The Carmagedonn Thread: FCA and "Consolidation"

[Leonidae]

^ [sarcasm]So, now they can have corroding cars with faulty electronics that catch fire before leaving the showroom?[/sarcasm]

 

[Sniffs]

*points to above post*and europeans wonder why americans don't trust any european cars that aren't luxury barges?

 

[Philly]

And even then that's just because the car costs so much so anyone who can afford it can afford the repairs.

 

[RACECAR]

Subaru May Be Pulling out of WRC Too...

They have. They have annouced it today.

 

[Philly]

This has been a sad few days of motorsport. Hopefully it'll pick up again when the economy turns around.

The thought of having the Big 3 pull out of NASCAR is a pretty big one as well...

 

[YSSMAN]

As far as I can tell, in some sports, GM is one of the few factory sponsors for some of the cars. Imagine if they back out of everything... That would be huge on both sides of the Atlantic, not to mention in South America, Australia and some parts of Asia.

 

[RACECAR]

This has been a sad few days of motorsport. Hopefully it'll pick up again when the economy turns around

I hope so too. It seems like it the end is here.

The thought of having the Big 3 pull out of NASCAR is a pretty big one as well...

So far, we aren't too far away from that happening, beginning with Dodge. They have lost alot of teams and realistically, the only ones left are GEM and Petty enterprises and none of them look to be in good shape at the moment. AS for GM, I fear after seeing them back out of the SWC and Grand-am that the Corvette Racing program is next.

 

[buickgnx88]

The Big 3 pull out of NASCAR? Wouldn't that be ironic...Toyota the only brand left in an American racing series! (or if they pull out too, no more NASCAR!)

 

[YSSMAN]

Honda is Having a Rough Day​

News from the front lines:

Honda has its first operating loss in 11 years, half-year at $1.4 BN

To make things worse, the first half of the year, they were running a $2.0BN profit. In the words of Scooby Doo, "Ruh Roh!"

Due to Rough Economic Times, Honda Cancels NSX Replacement

The car was reportedly very close to production, which is disappointing. Honda says that they're going to focus more on "green" technologies. I suppose that as long as we have the S2000, I'm happy.

 

[Tornado]

I must be the only one who is glad about that, then.

 

[Keef]

Honda is Having a Rough Day​

News from the front lines:

Honda has its first operating loss in 11 years, half-year at $1.4 BN

To make things worse, the first half of the year, they were running a $2.0BN profit. In the words of Scooby Doo, "Ruh Roh!"

Due to Rough Economic Times, Honda Cancels NSX Replacement

The car was reportedly very close to production, which is disappointing. Honda says that they're going to focus more on "green" technologies. I suppose that as long as we have the S2000, I'm happy.

I am confident Honda will trudge through this mess and escape with nary a scratch or scrape. Because Honda is awesome.

 

[RACECAR]

I must be the only one who is glad about that, then.

Why is that?

 

[Tornado]

Because the NSX replacement is a horrible thing that should never have been created.

 

[RACECAR]

Because the NSX replacement is a horrible thing that should never have been created.

What was so horrible about it? I've heard about it, but never seen it or knew much about.

 

[Swift]

Honda is Having a Rough Day​

News from the front lines:

Honda has its first operating loss in 11 years, half-year at $1.4 BN

To make things worse, the first half of the year, they were running a $2.0BN profit. In the words of Scooby Doo, "Ruh Roh!"

Due to Rough Economic Times, Honda Cancels NSX Replacement

The car was reportedly very close to production, which is disappointing. Honda says that they're going to focus more on "green" technologies. I suppose that as long as we have the S2000, I'm happy.

That's incredibly short sighted. Do they really think that there won't be people looking for the best new supercar for non-supercar money in the next few years? What if every company did that after the gas crisis in the 70's?

Nah, maybe they should put it on hold for a minute, but cancelling it is just stupid.

 

[Jim Prower]

You know, if the MSM harped Honda instead of Toyota...Honda's the true "Green" company.

 

[Keef]

That's incredibly short sighted. Do they really think that there won't be people looking for the best new supercar for non-supercar money in the next few years? What if every company did that after the gas crisis in the 70's?

Nah, maybe they should put it on hold for a minute, but cancelling it is just stupid.

How about this: cancelled indefinitely. There we go. The tens of millions of dollars has been spent and the development is done. I've seen the drawing for the thing--it's done! They have gone beyond the car itself and have designed machines to build it. I refuse to believe that they literally threw it all in the trash can. Suspended development? Yes. Cancelled? No. Whoever wrote the word "cancelled" is an idiot.

 

[Philly]

Anything else you can tell us about it? Since they seemingly won't care since the car doesn't really matter any more being canceled.

 

[YSSMAN]

Well, I guess Honda's point is that why would it be worth spending all the money putting the car out on the streets, with all the advertising, crash testing, emissions testing, shipping costs, etc if no one is going to have the money to buy the cars to begin with? Taking (lets say) a $100 Million loss now by cutting the project versus (lets say) a $300+ Million loss later makes more sense overall.

Its disappointing that they would cut it so late in the game, but perhaps it can be re-booted when things turn back around. I mean, c'mon, how many times did GM kill the Zeta project before actually getting the Commodore and Camaro off the ground?

 

[Touring Mars]

Chrysler has shut down all of its manufacturing plants for a month (Article)...

I've been watching this issue and reading this fascinating albeit depressing thread - very tough times... it must be if folks are saying their prayers already... (spot the unfortunate typo in that header!)

 

[YSSMAN]

I believe Ford is closing 10 of their plants for an extra week as well here in the US, which isn't good, but not nearly as bad as what Chrysler has going on. Now we hear the rumors about a GM and Chrysler merger being back on today as well...

 

[Jim Prower]

Why? Why GM and Chrysler? The only reason I can think of, again, is that GM wants Chrysler's bailout money if/when it happens...

Wouldn't it be ironic if, because of this, Chrysler got GM's share of the money instead?

 

[Philly]

Chrysler has shut down all of its manufacturing plants for a month (Article)...

The disturbing thing is that the release from Chrysler does not at all mention when the plants will reopen. So basically Chrysler is closed until further notice. Very disturbing indeed.

 

[Joey D]

Dubbya approved loans this morning, watch the market soar today, it's already up 163 points.

Bush announces auto rescue
President Bush announced a rescue plan for General Motors and Chrysler LLC Friday morning that will make $13.4 billion in federal loans available almost immediately.

A senior administration official briefing reporters said he expects that GM (GM, Fortune 500) and Chrysler LLC will be signing the loan papers to access the cash later Friday morning.

The money will come from the $700 billion fund set aside to bailout Wall Street firms and banks in October.

With these loans, Treasury will have committed virtually all of the $350 billion of that fund that it can hand out without additional authorization from Congress. Once Congress releases the other $350 billion, the two automakers will be able to borrow an additional $4 billion.

The loans are for three years but the money will have to be repaid immediately if the firms do not show themselves to be viable by March 31. It is expected that the companies will have to negotiate new agreements with unions and creditors in order to do so.

During brief remarks at the White House, President Bush said in normal times he would have not been in favor of preventing a bankruptcy of the two companies. But the current state of the economy and credit markets left him no choice but to act.

"Government has a responsibility to safeguard the broader health and stability of our economy," he said. "If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers."

"In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action," Bush added.

GM and Chrysler immediately issued statements thanking the administration for taking action.

"We know we have much work in front of us to accomplish our plan," GM said. "We thank the Administration for this important support of our industry at this challenging time, and we look forward to proving what American ingenuity can achieve."
Conditions similar to auto bailout bill

The terms of the loan are similar to those set in the auto bailout legislation that was passed by the House last week but was shot down in the Senate. Executives at GM and Chrysler must agree to limits on their compensation and eliminate perks such as corporate jets. The companies also must issue warrants, which convert into non-voting stock, to the government.

The loans do not include the concept of a so-called "car czar" to oversee the automakers, although it does say that a designee of the President would determine if the automakers are making the changes necessary for them to be considered viable.

The Bush administration official said that Treasury Secretary Henry Paulson would fill that role in the remaining days of the current administration.

The loans call for the automakers to prove they are viable by March 31, even though they are not expected to be profitable by that date.

The government wants the automakers reduce their debt load by two-thirds via a debt for equity exchange with current bondholders and get the United Auto Workers union to agree to wages and work rules competitive with non-union plants operated by Asian auto manufacturers by the end of next year.

In addition, the government is calling for GM and Chrysler to use their stock to pay for half the funds needed to cover future retiree health care expenses, which will be paid by union-controlled trust funds, rather than the automakers themselves, starting in 2010.

But there is flexibility for the companies and the incoming Obama administration to allow the loans to continue even if these targets are not reached, as long as GM and Chrysler can provide an explanation as to why they are viable without hitting those targets.

Republican senators demanded hard targets for labor union concessions and cited the UAW's resistance to agree to them as the reason the bill died last week.

But a Bush administration spokesman said there should be flexibility in the negotiations that will take place in the next three months between the automakers and the union.

"We do not feel it is appropriate for government to dictate the specific terms of negotiations between management and labor or management and dealers or management and creditors," the official said.
Time was running out

GM (GM, Fortune 500) has warned it will fall below the minimum amount of cash it needs to continue to operate without $4 billion in federal loans before the end of the month. Privately held Chrysler said it will need $4 billion or it will also run out of cash early next year.

Ford Motor (F, Fortune 500) has more cash on hand and has said it should be able to avoid tapping into federal dollars unless the weak auto sales continue longer than it expects in 2009.

Shares of GM soared more than 10% Friday morning on the news of the loan and Ford was up 5%.

U.S. auto sales plunged to 26-year lows last month as tight credit, rising job losses and weak consumer confidence have led to a virtual collapse in the auto market.

All of the major automakers, including Asian automakers Toyota Motor (TM) and Honda Motor (HMC), are cutting back production. But the situation is particularly severe at GM and Chrysler.

In the last week, those two automakers announced shutdowns of assembly lines for at least a month, several weeks longer than the typical shutdowns during the December holiday season.

 

[Azuremen]

So Bush had to mess up one more thing before he leaves? Damn...

 

[Div is back]

What a disgrace.

 

[mustangGT90210]

It's sad we had to go to this, but I definately feel it's the proper choice to make. I know that if the Big 3 go down more than half my family(both sides) will be out of a job and their pensions

 

[YSSMAN]

Well, we can sleep a little more soundly here in the Mid-West, but hopefully this will cause a massive change in thought for Detroit. Hopefully.

====

In the News:

Toyota may have their first annual operating loss in 71 years, a good sign for how crappy things are in the market right now.

 

[RACECAR]

In the News:

Toyota may have their first annual operating loss in 71 years, a good sign for how crappy things are in the market right now.

Thats not looking good.

 

[Mark T]

I haven't read too much into how these car companies have accumulated such massive debt so I'm going to ask a few questions.

1) Over what period did the car makers accumulate the debt?

2) If they didn't make any money during the good financial times how the hell do they plan to make money over the next few years when there will still be a recession and most people will be tightening theren pockets?

3) Are the board of directors still being paid? If so, why?

Those questions are directed towards the US car market rather than the latest news on Toyota. Sorry if those questions have already been answered earlier in the thread.