USMotor Industry struggling to keep their head above water?

[writerman]

Hey, Peter, I thought of you when this came through the e-mail:

November 14, 2008 -

How To Save A Major Automobile Company

Auto manufacturers taking advantage of a government bailout must only
sell clean and green vehicles that do not contribute to global warming.


by Neil Young

Find a new ownership group. The culture must change. It is time to
turn the page. In the high technology sector there are several
candidates for ownership of a major car and truck manufacturer. We need
forward looking people who are not restricted by the existing culture
in Detroit. We need visionary people now with business sense to create
automobiles that do not contribute to global warming.

It is time to change and our problems can facilitate our solutions. We
can no longer afford to continue down Detroit’s old road. The people
have spoken. They do not want gas guzzlers (although they still like
big cars and trucks). It is possible to build large long-range vehicles
that are very efficient. People WILL buy those vehicles because they
represent REAL change and a solution that we can live with.

The government must take advantage of the powerful position that
exists today. The Big 3 are looking for a bailout. They should only get
it if they agree to stop building autos that contribute to global
warming now. The stress on the auto manufacturers today is gigantic. In
order to keep people working in their jobs and keep factories open,
this plan is suggested:

The big three must reduce models to basics. a truck, an SUV, a large
family sedan, an economy sedan, and a sports car. Use existing tooling.

Keep building these models to keep the workforce employed but build
them WITHOUT engines and transmissions. These new vehicles, called
Transition Rollers, are ready for a re-power. NO NEW TOOLING is
required at this stage. The adapters are part of the kits described
next.

At the same time as the new Transition Rollers are being built,
keeping the work force working, utilize existing technology now, create
re-power kits to retrofit the Transition Rollers to SCEVs (self
charging electric vehicles) for long range capability up to and over
100mpg. If you don’t think this technology is realistic or available,
check out the Progressive Insurance Automotive X prize. Alternatively,
check out Lincvolt.com or other examples.

A bailed out Auto manufacturer must open or re-purpose one or more
factories and dedicate them to do the re-power/retrofit assembly. These
factories would focus on re-powering the Transition Rollers into SCEVs
but could also retrofit and re-power many existing vehicles to SCEVs.
These existing vehicles are currently sitting unsold at dealerships
across America.

Auto manufacturers taking advantage of a government bailout must only
sell clean and green vehicles that do not contribute to global warming.
No more internal combustion engines that run exclusively on fossil
fuels can be sold period.

No Big Three excuses like “new tooling takes time”. New tooling is not
a requirement for SCEV transition rollers.

Build only new vehicles that attain the goal of reversing global
warming and enhancing National Security.

Government legislation going with the bailout should include tax
breaks for purchasers of these cars with the new green SCEV technology.
The legislation accompanying the bailout of major auto manufacturers
must include directives to build only vehicles that attain the goal of
reversing global warming while enhancing National security, and provide
the financial assistance to make manufacturing these cars affordable
in the short term while the industry re-stabilizes.

Eventually the SCEV technology could be built into every new car and
truck as it is being assembled and the stop gap plan described above
would have completed its job of keeping America building and working
through this turbulent time.

Detroit has had a long time to adapt to the new world and now the
failure of Detroit’s actions is costing us all. We pay the bailout.
Let’s make a good deal for the future of America and the Planet.
Companies like UQM (Colorado) and others build great electric motors
right here in the USA. Use these domestic electric motors. Put these
people to work now. This plan reverses the flow from negative to
positive because people need and will buy clean and green cars to be
part of World Change. Unique wheel covers will identify these cars on
the road so that others can see the great example a new car owner is
making. People want America to in!

This plan addresses the issue of Global warming from our automobiles
while enhancing our National Security and keeping Detroit working.

www.lincvolt.com


# # #

And yes, it's *that* Neil Young!

[peter]

I'm in the loop for being converted, apparently.

I'm receiving invitations to join this group : www.facebook.com/group.php?gid=35766484043

They have an internally driven PR internet campaign going to persuade people that GM should be supported.

Some of the publicity materials :

www.youtube.com/ImForGM
www.youtube.com/watch?v=72cHfOKoA1c
www.imforgm.com
www.gmfactsandfiction.com
www.facebook.com/pages/General-Motors/23972786609
www.youtube.com/watch?v=U7YBjjLKLd0


Looks like more of the same.


Peter

[peter]

Big Three survival proposals :

GM
* $4bn loan to stay afloat by end of 2009. Up to $18bn in emergency term loans and revolving credit lines.
* Focus on core brands Chevrolet, Cadillac, GMC and Buick. Review other brands like Saturn, Saab and Hummer.
* Reduce US workforce by 30,000 by 2012.
* Chief exec to reduce pay to $1 in 2009.
* Sell corporate aircraft

Ford
* $9bn, 10-year bridge loan on standby.
* Look at selling Volvo and launch a family of hybrids and battery electric vehicles ready for 2012.
* Four plant closures between 2009 and 2011. Around 50% of future US production capacity allocated to small/medium sized vehicles.
* Chief exec to reduce pay to $1 in 2009.
* Sell corporate aircraft

Chrysler
* $7bn loan before the end of this year.
* 24 major product launches through to 2012 including hybrid vehicles. First full electric models launched by 2010.
* Seek alliances with other markers, such as sharing platforms for an estimated saving of up to $9bn in costs.
* Chief exec will be paid salary of $1 in 2009.


More : www.am-online.com

[nick65]

Lets be honest here - If car sales are going down, why in God's name is teh US Government trying to hold them up??

So they can carry on making cars that nobody wants??

[ringlefield]

"Chief exec will be paid salary of $1 in 2009."
Even at this level, he's overpaid!

Ron, Servian.

[peter]

An interesting article about GM's failings :

http://www.businessweek.com/bwdaily/dnflash/content/jan2009/db20090121_417607.htm


Peter

[ringlefield]

Even at the recent Detroit Motor Show (a few days ago), there was 'disappointment' that GM's relaunch of the Dodge Ram (yet another gas-guzzling dinosaur), had failed to excite the few people who had bothered to attend.
GM's mangement is truly on another planet!

[peter]

Spotted on the net :




Peter

[peter]

Well, I talked about possible bankruptcy in 2006 when it wasn't such a popular topic.

Now there are various magazines that propose bankruptcy as the only way out. Some think that Ford may survive.

Some of the smaller car rental companies are also looking shaky.

http://seekingalpha.com/article/120881
http://seekingalpha.com/article/120837
http://uk.reuters.com/article/marketsNewsUS/idUKN1425572520090214

The combined effect on the big three, their suppliers, their dealers and their customers would be so catastrophic that the US govt can not afford to let it happen.

However. there is plenty of evidence that governments can only delay the eventual collapse of defunct operations, and the current USD billions of support will eventually be seen as a small deposit.

And spare a thought for Saab. Saved from bankruptcy by the GM white knight in 1989, they have now had 20 years of GM mismanagement, and are again "For Sale". The problem is that now they have :

* lower sales volumes than in 1987
* no independent engineering capability
* a 2 model range (same as in 1989)
* a thinly veneered Opel product
* one obsolete model (same as 1989)
* a less desirable image than in 1989
* a less effective distribution chain
* no dedicated Saab management team

Would you buy a loss making car company that can no longer produce a car ?

It is too small to form a PSA premium arm, or even the premium arm of an independent Opel. It is difficult to see who would be interested from Europe.

The options for Saab would seem to be a disposal of the name to India, China or Korea or simply closing down.


Peter

[peter]

Analysis from Business Week :

www.businessweek.com/bwdaily/dnflash/co ... 696340.htm

[peter]

[Lewis Gunn]

It's blowing like stink down here, I'm amusing myself over the lunch break and thought I'd skim through this topic.

Peter has chosen to concentrate on the woes of the US Big 3 so I will confine my remarks to that arena.

I was in North America when oil prices sky-rocketed in the late 70's. Everybody thought the sky was going to fall in and (relatively) smaller cars were in vogue for a while. But it did not last and the gas guzzlers returned. The advertising slogan "Put your cash in the bank, not the tank - buy a Datsun" had no lasting impact. Eventually even the Japanese manufacturers gave in and started to market SUVs and trucks every bit a big as the home grown products. Just better built! The average American consumer still believes the old saying "There is no substitute for cubic inches".

American consumers want EVERYTHING at the lowest possible price. Which results in the bizarre spectacle of US car manufacturers in Europe and elsewhere producing far more advanced vehicles for their overseas markets than would ever be accepted at home.

There has been huge over-capacity globally in carmaking for many years. The recent financial crisis has simply accelerated the inevitable. If there really is a sea-change in the American car buying public it will be little short of a miracle. Given that build quality has increased in recent years I forsee that many motorists will do their sums and calaculate that it is cheaper to pay slightly higher gasoline prices and run their vehicles into the ground.

If this is the case none of the Big 3 will survive.

Lewis Gunn

[peter]

Headline : GM's Saab stops production over supplier issue

The end is in sight ?

More :
http://uk.reuters.com/article/marketsNewsUS/idUKLP22411320090225

[nick65]

OK, so what is the problem in letting these companies go to the wall??

From my POV, if no one is buying why are they being given money to hold the business up?? I for one will not be buying a car again for many years now. I have to change my motability car (Disabled) in September but to be honest I think I might just leave it.

OK, hundreds of thousands will lose jobs, but you wouldn't keep a power station open if it didn't make any electricity!!!

In one way I think it's good that these companies are hitting the wall - They were greedy, don't care about the environment and now want money for nothing. Well, why else would you need the money?? To pay staff for building something that cnnot be sold. It's got to be culled now and yes it will hurt, but why should taxes pay up for no reason??

[peter]

FT
GM future in doubt after $31bn loss
By John Reed in Detroit

General Motors on Thursday said it expected its auditors to study whether there was “substantial doubt” it could continue as a going concern, as the US carmaker revealed a full-year net loss of $30.9bn

It said it expected the auditors to give their opinion when the GM files its annual report with the Securities and Exchange Commission next month, since the company plans to take advantage of a 15-day extension to the deadline for filing.

Full story


And Europe underperforming, too :
Automotive News Europe

GM posts $1.6bn loss in Europe
John Revill

General Motors Europe´s financial health deteriorated sharply during 2008 as the carmaker suffered an adjusted pretax loss of $1.6 billion, compared with an adjusted pretax profit of $55 million in 2007.

GM Europe blamed lower unit sales, a poorer mix of models sold and unfavorable foreign exchange for the loss.

GM Europe´s full-year revenues slipped to $34.4 billion during the year, down from $37.5 billion in 2007. ...

[peter]

There is "substantial doubt" about the ability of General Motors (GM) to stay afloat, the firm's auditors have said.

Ongoing losses and the struggle to generate cashflow meant the firm's ability to continue as a going concern should be questioned, they added.

Full report : http://news.bbc.co.uk/2/hi/business/7926258.stm

Peter

[peter]

GM stock now at $1.45 after dropping to $1.27 in early trading.

NB at 04/2000 the stock was at USD 88.75


Peter

[Brian and Helen]

Peter - I hesitate to ask because it's been there so long, but why do you keep posting all this stuff about the US motor industry?

Are you involved with it? If not, what's the raison d'etre?

Brian

[peter]

I am a motor trade consultant.

In a previous life I worked at the GM head office in Detroit.



Sorry if it is boring !

Peter

[ringlefield]

It can only be boring if you click on it and read it!

Recently, with world events as they are, it has become very interesting as an indication of whether the new US president will take decisive action re the US car industry's future.

[Brian and Helen]

No Peter, it's not boring, it always just struck me as a bit "out of context". Now I know the background, I can understand why the interest.

Brian

[peter]

Current GM HO :


Old HO :




Guess who ?

[Brian and Helen]

Well, at least we know where the money went!

Remember the old Price-Waterhouse adages about a company about to go belly-up:

New swish offices
Flagpoles outside
Fishpond outside
Personalised number plates on directors' cars
Company yacht / villa / corporate jet / other freebies
Consultants + PR team in situ

and most of all, forgetting the basic message - "Where's the money, you cannot hide the cash, if there's a hole you'll find it if you follow the cash!" I've been doing this job for 40 years, and that advice has never let me down.

Brian

[peter]

27 March 2009 | Source: just-auto.com editorial team

Forecasters are predicting that the March sales figures for the US market will make for grim reading.

Edmunds predicts that this month's new vehicle sales (including fleet sales) are expected to be 774,000 units, a 42.7% decrease from March 2008.

"If sales continue at this pace all year, we're looking at a SAAR of only 8.9 million, which is slightly more than half of 2007 sales," observed Edmunds.com CEO Jeremy Anwyl. "However, this dire report neglects to cover that underlying demand for new cars continue to climb and is often being translated into used car sales."

Edmunds.com recently reported that that more than 20% of car shoppers who researched new vehicles actually bought a used vehicle. The company predicts that the trend accelerated in March.

"No automaker can sustain itself if the new car market doesn't open up soon," commented Michelle Krebs, Senior Editor of Edmunds' AutoObserver.com. "It's time for legislators to do something material, such as introduce scrappage laws, offer tax credits or temporarily lift sales tax, or at least increase the existing tax deductions on car loans."

March 2009 had 25 selling days, one less than last March 2008. When adjusted for this difference, sales decreased 40.4% from March 2008.

Analysts say that through the first two weeks of March, US auto sales were down 40% year-on-year.

According to JD Power retail sales are expected to fall to just 633,000 units in March, well off the pace from the 1.07 million vehicles sold in March 2008. Total sales are expected at 798,000 units, JD Power says.

However, JD Power said, somewhat optimistically perhaps, that it is confident that sales will see an uptick within the next few months.