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Go Back   REVscene Automotive Forum > Automotive Chat > REVscene Nation: Beyond The GVRD > Island Automotive Chat

Island Automotive Chat Victoria to Port Hardy and everything in between
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Old 11-07-2008, 02:17 PM   #1
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GM Doesn't have enough cash to make it through a few months

http://money.cnn.com/2008/11/07/news...ion=2008110711

That's just ridiculous. Earlier in the morning Ford announced that they only had enough cash to get through another year, but GM is crazy hurting. They will be bankrupt if they don't get a huge cash infusion from the government. They've appealed to the US government to try and get some of the 700 billion bailout (Ford also did this). But wow... imagine all those GM factories, dealerships... And of course, no automotive company is going to risk buying them at this point, the way the financial situation is.
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Old 11-07-2008, 02:22 PM   #2
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Here's another good article about bailout options
http://money.cnn.com/2008/10/29/news...ion=2008102907

I should note this story is about 8 days old, and GM has said they have stopped any ideas of merging with Chrysler to focus on the immediate financial problem.

Last edited by dustinb; 11-07-2008 at 02:24 PM.
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Old 11-07-2008, 03:30 PM   #3
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I think i'll be rethinking that Cobalt SS now...

What good is a 5 year warranty if the company doesn't exist to honour the warranty?
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Old 11-07-2008, 03:39 PM   #4
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It's hard to say if the government will help, the amount the need will be massive and all three of the Detroit manufacturers will need help. And if they do help them, they're so unprofitable that they would want to suck on the government's tit for a long long time, creating more debt.
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Old 11-07-2008, 04:04 PM   #5
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Wow thats alot of people out of a job. Im glad i work for a jap automotive company. No suprise really how badly the cars are built.
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Old 11-07-2008, 04:39 PM   #6
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I've been following the stories on the Big 3 over the past weeks and awaiting these reports. GM projected burning 1 billion per month in Q3 but instead has burned through 2.3 billion per month.

The US Federal Gov't has already made statements recently that it will not bailout US car manufacturers. We'll see if they change their mind.

As much as I think they should just let them go bankrupt, the economic impact on North America will be staggering. CBC reports should all three go bankrupt there will be 3 million job losses immediately

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Old 11-07-2008, 05:03 PM   #7
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Lol, i expected this to happen. Was at automall and the dealerships on marine drive. Checked out a few things. The only thing that was acceptable in terms of quality was a Cadillac. The rest, ie hummer, colbalt SS, corvette all had HORRIBLE interior trim quality. IE unshaved plastic, hard plastic all over. Corollas do better than hummer's do in terms of quality O.O I think the big 3 are done, no one is gonna bail them
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Old 11-07-2008, 05:31 PM   #8
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That's crazy. One of the huge problems for the big 3 is the benefits they pay to all current AND retired workers and their families. The UAW has probably done themselves in on this one.

Though I know you guys love to slam American car makers, what's also interesting at the end of the article is that Toyota's Q3 earnings were down 70%. Fortunately for them, they are in a much better position going into this downturn than their competition, but that is still a ridiculous drop.
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Old 11-07-2008, 05:33 PM   #9
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Well, toyota's down turn is expected too. Their econobox profit making corolla's market place is being taken up by god damned yarises and hybrids, which IIRC the hybrids don't make that much gross margin
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Old 11-07-2008, 06:58 PM   #10
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That's crazy. One of the huge problems for the big 3 is the benefits they pay to all current AND retired workers and their families. The UAW has probably done themselves in on this one.

Though I know you guys love to slam American car makers, what's also interesting at the end of the article is that Toyota's Q3 earnings were down 70%. Fortunately for them, they are in a much better position going into this downturn than their competition, but that is still a ridiculous drop.
Agreed. I think nearly every automotive manufacturer is seeing a huge loss in profits (except for Suzuki for some reason... must be those horrible commercials). But yah, the big three just don't have the finances to get them through this... pretty scary. And if the big 3, or one of the big three goes under, it will screw everyone else in the automotive sector. There will be so many people out of a job / benefits, they won't be out buying a new car from any manufacturer.
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Old 11-07-2008, 07:05 PM   #11
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^ But on the same note, won't the other "big 2" basically see a ~30% increase(between them both) in sales?
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Old 11-07-2008, 07:47 PM   #12
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^ But on the same note, won't the other "big 2" basically see a ~30% increase(between them both) in sales?
I don't think so. GM is by far the largest company out of those 3, and the loss of GM would be catastrophic for so many people.
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Old 11-08-2008, 12:40 PM   #13
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good articles:

why GM shouldn't be allowed to collapse: http://www.autoblog.com/2008/10/30/a...-john-mcelroy/

about the recent financial reports: http://www.autoblog.com/2008/11/07/a...-john-mcelroy/
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Old 11-08-2008, 05:06 PM   #14
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Old 11-17-2008, 03:29 PM   #15
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GM is selling their entire stake in Suzuki to try and generate money... wonder if this will help bring some of their products from Japan over here.

http://money.cnn.com/news/newsfeeds/...fd.htm?cnn=yes
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Old 11-18-2008, 12:57 AM   #16
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I used to think "Stupid decisions were made, let them collapse cuz thats what you get for being selfish and dumb", but after really seeing what could happen to the American people on the whole if it were allowed to die...
I think that bailouts should happen, but with extreme stipulations regarding "greener" vehicles, including limiting the number of mondo-SUV's and trucks eligible for sale - Hell, maybe even bring that 4.0L engine size limit that was all the rage in the late '90's into effect.

If the Big 3 (or even GM alone) are bailed out, they can't be allowed to continue their ridiculously irresponsible behavior. I say axe the major execs, restructure with high amounts of gov't scrutiny and maybe even some NGO interaction from other companies to figure out a way to fix this thing.
25B won't do much if they burn thru 1.5B/month...
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Old 11-18-2008, 07:17 AM   #17
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I used to think "Stupid decisions were made, let them collapse cuz thats what you get for being selfish and dumb", but after really seeing what could happen to the American people on the whole if it were allowed to die...
I think that bailouts should happen, but with extreme stipulations regarding "greener" vehicles, including limiting the number of mondo-SUV's and trucks eligible for sale - Hell, maybe even bring that 4.0L engine size limit that was all the rage in the late '90's into effect.

If the Big 3 (or even GM alone) are bailed out, they can't be allowed to continue their ridiculously irresponsible behavior. I say axe the major execs, restructure with high amounts of gov't scrutiny and maybe even some NGO interaction from other companies to figure out a way to fix this thing.
25B won't do much if they burn thru 1.5B/month...
It's such a hard topic... because yes, they did everything to themselves, and only now the global drop in auto sales has been the final straw. I originally thought that they couldn't let an institution like GM go bankrupt, but all the reading I've been doing recently has been pointing to the idea that the bailout won't happen. Anyways, the plan on announcing in the next week if they're going to let GM die or give them a huge paycheque.

Ford announced this morning that they are selling 20% of their 32% stake in Mazda to raise capital.
http://edition.cnn.com/2008/BUSINESS...ale/index.html

Here's some good articles discussing the GM bankruptcy debate. Suggested you all read.
http://money.cnn.com/2008/11/13/news...ion=2008111305
http://money.cnn.com/2008/11/18/news...ex.htm?cnn=yes

And I agree in the articles about how bankruptcy could be good for GM. Imagine how much money they would save if suddenly all their employee contracts were gone. That's billions of dollars a year. Of course, that's suddenly hundreds of thousands of people who just lost their health care and retirement.... but the government seems ok with that.

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Old 11-18-2008, 11:09 AM   #18
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The unions have fought so hard with GM, that they are playing a big role in its supposed demise. But something I find interesting, is that most of the news regarding GM talks of GM North America, not the global aspect of it. I think the majority of this is simply corporate manuevering to make things sound worse than it is, so GM can get some of that much needed capital to further its business.

Checkout http://gmfactsandfiction.com/ to see how they are spinning the situation.
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Old 11-18-2008, 03:33 PM   #19
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They did it to themselves.
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Old 11-19-2008, 04:01 PM   #20
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I am actually torn on my feelings for this situations. On one hand I say "they did it to themselves", and they can thank the unions for a part as well so I could say "let em go bankrupt" and then restructure under chapter 11 since a bailout might just give them more time of the same old business. And maybe bankruptcy might let them restructure the company that can lower costs and make it profitable again. But on the other hand I see how many jobs could be lost, and I worry about how many people will continue to buy from a company thats in bankruptcy protection, I don't think consumer confidence in any company is too high under these circumstances. Lets me honest, consumer confidence plays a major role in many people when making a large purchase like a car or house.
Either way I don't think there is the perfect solution or the "right" solution. But have pros and cons. I guess the US needs to sort those out and decide what makes better sense for everyone.
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Old 11-19-2008, 05:16 PM   #21
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I'd hate to be a GM retiree right now.
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Old 11-20-2008, 01:27 AM   #22
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Big thumbs down for bailouts. Already-strapped taxpayers should not be dumping cash into failed companies with failed business models, absurd employee wages and no hope of short term success. AFAIK the median salary for the big three is around $75k, and their CEO's are making well, WELL into the 7 figures. Compare to another huge, successful company (costco) who has a median wage around like $30k and a CEO who pulls down 300k.

Yes, it will severely damage the economy if they all go down, but what else can possibly happen? A bailout is just throwing money in the toilet and staving off the total failure of these companies for another couple months.

This is not to say these companies should just be hung out to dry. Nobody would ever go for it, but what about letting toyota come in and acquire a big stake to take over GM operations? Wages would go down, quality would go up, and there would be a change of creating a sustainable industry. That $30b NEEDS to go somewhere else...ie, helping UAW members find new jobs, or cutting up parts of the big 3 and selling them to other automakers to take over.

I'm sorry, and I know it affects a lot of people personally, but failed businesses need to be revamped or die. A society that pulls along huge corporations with tax dollars who make poor decisions is doomed to failure. If your business can no longer provide a product that people want to buy, and you cannot control your own costs or plan for any type of financial emergency, then unfortunately you need to go. I think the government should help with the transition for employees and whats left of the corporate structure, but that's it.

Does anyone care that fletchers can no longer make a living producing arrows? What about companies that printed millions of punch cards for programmers? Carbon-copy paper? Teletype machines?

Should we have bailed out companies that invested heavily in betamax or HD-DVD?

Businesses have to evolve with the times, or fail. That's how our system works, and when we actually stick to the concept (with a little poke from the justice department here and there to keep it from getting out of hand), everything works properly.

It seems like the current theme is "rewarding irresponsibility". Missed 3 payments on the 2nd mortgage you took out because you would make cash at closing to buy another car? NO PROBLEM! The government will pay for the loan. Been making all your payments and didn't over-extend yourself? Too bad for you.

Honestly, what we really need is a total economic overhaul, and a huge switch from an extreme debt-based economy to one that is based on ACTUAL PRIVATE OWNERSHIP of assets. It will be interesting to see what happens in Iceland over the next couple years.
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Old 11-20-2008, 02:12 AM   #23
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If the big 3 are left out of the bailout, it doesnt mean they will dissapear. The factories wont be demolished and not everyone will be thrown out on their asses. The goverment steps in after banckrupcy is filed and helps a company like that restructure. In a failing company the size of these, it seems to be the more productive thing to do.

Kinda like the saying.. "Give a man a fish and feed him for a day, teach him to fish and you will feed him for a lifetime."
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Old 11-20-2008, 07:37 AM   #24
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Kinda like the saying.. "Give a man a fish and feed him for a day, teach him to fish and you will feed him for a lifetime."
Too bad the world is almost out of fish.
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Old 11-20-2008, 09:58 AM   #25
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boo fucking hoo about 3 million jobs lost. It's like when sawmills/pulpmills close down people always bitch and moan. These people were being paid insanely high wages for what they were doing and more often than not blew their money on dumb shit like big trucks and bigger-than-yours TVs instead of saving for a rainy day. (I realize this is a generalization, but I've lived in enough oil/pulp/lumber towns to start to see a pattern). Their employers were churning out garbage that sat well in the short-term but everybody knew wouldn't sell long-term (Is anyone surprised that Hummer ain't doin' so hot? Or that the demand for full-size pickups is dropping?). They made insane amounts of money, pocketed it all and now that their stupidity has driven them to the poorhouse they want MY taxes to bail them out? Fuck them. They all wanted a free-market capitalism so bad, let them have a taste of it.

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