Auto Bailout 2: The Search for More Money

Dead of Knight

Dead of Knight

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http://money.cnn.com/2009/02/17/news/companies/auto_plans/index.htm?postversion=2009021716?Fail

NEW YORK (CNNMoney.com) -- General Motors and Chrysler LLC said Tuesday they could need an additional $21.6 billion in federal loans between them because of worsening demand for their cars and trucks.

The two firms, in documents submitted to the Treasury Department, also detailed plans to cut 50,000 jobs worldwide by the end of the year. GM said it plans to close five more plants in the next few years and confirmed it will drop some of its weaker brands.

When all is said and done,GM (GM, Fortune 500) said that by 2011 it could need a total of $30 billion, which includes the $13.4 billion in Treasury loans it has already received. In the near term, GM will most certainly need $9.1 billion in additional loans and could require another $7.5 billion in the next two years if auto sales don't improve.

Chrysler said it now needs a total of $9 billion, up from the $4 billion Treasury loan it received in December. Chrysler said it will need that money by March 31.

GM also accelerated its job cut plans, saying that it would eliminate 47,000 jobs over the course of 2009. The company said it would cut about 20,000 jobs in the United States, or about 22% of its remaining U.S. staff.

Previously, GM called for U.S. job cuts of between 20,000 to 30,000 workers, but it had stretched out those reductions through 2012.

The company said it plans to close five additional U.S. plants by 2012 --in addition to the 12 planned closings announced in December. Executives would not identify the plants that would be closed.

"Our plan is significantly more aggressive because it has to be," said GM Chairman Rick Wagoner.

Experts said that the request for additional dollars are not a surprise, given how bad auto sales have been since the December plea for help.

"The most important issue is not what the automakers are going to do to cut costs, but rather what the government is going to do to stimulate car sales," stated Jeremy Anwyl, CEO of car sales tracker Edmunds.com. "No automaker is viable under the current market conditions, and so far the spending package appears to spread money too thin to actually make much of a difference in any one area."

Some economists argued that the problems detailed in the plans show that GM and Chrysler are already failed companies.

"When consumers refuse to buy your product, that's the economy telling you you're bankrupt," said Rich Yamarone, director of research at Argus Research.
Click to expand...

There's much more in the article, it's pretty long so I didn't post all of it.

All I can say is, fuck these guys.
 
the first line of the article... "because of worsening demand for their cars and trucks."

wow, if only there was some sort of basic principle to guide companies in these tough economic times...
 
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Maybe because the UAW negotiators are a bunch of jackasses they continue to produce cars when there's thousands upon thousands of extra stock on the dealer lots. Or it may be because GM/Chrysler are just that stupid and they think they should keep their plants running when no one wants their shit. I don't know.
 
[quote name='Dead of Knight']Maybe because the UAW negotiators are a bunch of jackasses they continue to produce cars when there's thousands upon thousands of extra stock on the dealer lots. Or it may be because GM/Chrysler are just that stupid and they think they should keep their plants running when no one wants their shit. I don't know.[/quote]

A little from column A and a little from column B.

In a few years, we'll all be thankful for the hundreds of thousands of unsold GMs out there. Need a new engine? This one has never been driven. Take it! Alternator bad? Brand new with a factory warranty right here. Just pop off the serpentine belt and you're halfway there.
 
They need to quit making cars before they sell them. You want a car? Give us the money and we'll have the car built in the next 2 to 3 weeks. It'll eliminate unsold cars.
 
Hey Msut, what's your opinion on the American government's, and Obama's administration's willingness to spend China's money?
 
[quote name='thrustbucket']It is kind of funny that we are going to pay for any new American cars from now on twice. In every paycheck and again at the lot.[/QUOTE]

forget that, im buying japanese or european AND buying used when i get my new (used) car this summer
 
[quote name='thrustbucket']What the hell, just give em 50 billion each. Who cares at this point. Drop in the bucket...[/quote]

Or............. they could stop making shit and make cars people actually want to buy. Then they wouldn't need money. :roll:
 
[quote name='Ikohn4ever']they should make all cars older than 2000 illegal, that would take care of all those cars sitting on the lots.[/quote]

Classic Cops episode material.

"We're in a high speed pursuit of a 1999 Ford Mustang ..."

"What do we have here? Your VIN matches with FY1999. You're going to jail for a very long time."
 
The Guardian (I think? I can't find the link) had an incredible photo essay of the build up of manufactured automobiles and what it looks like globally.
 
So GM is reportedly going to kill Saturn... Saturn, one of the division that ACTUALLY SELLS. That makes sense. Let them die. They proved time and time they don't know what the fuck they are doing.
 
So, they want money to keep employing people to make cars no one want to buy?

There is no way they won't get this. What will happen to America if we can't churn out thousands of slight revisions of a few dozen models year after year?

Don't take the Madden approach to making $40,000 vehicles, for fuck sake.
Don't make a new vehicle (that looks identical to the last) just because it's a new year. Make a new vehicle when you have a fucking reason to.

I know it's unAmerican, but auto makers should be limited to like 2 kinds of car, one truck, a van and NO fuckING SUVs.

Of topic... but related. I also think all packaging should be plain unbleached cardboard with a sticker on it. Why the fuck do you need a box covered with 9 square feet of high gloss marketing? How much money would be saved if they didn't buy all that dye? How much safer would it be for the environment?
 
[quote name='VipFREAK']So GM is reportedly going to kill Saturn... Saturn, one of the division that ACTUALLY SELLS. That makes sense. Let them die. They proved time and time they don't know what the fuck they are doing.[/QUOTE]

Well they need to sell something and Saturn has apparently generated some serious offers.
 
1. Why sell a division that can actually make money for you?

2. They have how many other Shitty divisions they could get rid of?

3. It won't matter if they are going to keep how ever many other shitty divisions they have.
 
With all this extra stock, why aren't they slashing the prices on their vehicles? Even if they took a loss on them, it's better than having them sit there like that.
 
Because if they set the standard with dirt cheap autos they'll have to deal with bitching next year?

They expect everyone will run out and buy brand new 2 year old vehicles at the end of this depression?

They can't afford to ship them over here?
 
[quote name='VipFREAK']1. Why sell a division that can actually make money for you?

2. They have how many other Shitty divisions they could get rid of?

3. It won't matter if they are going to keep how ever many other shitty divisions they have.[/QUOTE]

You answered your own questions. The other divisions are so shitty that there are no bidders for them. Saturn is one of their few assets that will attract resonable prices. You can only sell something if there is a buyer. Apparently there are buyers for Saturn. GM has been trying to dump the Hummer brand for close to 2 years now. They are going to end up having to dump it for pennies on the dollar before all is said and done.
 
I think that's a good idea, ordering your car before it's built. These bozos are losing money on unsold cars that they spent money to build, right? So you order your car and (in theory) it should be cheaper since they're only building sold merchandise.

Or maybe it really is cheaper to crank them out by the millions, I don't know.
 
They order massive amounts of stuff and have many factories. The larger the scale you can produce something, the cheaper per unit it is.
If they have to make less, they have to buy less. The end result is a higher cost per unit. That means we'd have to pay more for each car they made less of.
[quote name='Friend of Sonic']I think that's a good idea, ordering your car before it's built. These bozos are losing money on unsold cars that they spent money to build, right? So you order your car and (in theory) it should be cheaper since they're only building sold merchandise.

Or maybe it really is cheaper to crank them out by the millions, I don't know.[/quote]
 
I actually wasn't going there, but yeah... now that I think about it. That makes more sense. Also, even though I haven't talked about it I've observed that for a while now, not only have they been mass producing cars, but what... every year they come out with a "slightly" updated piece of the same crap. Oddly though, say for instance... the Accord keeps coming out with the same updated crap, but they still sell. Why is this?

Import crap is better than domestic crap.
 
[quote name='Kayden']They order massive amounts of stuff and have many factories. The larger the scale you can produce something, the cheaper per unit it is.
If they have to make less, they have to buy less. The end result is a higher cost per unit. That means we'd have to pay more for each car they made less of.[/QUOTE]'

yes the cost would go up, but their current business model is certainly not working.
 
This other business model will work even less well. Who would be able to afford them? You can't sell what people don't buy and people can't buy what they can't afford.

They could take out bigger loans, but that'll only exacerbate the issue.

[quote name='RAMSTORIA']'

yes the cost would go up, but their current business model is certainly not working.[/quote]
 
[quote name='Kayden']This other business model will work even less well. Who would be able to afford them? You can't sell what people don't buy and people can't buy what they can't afford.[/quote]

1. If you come up with crap everyone doesn't want all the time NO business model will work.

2. Yes, we are in bad times and no body can afford the cars they are pumping out and on top of that fuel resources are an issue.

Wanna really solve the problem stop making big slow inefficient crap, You know what a Datsun 510 or an AE86 is? Remake it, shove a diesel or hybrid in it and sell it for cheap. Luxury is luxury, is it needed? no... They want it? too bad, tough times. Deal.
 
Build to order autos will cost A LOT more, 20-30% easy.

What we need is to streamline the industry. We don't need GM making 30 different kinds of trucks, we don't need 8 badge swapped versions of an SUV and within the model lineups we don't need 20 different trim packages within each car. We basically need to cut options.

Leave the customization to the aftermarket.

I do think GM needs to go bankrupt. That is the only way they will really be able to get rid of all the legacy costs and expenses holding them back. They need to start over.
 
^Yeah, much more so than other car companies, most of GM and Chrysler's shit is badge-swapped at least with 2 different cars. Could be another reason why they're shitting money now.
 
You know, i have to wonder, why didn't companies like Studebaker, Packard, Tucker etc. ever think of asking the government for a bailout? Why is it ok to do so now, when it would have been unheard of back then?
 
[quote name='BillyBob29']Build to order autos will cost A LOT more, 20-30% easy.

What we need is to streamline the industry. We don't need GM making 30 different kinds of trucks, we don't need 8 badge swapped versions of an SUV and within the model lineups we don't need 20 different trim packages within each car. We basically need to cut options.

Leave the customization to the aftermarket.[/QUOTE]

Didn't Ford build a manufacturing plant in South America in the past coupla years that's (1) fuckin' HUGE and (2) has newer and adaptable assembly lines that reduce some of the redundancies/inefficiencies of what you're arguing without sacrificing this sort of "standardization"?
 
i just thought of something, and im not sure how the auto industry works in this regard, maybe someone can shed some light on this.

but all this talk about cars sitting in lots. are those cars bought and payed for by dealerships already? what i mean is, are the dealerships losing money, or do GM, Ford, etc reimburse dealerships for unsold cars. the reason i ask is, if detroit "sells" these cars to dealerships and are still this fucked with their money, how could they ever hope to recover.
 
[quote name='mykevermin']Didn't Ford build a manufacturing plant in South America in the past coupla years that's (1) fuckin' HUGE and (2) has newer and adaptable assembly lines that reduce some of the redundancies/inefficiencies of what you're arguing without sacrificing this sort of "standardization"?[/QUOTE]

And of course Ford isn't asking for any money.

[quote name='RAMSTORIA']i just thought of something, and im not sure how the auto industry works in this regard, maybe someone can shed some light on this.

but all this talk about cars sitting in lots. are those cars bought and payed for by dealerships already? what i mean is, are the dealerships losing money, or do GM, Ford, etc reimburse dealerships for unsold cars. the reason i ask is, if detroit "sells" these cars to dealerships and are still this fucked with their money, how could they ever hope to recover.[/QUOTE]

They're unsold to dealers, I believe, but don't 100% rely on that. I've seen multiple articles about Chrysler literally begging dealers to buy more cars or else they'd be forced to go out of business. Of course the dealer lots are already full of unsold cars.
 
GM shouldn't have quit making disposable cars that needed to be replaced every 4 years. My Oldsmobile is going on 10 this year and still running strong! I'll probably keep her another 5 then replace her with another GM. Hell, they might last 20 years by then.
 
[quote name='JolietJake']You know, i have to wonder, why didn't companies like Studebaker, Packard, Tucker etc. ever think of asking the government for a bailout? Why is it ok to do so now, when it would have been unheard of back then?[/QUOTE]

now they are "too big to fail" :roll:

[quote name='redline']GM shouldn't have quit making disposable cars that needed to be replaced every 4 years. My Oldsmobile is going on 10 this year and still running strong! I'll probably keep her another 5 then replace her with another GM. Hell, they might last 20 years by then.[/QUOTE]

If you expect to compete with Japanese companies that have a much better track record than you do already for reliability, not to mention their product is less expensive, how do you figure making your cars less reliable is a good business decision?
 
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