HOWES: Detroit Three need cash -- fast

[Lichtronamo]

Wednesday, June 25, 2008
Daniel Howes, Detroit News

Detroit's Big Three need cash -- fast
High gas costs, low consumer confidence threaten automakers' ability to get funds to fuel restructuring.

The General takes another whack at its imploding North American business -- cutting shifts, boosting car production, raising prices and even resorting to the Motor City's preferred narcotic, zero-percent financing -- and, for a day, its shares close higher than they opened.

For a change.

Tuesday, shares in General Motors Corp. closed at $13.19, up 28 cents, or 2.18 percent, after brushing a 52-week (and 33-year) low of $12.63 earlier in the day. Their stunning fall, from a 52-week high of $43.20 last Oct. 12, shows just how little confidence Wall Street and just about anyone else has in GM and its ability to weather $4-a-gallon gas, slumping consumer confidence and the crumbling of its pickup and large SUV business.

It doesn't matter whether GM agrees with the verdict. The markets and the courts of public opinion have ruled and GM, for all its measurable progress over the past three years with its products, its labor agreements and its success abroad, is coming out the loser.

Full article:

http://www.detroitnews.com/apps/pbcs...59/1148/AUTO01

[Ming]

That's a dismal picture. Ouch.

[FierySolstice]

They will bounce back..

[roteague]

GM needs to get smaller and more fuel efficient vehicles on the road now, not in 2010. Their years-long development cycles aren't going to cut the mustard any longer. Yes, I realize GM has a very fuel efficient range, but the perception isn't there, and there aren't enough econo-boxes out. Beat, etc, needs to be on the road by the end of the year.

[Markviii]

say goodnight ****....goodnight ****.

[ByTheLake]

Originally Posted by Ming

That's a dismal picture. Ouch.

Agreed ... this is such a hard time for the home team fans.

I just can't take it ... time to read happynews.com. That's right, nothing but uplifting good news for those of us that just can't take another sliver of negativity.

I'll just stick my head in the sand, read my happynews.com, and imagine that things couldn't be better.

[ghughes]

hi mark8 - you ****, dont count on the government letting ford and gm go under, they will let dcx, probably. The Joke's on you. Ford and GM are going to have to merge, the govt needs to give them a bridge loan for 3 years to make it happen. Merge the product lines, use common platforms, components, fire nearly all of each companys executives and replace them with very few people. Use the money saved to retain and beef up the engineering staffs- the new company- With $350 billion in sales it would be a much more competitive animal;

[mpsrent]

Like airlines, auto makers are monster corporations that consume cash at an alarming rate. Billions may only last a few months. There may not be enough time left for long term strategies.

Interesting point about the court of public opinion. GM's negative public image may be their greatest hurdle to overcome. It doesn't matter how much progress you make, how good your cars are or how competitive you are if the public is convinced that you are a losing proposition.

Not comments from a "the sky is falling in person", I'm just a realist.

[mkaresh]

Dan Howes is among the best in the business, and does a good job of summing up the current situation here.

Anyone here buying GM stock?

[fan]

The price of gas has almost doubled in the last 6 months. It's not only the price but mostly the price increase rate that scares the customers. John may buy a truck if he knows that the price will settle at 4$ a gallon, but won't buy it if it's likely that the price will be 8$ in half a year. So he waits.
I assume that sales of vehicles have fallen so sharp mainly because customers don't know what to expect regarding oil prices. More so, if one was considering buying a big truck.
For auto sales to increase, the more important thing would be to keep the price of the oil stable for the rest of the year. Be it 4.5$. The authorities should do something about it.
Yes, the future belongs to fuel efficient smaller vehicles, but if 2 years from now gas stays at say 4.5$, the trucks sales would rebound enough to sustain GM till new cars show up.
So, keeping the gas price at a stable value ( 4.5$ ) for a longer period would help auto industry alot. Ups and downs would do alot of harm.

[377Z]

Originally Posted by roteague

GM needs to get smaller and more fuel efficient vehicles on the road now, not in 2010. Their years-long development cycles aren't going to cut the mustard any longer. Yes, I realize GM has a very fuel efficient range, but the perception isn't there, and there aren't enough econo-boxes out. Beat, etc, needs to be on the road by the end of the year.

Its too bad this won't happen in part because they are regulated to DEATH.

[I-Love-Pontiac]

Originally Posted by 377Z

Its too bad this won't happen in part because they are regulated to DEATH.

What's that? Most of your money comes from SUVs? Well we'll have to make sure we regulate those bitches out of existence.

[geozinger]

Originally Posted by mpsrent

Like airlines, auto makers are monster corporations that consume cash at an alarming rate. Billions may only last a few months. There may not be enough time left for long term strategies.

Interesting point about the court of public opinion. GM's negative public image may be their greatest hurdle to overcome. It doesn't matter how much progress you make, how good your cars are or how competitive you are if the public is convinced that you are a losing proposition.

Not comments from a "the sky is falling in person", I'm just a realist.

I have one word for you: Hyundai.

They had an incredibly bad public image, not all that long ago. They have struggled mightily to retool their cars and increase reliability and to an extent have done so. They still have problems, particularly with their management (people bitch about Wagoner, but take a look at Kia/Hyundai's leadership sometime...).

However, GM, no matter what they do, just cannot buy a break here in the States.

What would it take to overcome this?

I have no clue.

Chrysler has the lifetime warranty on the drivetrain, but I don't see people lined up to buy their products. The 10 year warranty on the Hyundais worked for a while, but they have backed away from that I see.

Maybe GM should announce they have just become a Japanese company.

Maybe that would get folks to come back...

/humor

[377Z]

I meant more in terms of the myriad of safety & emissions regulations, and the fact that California is allowed to demand some of its own, and the fact that they are completely different from the EU.

With the effect of gas prices and the economic issues, I'm not too concerned with CAFE at this point.

[TimR]

Originally Posted by mkaresh

Anyone here buying GM stock?

I'm watching. It will drop further yet I'll bet (mid 12's, maybe 11's with more bad news (GMAC)). I'm willing to take a gamble with a small amount of shares (1000 maybe), people/media are in panic mode right now, hopefully that will settle out and things will carry on...with some luck to some good improvements next few years but its a long shot. The volt could be...could be...a game changer but they need it asap and they better not f*** it up!!

GM does have some good products but how you change perception is beyond me....that will take a long time.