J.D. Power Warns of "Outright Collapse" of Auto Industry

[kenman923]

It will be rough, but I think they are overstating it a little bit.

[Steel4ring]

There is news on the wire of a GM Chrysler Merger deal in the works!!!!

[shorod]

Cash is not the problem. There is plenty of cash out their, the problem is getting people to spend it. That is what caused the banking collapse in 1932, people would not spend money. Once the credit markets ease, their will be money flowing again. If the credit markets don't ease, well GM and Ford might be the first companies to go, but everyone else will follow, it will take just a little longer. The best thing all of us can do is spend some money. Hey, I just purchased 200 shares of GE stock. In three years I expect to see it nicely up! As for GM and Ford, I've already said the best thing for them is to go private.

[TriShield]

Originally Posted by Citation84

GM's Sept sales weren't down as massively as they have been month to month because they drew buyers ahead with their employee pricing orgy. Watch what happens next month. And the month after. People who consider GM cars wait for the "deal". If there aren't any deals they don't buy, and those that were planning on buying already got theirs, probably earlier than expected because of the special pricing. Of course their #s looked better. And their FLEET sales were up in Sept. as well. I read Malibu was only 49% retail for the month, the rest went to the fleets. That's Chrysler territory, almost.

Those sales numbers do nothing but illustrate how bad off GM is. Many of their cars including the Malibu are fleet queens and GM has to firesale them to get people to purchase them at all. GM annihilates their profit, resale and brand equity with every new gimick they come up with to try and move cars.

[TriShield]

Originally Posted by shorod

Cash is not the problem. There is plenty of cash out their, the problem is getting people to spend it.

If cash isn't a problem then why are the trying to sell everything? How is only having enough cash on hand to operate a year having plenty on hand?

[Citation84]

Originally Posted by TriShield

Those sales numbers do nothing but illustrate how bad off GM is. Many of their cars including the Malibu are fleet queens and GM has to firesale them to get people to purchase them at all. GM annihilates their profit, resale and brand equity with every new gimick they come up with to try and move cars.

Truly.... that quote "lipstick on a ....." comes to mind

[AMERICA 123]

Originally Posted by miken123

This reminds me of (what i think is) a good quote by Lee Iaccoca. Something his dad taught him. Back when Chrysler was at the brink of destruction, many companies came to talk merger. One was DeLorean of DMC, who was also struggling to get his show going.

Iaccoca's dad always told him two losers should never partner together expecting to get a win out of it.

That was actually in regards to Chrysler and Fiat.

[mobyss]

Well, there's no doubt that the current economic downturn will be looked back upon as an "inflection point" in US history - like the big wars, the Great Depression, Kennedy assassination, 9/11, etc. Government policy is changing in incredible ways, and the concept of "free market" capitalism will be drastically different from now on. Be ready for government ownership of 10 to 20% of every large bank, manufacturer, and energy company for a long time. Communism? Maybe, but in the name of "societal stabilty" most people will sheepishly accept it. Some welcome it - thus the support for Obama and other very far-left socialist politicians.

In the car business, the US market in particular - I forsee changes that almost none of us can imagine now. GM could possibly have to sell or close down four of their divisions - Hummer, Saab, Buick, and Saturn in the next two or three years, and perhaps merge all remaining GMC, Pontiac, and Cadillac dealerships together, closing about 50% of them in the process. Chevrolet will continue as a full-line brand, but with many fewer trucks and SUVs being sold - probably less than half of 2005 levels, and also with about half the dealerships.

Ford might have to eliminate Mercury and Lincoln, and sell Volvo. Chrysler could very well be sold for scrap, and some of the US factories sold to the Chinese, Koreans to build sub-$10,000 econocars. The Jeep and Dodge truck brands have some value - maybe Nissan will pick up Dodge truck since they are giving up on the Titan, and Jeep could go to the Indian owners of Land Rover - Tata - as an entry-level SUV line?

The credit crunch will not end until all the poison is through the system - 2010 at the earliest. With money as tight as it is now, and will be for the next 18 to 24 months, car sales will dip down to 7 or 8 million a year - less than half the peak from a few years ago. All the pull-ahead from 2004 to now will finally catch up, and people will just drive what they have, or swap used cars among themselves to get what they need - trucks for real work, cars and minivans for passenger vehicles.

Gas should settle around $2.50 a gallon, but it will be cash-and-carry for most people, since the next domino to fall will be credit card limits. The days of "charge it and go" will be over.

[scooter10572]

Originally Posted by Caleb02

gm and ford have already gone under, they are dead, lets face it, the american auto industry is a thing of the past. Ford and Gm and Chrysler will get bought out by a chinesse company who will close them down and use their platforms and move production to were it should be china. China is the new america..

Are you a complete moron?Because you sure talk like it,**** china last time I checked this was AMERICA and morons like you dont help this country.Let me guess you drive an import right?Go live somewhere else if you think china should own OUR auto industry.I hear china's booming,you can get a job working 14 hours a day for 50 cents an hour.PLEASE rattle your head around to make your marbles wake up before you say such ignorant ramblings!!!!

[PhishPhood]

Originally Posted by TriShield

If cash isn't a problem then why are the trying to sell everything? How is only having enough cash on hand to operate a year having plenty on hand?

I agree here. It appears that they realize that they really don't have enough cash to scrape though to 2010. First they're burning too much on a monthly basis so they've got to cut back severely on expenses. Second with the banks not willing to lend to other banks just think how far down the lending chain Ford and GM are? I'm sure that they've been told by their bankers that when things loosen up that there will be no loans anymore.

Just to get by until some future turn-around they now have to sell off the lights, carpets and grandma's heirlooms.

Banks won't lend to banks so no one will lend to junk bond creaters. This literally is the 'perfect storm' for the detroiters. Years of mismanagement, bad product, intense competition and an aging workforce set the stage for three weakened businesses teetering on the edge. But then a sudden surge in fuel killed off the most profitable products in the portfolio and then due to no fault of their own the credit crunch pulled the rug out from underneath all their efforts to recover.

[PA Dweller]

I thought things were bad, but I never expected it to get like this.

[blawrence73]

Originally Posted by Caleb02

gm and ford have already gone under, they are dead, lets face it, the american auto industry is a thing of the past. Ford and Gm and Chrysler will get bought out by a chinesse company who will close them down and use their platforms and move production to were it should be china. China is the new america..

What you say sounds drastic, but I've been thinking the same thing for the past 3 years. I hope we are both very,very wrong-but I'm bad afraid that we are not!

[Millefune]

Originally Posted by scooter10572

Are you a complete moron?Because you sure talk like it,**** china last time I checked this was AMERICA and morons like you dont help this country.Let me guess you drive an import right?Go live somewhere else if you think china should own OUR auto industry.I hear china's booming,you can get a job working 14 hours a day for 50 cents an hour.PLEASE rattle your head around to make your marbles wake up before you say such ignorant ramblings!!!!

Originally Posted by blawrence73

What you say sounds drastic, but I've been thinking the same thing for the past 3 years. I hope we are both very,very wrong-but I'm bad afraid that we are not!

All you newer folks will learn to just ignore Caleb02's posts eventually. I at first read them and responded, but if you stay here long enough, you'll see that most people don't really listen to him. I've gotten to the point where I don't read his posts at all, and just skip over them. Only read this last one because it was part of your guys' posts.

[Bigbee60]

Originally Posted by PhishPhood

I'm sure that they've been told by their bankers that when things loosen up that there will be no loans anymore.

Are you an economist or just play one on TV??

Risk = Return to banks. Even in a down economy, you need the portfolio to have rate adjusted, risk assets. Not all banks are sick and not all lending markets are frozen.

Use real facts - your opinion doesn't hold water.

[yoblues]

In the words of Roy Orbison.....IT'S OVERRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR! Not only is GM over lots of companies are over. The whole CONSUMER/DEBT economy we have built since 1980 has collapsed. There will be no more easy credit. No more 10 credit cards for you. No more easy home loans. No more easy equity loans (if anyone outside Beverly hills has any equity left in their house anymore). It's done you now have to live within your paycheck which means the American Dream is over for most of you because your paycheck in a service economy with no easy credit is worth squat........