GM Announces September Sales Down 45%; Tough Comparison To '08 Employee Discount Sale

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Originally Posted by 2002 Caddy

Not to worry Lutz and LaNeve have just announced the "next" program designed to attract new buyers to GM...

Sorry if this is a re-post... Straight from the mouth of Lutz...




I pity people who have to figure that out at the dealership...

I wonder as I plow through that list... I think I can buy a new Escalade and GM will pay me $4.98

Can we fire LaNeve now? I mean what more will it take?

Somewhere there is smoke coming out of Buickman's ears.

[akbar]

Originally Posted by ARCANGEL

To bad Ford continues to pay that back and is on course to have it all paid back by 2011-2012. Even when GM goes public what makes you so certain investors will jump in?

Investors will jump in if GM is profitable. Who would not invest in a company with little debt and good profits? So if I understand correctly, you are really asking whether GM will be profitable. Well, time will tell. GM still has to execute. Government financed bankruptcy has removed the burdens that was holding GM back and should help tremendously. We have to give atleast a year before making judgements.

[akbar]

Originally Posted by wescoent

So a secured loan is a FAILURE to borrow money?

Okaaaaaaaaaay....

Ford did not fail to ask for help (borrow money). They did a good job of getting the help they needed and are doing a good job of using that help so far.
By failure I am referring to the failure of their business plan/model/strategy (just like GM) before getting the money.
Even before the financial meltdown, Ford reached a point where they realized that all the restructuring thay had done till then would not see them through their slow sales and dwindling market share, even with an industry volume of 14 to 15 million projected at the time. They needed more money to restructure for much lower sales than they thought they could win in the market. So they went and gave up all their assets including the blue oval logo to the banks. Basically an admission that we are doomed unless we get outside help. Banks being what they are, are usually waiting for opportunities like these. So they said, sure we will give you the money as long as you pay us such and such rate and you do the things we prescribe you to do - much like what Govt said to GM.
GM at the time figured that they could survive at industry volumes of 15 million till 2010 when VEBA kicked in. So why take on more debt if they did not need to? Now whether they figured right, or whether they overestimated their sales potential is some thing I dont know - and I dont think anybody else on this forum knows regardless of what they claim.
When the economy tanked, and GM went through the government financed bankruptcy to be viable at 10 million sales volume, banks and UAW had no options but to give Ford the same concessions (reduce debt for equity, take equity for VEBA obligation) as GM got, if they hoped to get their money back or survive. Besides swapping debt for equity is really not a concession under the circumstances. Banks are getting stock dirt cheap at a time when the industry has hit rock bottom. There is no way but up from here albeit slowly. When the economy gathers steam, they will play a masterful role in boosting up stock values and get out covering their margins and some more.

[Extreme4x4]

There are a few holes in your "theory."

First, the banks do not tell Ford to do anything. They are a lender, not an owner. As long as Ford makes their payments, which they do, they are happy. Collateral is just that............. in case of default.

Your other falacy is that GM did not seek the same type of loans that Ford did. They did. Their presentation was pathetic, and they had no plan. They basically thought that the banks should just shower them with money because they are GM. It didn't work.

Nobody has argued that Ford was not in terrible shape, least of all Ford. When they made their presentation, for their mortgage, they were completely humble. They admitted that they has screwed up, and had a solid and complete plan to fix their business. Mulally had been through a major restructuring before, so he know just how expensive it is.

This plan is the same one that Ford is still executing today. Unlike GM, they have stuck to their plan, with minor modifications due to the severity of the recession. This is why they are showing progress.

GM, on the other hand, still seems to have very little direction. They are still making and changing decisions left and right.

Thus, one company has excellent management. The other............... not so much so.............. at least so far.

[akbar]

[quote=2002 Caddy;1859649]I know that some on this forum constantly try and rewrite history... But that is a new record! "They did due diligence, analyzed the medium to long term prospects of the automotive market"

That made coffee come out of my nose.

The truth was the last administration was in FULL panic.. They were ramming one bail out after another through congress. They went to congress with a bailout for GM and Chrysler. Congress said no thanks, and on Dec 24th 2008 the Prez, gave the money anyway... There was NO due diligence, there was NO analysis of medium and long term potential... In fact no one really looked at the numbers until around February when we all discovered that everything that had been presented was BS... They were given 30 days to come up with a real plan and the Prez fired Rick.

"Very good chance of pay-off!" Just about anyone who actually looked at the business plan though there ZERO chance of a pay off... Even during the first meeting with congress (remember the one where they all got in trouble for flying gulfstreams) The congressional economist said at that meeting that this was the first of several payments needed and that it would take over 100 Billion to prevent GM from going into bankruptcy. Turns out.. He was right.

How soon we all forget.

Actual "dole" the money out to GM was exactly what they did.

QUOTE]
When I mentioned "due diligence" I was referring to the actions the Obama administration took. Previous administration did not have the time to do anything. They gave enough money for GM to last 3 months, under the assumption that the next admin will dig deep and determine the appropriate course of action.
I agree to your point that Obama's team did study the plan, figured it was not enough and fired Rick because of it. They pretty much told GM, UAW and other stake holders waht needed to be done before they comitted taxpayer money. This is what I was referring to as "due diligence".
Whether this will be enough to see GM through remains to be seen.

[akbar]

Originally Posted by Extreme4x4

There are a few holes in your "theory."

First, the banks do not tell Ford to do anything. They are a lender, not an owner. As long as Ford makes their payments, which they do, they are happy. Collateral is just that............. in case of default.

Your other falacy is that GM did not seek the same type of loans that Ford did. They did. Their presentation was pathetic, and they had no plan. They basically thought that the banks should just shower them with money because they are GM. It didn't work.

Nobody has argued that Ford was not in terrible shape, least of all Ford. When they made their presentation, for their mortgage, they were completely humble. They admitted that they has screwed up, and had a solid and complete plan to fix their business. Mulally had been through a major restructuring before, so he know just how expensive it is.

This plan is the same one that Ford is still executing today. Unlike GM, they have stuck to their plan, with minor modifications due to the severity of the recession. This is why they are showing progress.

GM, on the other hand, still seems to have very little direction. They are still making and changing decisions left and right.

Thus, one company has excellent management. The other............... not so much so.............. at least so far.

Banks may not have told Ford what they needed to do explicitly, but they have to buy into Ford's plan before they lend a cent out - in essence companys have to figure out what the banks will want them to do. Ford had hired a banker consultant (the same one that GM had hired earlier, he is now on GM's board if I am not mistaken) several months before they went to the banks. That was presumably to figure out what kind of restructuring plan they would have to present to get loans from the bank.

I will take your word that GM also sought loans but did not get it as they did not present a good plan. May be so, but as I have mentioned GM figured that they could survive till 2010 (based on then projected industry volumes) and at that point were not yet in a position, unlike Ford, where their survival depended on the loans. I am going to speculate here (as my speculation is as good as yours, unless you are privy to all the numbers that accounatnts at these companys have) that due to lack of a desperate need at the time GM may have looked for loans at terms not favorable to these banks so they dismissed their plans as a joke.
I have never argued that Ford was not humble while securing loans or their management is incompetent. I am only arguing the claims that only GM failed. IMO both failed at differnt points in time and both secured help, but through different means.
The plan is not the same one has Ford agreed to when they secured loans. They had to go back to UAW and banks for debt to equity swaps (these are not minor modifications) to compete at the new reality of 10 million volumes. They got those thanks to GM leading the way through govt controlled bankruptcy.
It appears that GM is changing their decisions frequently, because their internal product debates are keenly publicized here at GMI. Since bankruptcy their major decisions on - no of brands closing, no of plants closing and no of dealers closing are largely the same.

[Extreme4x4]

Some of what you say is correct, some is not.

Ask wescoent about GM's asking for a loan, through the same channels that Ford did. What does wescoent know about it?? Lets just say that he is privy to this information, due to the fact that he performs risk assessments for JP Morgan. In other words, he has DIRECT information.

As for Ford completing debt to equity swaps and getting UAW concessions. This is called smart business, and smart money. If they did not take advantage of the huge rise in their stock value, they would be idiots. If they did not pursue the same concessions from the UAW, they would again be idiots. They are maintaining their competitive position through their own actions, not the governments.

Frankly, I am tired of people looking at Ford and GM's situation, and saying that they are the same. It is BS. One is a company doing it on their own (remember that GM was unable to make a suitable presentation to the same bankers that Ford used), and the other threw up their hands, and took the "easy" way out. In other words, one is doing it the "American way." The other is trying to do it the copout way, due to their continued managerial incompetance. One grew up, the other didn't.

We will see if GM "learned their lesson." Paint me skeptical.

[akbar]

Originally Posted by Extreme4x4

Some of what you say is correct, some is not.

Ask wescoent about GM's asking for a loan, through the same channels that Ford did. What does wescoent know about it?? Lets just say that he is privy to this information, due to the fact that he performs risk assessments for JP Morgan. In other words, he has DIRECT information.

As for Ford completing debt to equity swaps and getting UAW concessions. This is called smart business, and smart money. If they did not take advantage of the huge rise in their stock value, they would be idiots. If they did not pursue the same concessions from the UAW, they would again be idiots. They are maintaining their competitive position through their own actions, not the governments.

Frankly, I am tired of people looking at Ford and GM's situation, and saying that they are the same. It is BS. One is a company doing it on their own (remember that GM was unable to make a suitable presentation to the same bankers that Ford used), and the other threw up their hands, and took the "easy" way out. In other words, one is doing it the "American way." The other is trying to do it the copout way, due to their continued managerial incompetance. One grew up, the other didn't.

We will see if GM "learned their lesson." Paint me skeptical.

I agree Ford is doing the smart thing to get their debt obligations to the Bank and UAW reduced. They have to if they are going to survive this finacial meltdown and stay competitive with GM. But it was not in their original "visionary plans" and they took these actions in response to GM bankruptcy. UAW and banks are more than obliged to change their agreements with Ford as it is in their interest for Ford to be competitive and survive.
Bankruptcy laws are American laws. GM's bankruptcy went through the American court system. The claims of creditors were considered and dismissed by the courts. So I dont see why this bankruptcy is not the "American way" in your eyes. I also dont see this as GM taking the "easy" way out, when you consider that their CEO and 35% of their executives were fired, their board was dismissed, several thousand employees and plants and dealers were closed, their share holders lost their value.
Maybe you are hung up on the fact that the Govt financed the bankruptcy. Well the alternative was to let GM go to liquidation and let the money lenders feed on the remains of GM. I dont see what would have been so noble and redeeming about that process.
Basically your case of GM's incompetence is based on what a money lender says here on this forum. I have no motivation to vouch for GM's managerial competence and may be his portrayal of the supposed GM loan application process is right, but what about the "American way" of listening to both sides of the story and then reaching a conclusion? As far as I can remember there were stories about Ford approaching the banks for the loan in the media,and how it was critical for them to acquire it. But I cant recall even one story in auto or finance media about GM seeking loans and their motivation for it. If you can dig up stories that can detail when and why GM sought loans and why they were rejected I will be happy to be enlightened. If not I think our debate can only be settled in time. So let us wait and revisit this in 12 to 18 months.

[K-1]

Originally Posted by Extreme4x4

Frankly, I am tired of people looking at Ford and GM's situation, and saying that they are the same. It is BS. One is a company doing it on their own (remember that GM was unable to make a suitable presentation to the same bankers that Ford used), and the other threw up their hands, and took the "easy" way out. In other words, one is doing it the "American way." The other is trying to do it the copout way, due to their continued managerial incompetance. One grew up, the other didn't.

And when Ford does their debt-equity swap, it becomes a different means to the same end. Their debt becomes equity ownership; same as GM.

[Extreme4x4]

One is voluntary, the other is not.

That you cannot see the difference................... well, that is not my problem.

[K-1]

Originally Posted by Extreme4x4

One is voluntary, the other is not.

That you cannot see the difference................... well, that is not my problem.

The other option is defaulting on the loan. That doesn't exactly make the D-E swap "voluntary." Enough with the Ford sack licking already. Different means, same end.