[steinravnik]

GM Debt Outlook Cut to Negative By Moody's on GMAC

April 25 (Bloomberg) -- General Motors Corp.'s debt outlook was cut to negative by Moody's Investors Service on concern that problems at its part-owned GMAC LLC finance company might hurt the automaker's ability to offer vehicle loans.

Moody's today kept GM's rating unchanged at B3, or six steps below investment grade. Its outlook on the Detroit-based automaker had been stable.

GMAC, which is owned 49 percent by GM and provides a majority of its car loans, yesterday said it arranged a $750 million revolving credit facility for its Residential Capital LLC home-lending business after defaults on housing loans rose and ResCap's cash ran short.

The finance company's support for ResCap ``could weaken GMAC's own credit profile and limit its ability to access the secured and unsecured debt markets,'' Moody's analyst Bruce Clark wrote in a report. ``Moody's views the potential erosion in GMAC's credit profile and its ability to fund retail and wholesale receivables as a material risk factor for GM.''

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=arOmoWk9f1u0

 

[kenman923]

That could add more insult to injury in GM's comeback.

 

[dav305z]

Funny how decisions that seem stupid at one time can turn out to be brilliant in hind sight.

When GM sold the majority stake in GMAC, it was their main profit engine. Had they kept it, they might have been sunk.

 

[jkr2106]

Funny how decisions that seem stupid at one time can turn out to be brilliant in hind sight.

When GM sold the majority stake in GMAC, it was their main profit engine. Had they kept it, they might have been sunk.

Yea...it's things like that that make me really hopeful for GM's future. They are apparently pretty smart people. So whenever they do something that seems stupid to me, I try to give them the benefit of the doubt now.

 

[New_Mexico_Sunset_on_Rt66]

They are apparently pretty smart people.

Gee, thanks Mr. Obvious.

 

[iamwin]

Time to buy more GM retail bonds coming up? I think so.

 

[vam29]

Too bad GMAC didn't sell all of the mortgage business to Cerberus and keep only the automotive part responsible for financing retail and wholesale operations when they had the chance to do so. If they had, they would be a much stronger company today by sticking to what they know best.

 

[Buickman]

how many more negatives before people wake up and realize what a disaster Red Ink Rick truly is?

 

[jkr2106]

Gee, thanks Mr. Obvious.

WOW...hostile much? Believe it or not, many don't agree with us so it's not all that obvious. That was more tongue-in-cheek than anything and intended for those on this board that dislike Rick and Lutz.

BTW--no offense if any of you dislike them; we all have our opinions...

 

[Buickman]

WOW...hostile much? Believe it or not, many don't agree with us so it's not all that obvious. That was more tongue-in-cheek than anything and intended for those on this board that dislike Rick and Lutz.

BTW--no offense if any of you dislike them; we all have our opinions...

rather than a matter of liking, it's a matter of results. when one looks at the record of Red Ink Rick, the result is nausea.

 

[jkr2106]

rather than a matter of liking, it's a matter of results. when one looks at the record of Red Ink Rick, the result is nausea.

I can definately understand your perspective. Here's my train of thought (of course feel free to critique it):

GM is profitable in every region of its core business (car sales) except NA. That leads me to believe there is something amiss in the home market rather than a problem with central management (because they seem to be doing something right elsewhere). Just from my own understanding, it seems people are still reeling from past mistakes GM has made and the perception that has caused without really recognizing new strides in product execution. Now, these mistakes (for which the public still holds GM accountable) are not Rick's fault. Actually many (most?) happened when GM was profitable. So, to say profitability is not important would be foolish of me, but at the same time, I think there is more that is important to the long term success of a company than quarterly results. We can just check out GM's history for that.

 

[Buickman]

I can definately understand your perspective. Here's my train of thought (of course feel free to critique it):

GM is profitable in every region of its core business (car sales) except NA. That leads me to believe there is something amiss in the home market rather than a problem with central management (because they seem to be doing something right elsewhere). Just from my own understanding, it seems people are still reeling from past mistakes GM has made and the perception that has caused without really recognizing new strides in product execution. Now, these mistakes (for which the public still holds GM accountable) are not Rick's fault. Actually many (most?) happened when GM was profitable. So, to say profitability is not important would be foolish of me, but at the same time, I think there is more that is important to the long term success of a company than quarterly results. We can just check out GM's history for that.

the problem here in the US is the absolutely horrific marketing which shows no sign of changing soon. in spite of Total Value Promise we have once again a $1000 cash bonus offer for the last four days of the month. all month long we struggle then go bananas as CSI suffers, customers are slammed through the system, and buyers earlier in the month ride in their new vehicles realizing they over paid. in the meantime our brands suffer from the distress merchandising with low ball full page ads detailing the giveaways. so many millions upon millions are wasted and simultaneously long term damage is done to brand equity. they just don't get it.

today for example, using GM discount a Saturn Aura can be leased for less than $200/month. add another $100 if you want a Malibu, same car basically. G6s and other models offer similar giveaways as GM tries to make up for a disastrous month by buying business at month end. Return to Greatness would solve this problem and lead to healthy, profitable sales through effective marketing.

 

[jkr2106]

the problem here in the US is the absolutely horrific marketing which shows no sign of changing soon. in spite of Total Value Promise we have once again a $1000 cash bonus offer for the last four days of the month. all month long we struggle then go bananas as CSI suffers, customers are slammed through the system, and buyers earlier in the month ride in their new vehicles realizing they over paid. in the meantime our brands suffer from the distress merchandising with low ball full page ads detailing the giveaways. so many millions upon millions are wasted and simultaneously long term damage is done to brand equity. they just don't get it.

today for example, using GM discount a Saturn Aura can be leased for less than $200/month. add another $100 if you want a Malibu, same car basically. G6s and other models offer similar giveaways as GM tries to make up for a disastrous month by buying business at month end. Return to Greatness would solve this problem and lead to healthy, profitable sales through effective marketing.

I don't think GM likes doing that. IIRC, cars in China don't sell that way. I think things are just hard in the US because of perception and all. If GM keeps producing top notch product then perception will change.

To be honest, I've been a GM fan for a while (I like rooting for the home team), but it wasn't until the 08CTS/Enclave/AeroX/Malibu/Camero concepts era that I would actually recommend GM cars to people. Before that my family bought Nissans because that was the better overall package for us. Now, I'm seeing a change in GM cars and I think the public will eventually see that as well.

All that is to say that objectively, GM cars were lacking in a number of areas. As much as I wanted to support them, I couldn't. Now (and at least by 2011) there is be a very desireable lineup that anyone would be hardpressed to critique. Start counting the number of years it takes for GM to rebound from now, not from when Rick took office. He had to fix a number of things, but for the most part they are being worked out. It took a long time to get here, it won't be easy to return to their status in the '60s.

Where all that ties into the cash back issue is that once people start getting an understanding of a new GM, they will start paying more for it. And I'm just argueing that will take time.

 

[TriShield]

This throws fuel on GM's cash burn fire, accelerating their trip to bankruptcy.

 

[Buickman]

This throws fuel on GM's cash burn fire, accelerating their trip to bankruptcy.

it will be my distinct pleasure to contradict GRW (RIR) at the Annual Meeting. after his rosy speech, the truth will be detailed and he will be again exposed for the phony, corrupt puppet that he is.