[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.dll/article?AID=/20080625/OPINION03/806250359/1148/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]

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]

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]

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]

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]

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.

 

[windvale]

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;

GM and Ford have had decades - DECADES - to do everything you've suggested here...and they really have not been able to get very much done except the statis quo.

Do you really think that firing nearly all GM's executives will make a real difference ? Just curious - Who would you replace them with ? Beefing up the engineering staffs - with who ? $350 million in sales ? So what - why would $350 million in sales automatically make GM competitive ?

Face it, GM had it's chance during the last decade to change, and they fiddled while Rome burned. I'm thinking it's pretty much all over now except for the shouting...

 

[GM-Joe]

They will bounce back..

Bigger vehicles will pickup in September well gas prices and usage typically decline.

 

[ghughes]

"Just curious - Who would you replace them with ? Beefing up the engineering staffs - with who ? $350 million in sales ? So what - why would $350 million in sales automatically make GM competitive ?

Face it, GM had it's chance during the last decade to change, and they fiddled while Rome burned. I'm thinking it's pretty much all over now except for the shouting."

Yes, 350 billion is sales means that you can spread your costs more effectively and rationalizing both corp lineups would mean huge savings. $350 billion in sales would give them more access to cheaper credit- A key, here is the US govt floating them some tax forgiveness or loans to make this happen. I said fire most of the executives (finance, legal) and let those jobs go unfilled - that money goes to boost engineering depts., it would work well and really threaten the Japanese big-3. I do think its over for both ford and GM without something drastic like this scenario. Its pathetic, but only their combined share will now allow them to live.

 

[camaro_freak]

Bigger vehicles will pickup in September well gas prices and usage typically decline.

how overly optimistic. Gas prices will never dip below $3 again. We all better get used to higher prices, GM needs wisen up quickly and step up to the plate. They've had it easy over the last two decades focusing on the cash cow SUVs/trucks. We're witnessing an end to an era!

Small to mid size cars need to take top priority over everything else at this point.

 

[paul8488]

Another part of the problem is that people have gotten used to trading in their car much sooner than they really need to. It was too easy to do it for years (decades?). Few people drive their car into the ground and then buy a new one. People can very easily keep their current cars 10+ years, as opposed to trading every 3 like they've gotten used to. This is bad news for the automakers... they will continue to sell trucks and vans to companies that need them, for example, but Joe Q. Public with his 2004 Cobalt isn't going to be trading it in on a Suburban anytime soon.