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Automotive News & Views Do You Favor A Government Loan To The Detroit 3?
3958 messages, Last post on Oct 02, 2009 at 4:52 PM
You are in the Automotive News & Views Forum. Your Hosts are steve_ & claires
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Replying to: farout (Dec 05, 2008 11:00 am) I think Senator Shelby from Ala is doing the job of protecting his state's parochial interests in protecting the transplants in his state and region of the country and in a condescending and arrogant manner. He seems like a nasty SOB but he must bring home the pork. Personally, I think we need to provide some "interim" loan financing until the Detroit 3 issues are resolved one way or the other over the next several months. I'm not a fan of government involvement in business, but I'm also a realist about what's best for the country short term. The last thing we need is massive auto related unemployment right now on top of the already ugly jobs situation. Its going to be a serious recession as it is, add all the impact from a sudden Detroit 3 collapse and we may be headed for a depression. The transplants won't quickly take over the plants. Heck, they won't even be able to meet all of the replacement demand if GM, Ford and Chrysler fold. Not only do they not locate in union areas, but high unemployment will affect their business as well, not to mention many auto parts vendors going under. In fact, high unemployment is going to impact most every US business soon if things don't start improving. We are in deep do-do as demonstrated by even oil prices crashing down. The Detroit 3 may not be the answer to our auto needs long term, but let's not shoot ourselves in the foot short term. |
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Replying to: steve_ (Dec 05, 2008 2:35 pm) Congress approved funds of $25B to help D3 meet fuel efficiency rules in September. Since then, sales plummeted for the entire global auto industry. The LEADERS of the D3 are on a second try to get any funding to survive the New Year. The economy in the meantime plummets to 30 year records and some first time ever records. Next week congress will most likely approve stop-gap funding with strings attached, I assume out of the $25B fuel-efficiency funds which will need amending to release. Time is short. I believe in December, the economy will at least mimic November in the current trend in a slew of categories. OK, enough BS. My question is: Does anyone really believe all of the D3 will make it out of 2009? Regards, OW
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Replying to: berri (Dec 05, 2008 4:33 pm)
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Replying to: jimbres (Dec 05, 2008 3:10 pm) Amen to that. It is easier to make more money than it is to survive a nuclear war. I would look for the Chinese to buy up the pieces of GM. They love the Buick in China. They will soon pass US as the number one car buying nation. They will need the capacity. |
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Replying to: circlew (Dec 05, 2008 4:49 pm) Only if the UAW makes "real" and meaningful concessions. Then I can see Ford making it and GM only if they do some quick and massive restructuring. Chrysler is probably through unless Ceberus puts up more money and I think that should be a condition for any government loans there. Having said that, I think the question becomes more like will any of them make it through 2011? That may be more doubtful, but by then hopefully the economy is rolling again and can better absorb the Detroit 3 collapse, or at least the failure of GM and Chrysler.
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Replying to: tpe (Dec 05, 2008 4:53 pm) Very good observation. I think that is what Obama has in mind. His stimulus package is asking for $136 billion to start immediately repairing roads and bridges around the USA. He claims each billion spent will put 40,000 people back to work. Just $34 billion would employ 1.360,000 people. Far more than the Big 3 represents. Those workers will stimulate the buying of whatever cars are left. Problem solved. May the best products come out on top for all of US. |
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Replying to: tpe (Dec 05, 2008 4:53 pm)
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Replying to: chikoo (Dec 05, 2008 2:49 pm)  He seemed like one of those people who buys the flag, not the vehicle. That's his choice, but one must remember how many of these American car companies came to be: through bankruptcies, mergers, and acquisitions. Anyone remember Packard? Hudson? American Motors/AMC? They never got bailed out. They failed or got bought. Even if, for example, Chrysler went bankrupt, there's still the matter of the Viper, and the Caravan. Hey, VW might buy Chrysler to secure their minivan source, since they're selling a version of it now. And there's plenty of people who wouldn't want to see the Viper go away...potential buyers of whom some are rich enough to be potential buyers for the design and rights. Same story with GM and the 'Vette. Can you imagine a car nut, like, say, Jay Leno allowing one of those famous names to die off? GM or Chrysler going BK would be rough, but not the end of the world like some would want us to think. And yes, I always insist on separating Ford out, because Ford is in a VERY different financial and market position from the other two these days. |
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Replying to: joel0622 (Dec 05, 2008 2:56 pm) Yes, the "Buying American Cars, What Does It Mean?" forum has been going on for a number of years now.  Since the profit margins on vehicles are well under 10% (0% at the D3), that means most of the car costs stay in the country of assembly/sale. For example: Sales price - $10,000 (just for round numbers) Profit to automaker in home country - no more than $1000, likely much less Money to dealer, transport truck company, paint shop, parts shops, assembly plant, parts suppliers located in the USA - $6000 Money to outside the country for non-US made parts (lets say $3000). Note that all cars, both Detroit badged and others, have many parts from outside the US - transmissions, fuel injection parts, spark plugs, radios, etc. The differences in parts sourcing between US and foreign nameplates is not all that great anymore. When we talk about "My country" let's make sure we are talking about U.S jobs and are not using "My country" as camouflage for "UAW". |
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Replying to: berri (Dec 05, 2008 4:33 pm) All 3 are not going to go out of business the same day. Ford can last at least a year longer than GM. The company that currently owns Chrysler, can either fund them, or sell them. not to mention many auto parts vendors going under. If a vendor is dependant on only GM for it's income, that was a bad business decision. In fact, high unemployment is going to impact most every US business soon if things don't start improving. We are in deep do-do as demonstrated by even oil prices crashing down. GM will need to cut jobs, with or without a bailout. They are simply building way more cars than they can sell (at a profit). Discounting cars to the point of loosing money on each one, just to get rid of them, will not work anymore. They have no more money to waste. At least I hope they don't get more. You say "Impact every business soon". Well, are we going to bailout every company that has financial trouble? Where do you draw the line? |
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