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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: kdhspyder (Dec 06, 2008 3:25 pm) Ironic that the one who arguably had nothing to do with this mess is the one who can clearly see the problem...another reason why I believe that Ford will be the last man standing. |
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SUVs at altar, Detroit church prays for a bailout DETROIT, Dec 7 (Reuters) - With sport-utility vehicles at the altar and auto workers in the pews, one of Detroit's largest churches on Sunday offered up prayers for Congress to bail out the struggling auto industry. "We have never seen as midnight an hour as we face this week," the Rev. Charles Ellis told several thousand congregants at a rousing service at Detroit's Greater Grace Temple. "This week, lives are hanging above an abyss of uncertainty as both houses of Congress decide whether to extend a helping hand." Local car dealerships donated three hybrid SUVs to be displayed during the service, one from each of the Big Three. A Ford Escape, Chevy Tahoe from GM and a Chrysler Aspen were parked just in front of the choir and behind the pulpit. Ellis said he and other Detroit ministers would pray and fast until Congress voted on a bailout for Detroit's embattled automakers. He urged his congregation to do the same. Other Detroit-area religious leaders -- including Christian, Muslim and Jewish leaders convened by Cardinal Adam Maida -- have urged Congress to approve an auto aid package. But the service dedicated to saving Motown's signature industry at Greater Grace Temple was the highest profile effort to mobilize support yet. |
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You'll see in the below the Chicago Tribune is going Ch11. The whole newspaper industry is seeing less advertising $. I'd guess so is every newspaper, and every magazine, and every TV and radio station. Are we going to bail them out too? http://www.marketwatch.com/news/story/Tribune-could-file-bankruptcy-WSJ/story.as- px?guid=%7B71F8BA18%2D2283%2D4844%2D8818%2D6269BB00CF08%7D Or Dow Chemical this morning announced an 11% cut in employment and 20 plants closing. I guess they don't have any lobbyists? Maybe when Dupont and Exxon Mobil cut they can all go for a bailout too? Oh, I can't forget the homebuilders. Let's bail them out too. And I hear income in Vegas is down; we can't let that area which is already suffering large home price decreases to suffer more. How about bailing out all of Nevada? |
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Strings attached Congress could set tough bailout conditions. Here are some possibilities. •Appoint a "car czar" to oversee automakers' restructuring •Force companies to file for bankruptcy if they don't meet loan terms •Require GM and Chrysler to merge •Cut hourly workers' compensation and scrap the UAW Jobs Bank •Compel bondholders to accept a debt-for-equity swap •Prevent companies from lobbying against states' global warming initiatives Nothing about dealer franchises, at least not that I can see. If they force GM and Chrysler to merge, they will have 11 brands and what, 10,000 dealers? How will they rid themselves of the 7000 dealers and 7-8 brands they need to? Will the "car czar" have a hand in that, and the ability to suspend existing laws in this area so that the necessary cuts can be made? http://www.autonews.com/article/20081208/ANA03/812080320/1200 (registration link) PS there is also this: Some lawmakers floated the idea of requiring financial institutions that are getting federal aid from the $700 billion rescue package to make loans to automakers. While that sounds intuitively tempting, I think it would be a bad idea - we only just got done rescuing them from bad debts, now we want to saddle them with new ones?
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here's an interesting article highlighting an ad that GM is running basically apologizing to the public. It seems like they finally get it. This is the tone they should have had during their first visit to Washington back in November. http://www.autonews.com/article/20081208/ANA02/312089881/1018 I'm not an economist nor an expert in the auto industry but the numbers just don't add up for GM. They are $66B in debt; their common stock is worth less than $5B; they have made a profit since 2004 when sales were over 16m; there is no way they will show a profit with current sales and structure; too many dealerships that will require billions to close; etc. I'm in favor of a pre-packaged bankruptcy so we can save some jobs and get GM to profitability. |
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Here's an article on the Saturn franchises. Supposedly, their franchise agreement is unique and may allow GM to kill this brand fairly inexpensively. Of course it could all in up in court. DETROIT — Saturn's franchise agreement is different from those of General Motors' other brands. The Saturn agreement required dealers to sign the Federal Trade Commission's Franchise Disclosure document, says Mark Johnson, president of financial advisory and brokerage firm MD Johnson near Seattle. Subscribe to Automotive News "Nobody at any car store since the beginning of time has ever signed one of those except Saturn dealers," Johnson says. "The whole document tells you how you could potentially lose all of your investment through debt and losses through this franchise." Saturn confirms the unique agreement. Saturn spokesman Steve Janisse says, "Everything was done differently with Saturn, and this was one of those things." Janisse says Saturn has a different legal structure from other GM brands. Saturn has a Franchise Operations Team, which has a limited say in brand operations. The FTC document favors the manufacturer, Johnson says, "so GM is in a much better position to terminate Saturn than any other manufacturer with any other brand." In the late 1980s, GM cherry-picked the best dealers for the new dealer network. The dealers have heavily influenced the company. Janisse says GM's seven other brands operate under a Dealer Sales and Service Agreement, a personal service agreement between the dealer and GM. For dealers, Johnson says, the good news is that state franchise laws probably would trump any signed documents in a court of law.
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Replying to: nippononly (Dec 08, 2008 8:14 am) I think it is too late for GM to do any good for Chrysler or the other way around. Sell Jeep to Ford and let the rest be liquidated. Doesn't Ford own Cummins diesel? They could get rid of that PowerStroke junk and start using the Cummins in their trucks. Trying to rid themselves of dealers is too costly. Let GM just go into bankruptcy and the dealers will fall on their own. Most are ready to kick the bucket right now. Let Ford survive as a much stronger AMERICAN automaker. The Big 3 are pathetic and no amount of bailout is going to save all 3. We need to get it over with and done. Then the rebuilding can begin. Next year will be just slow bleeding if we try to keep all three going.
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Replying to: nippononly (Dec 08, 2008 8:14 am) While that sounds intuitively tempting, I think it would be a bad idea - we only just got done rescuing them from bad debts, now we want to saddle them with new ones? The automakers are the ultimate subprime borrowers. |
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Replying to: dtownfb (Dec 08, 2008 9:03 am) nippononly, "What if GM Dumps Saturn?" #21, 8 Dec 2008 8:25 am
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Replying to: steve_ (Dec 08, 2008 9:50 am) None of them do, that's the way GM works. it's primarily Chevy and a bunch of Chevy clones. Hummer consists entirely of Colorado and Silverado platforms, Saturn, Pontiac, Saab, Buick, even Cadillac, they're all using the same platform. GM can sell names, but not business units. All they can do is close them down.
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