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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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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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Replying to: gagrice (Dec 08, 2008 9:12 am) Just out of curiosity, Why in the world would any one want to buy Jeep. We got out of that business when we stopped making the the Bronco II  Allot of people here talk about one auto maker buying another auto makers platform. Isn't to many products one of the things that has us in a mess now? I want to see Ford do away with the whole LM deal all together and concentrate on Ford. Though I must admit that CTS is one sweet looking ride
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Replying to: joel0622 (Dec 08, 2008 10:03 am) What does Ford have to compete with the Wrangler? By the way the Bronco II was a horrible POS. Unsafe at any speed. And not worth a hoot off road. Ford has never had a decent off road vehicle. Including the early Broncos. I loved my 84 Bronco. Yet it was not in a league with the Wrangler. The rest of Jeep line, Ford has covered fine. Then again it may be too much of a hassle with Daimler still having a chunk. Maybe best to just let them liquidate with GM and get it over with. I am not a big Ford fan. But I think they have won the battle of the Big 3.
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Replying to: gagrice (Dec 08, 2008 10:14 am)
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