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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: kernick (Mar 03, 2009 9:39 am) By it hanging around it's taking customers away from GM and F which also have to shrink btw. It's just that with C still sucking up customers for a while GM and F have to shrink more than they would otherwise.
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Replying to: steve_ (Mar 03, 2009 9:54 am) There is no difference between your option 1 and this option. Everything has a particular value today - a steak dinner, a car, an auto plant, or a whole company. It has 1 value. That value is the most someone is willing to pay for it. There is no difference between a regular sale and a fire-sale. A fire-sale is simply the description for something that has lost so much value. Because GM and Chrysler do not sell their assets means they are UNWILLING to do so, and take the loss. Some of us may have Citi or Fannie Mae stock - very similar situation. Maybe we're holding onto it because we don't want to sell so low. That's our right, but then again maybe we need to sell it to pay bills. But of course if the government is chump enough to give me money, there's no forced sale, right? That leaves some outfit like Chery or Tata I guess Do you have a paradigm that a non-auto company can't get into the auto business? Why couldn't Boeing, GE, Walmart, Exxon, or Warren Buffett buy some of the assets? Many of those know how to manufacture something far more complicated than an auto. |
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Replying to: kernick (Mar 04, 2009 7:33 am) I don't think any of those concerns could make it as an automobile manufacturer. Boeing and GE are good at costly, high-tech stuff, like airplanes, satellites, MRI machines, jet engines, etc. I could maybe see one of them taking over Tesla and building a $100K+ car, but nothing at a $15K-$20K price point. Walmart doesn't build anything. It sells what others make. Why do you think they could become a car manufacturer? What might make sense is for Walmart to contract to one of the D3 to build them a special, low-cost vehicle that Walmart only would sell. They do this with some of their products, like TV sets. What does Exxon produce beyond oil/gas? Warren Buffet also has never built anything. I think anytime he tried getting into a business that built anything, he came out on the short end of the stick.. The original Berkshire operation - didn't he buy that just as all the textile business was moving out of the northeast to the south? He is very good at making money, but that's not the same as making a successful car or truck.
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Replying to: srs_49 (Mar 04, 2009 8:06 am) That is ridiculous. Why? Because GM, Ford and Chrysler are failing because of their system. What the U.S. auto industry needs is efficent management and structural systems. Any company or individual with funds could take over Ford, GM's and Chrysler and run it better than them. I or even you - who i don't know could run the D3 better then they do. How's that possible? Because the D3 are locked into their current size and structure with all their contracts. They have little room to maneuver. If anyone buys the D3 assets are they going to be paying D3 pensioners - No? Do they need UAW workers with the 2,200 page contracts - no. Do they have too many dealers - no, they only sign on about 50% of what they have now. Do they have the stigma of the D3 - no, mostly gone if they market correctly. Would a new auto company be sized right - yes (Ex. say GM has 10 plants they're paying for, when the market only is buying 50% of what it used to - the new company would only buy and run the 5 best plants - much less costly!). So in summary, someone else can build vehicles a lot cheaper than the D3 can, who have all these excessively expensive agreements.
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Replying to: kernick (Mar 04, 2009 9:29 am) Problem is, they're not going to liquidate like that as long as they're getting "bridge loan" handouts. Which means anything they sell will have contract and obligation strings attached. Which are the root of the whole problem in the first place. 
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Replying to: kernick (Mar 04, 2009 7:33 am) Once upon a time Henry J. Kaiser made and sold little cars. The "Henry J". Before he folded, Sears & Roebuck, went into selling cars, " Henry J", but under the badge "ALLSTATE'. Sears learned a lesson from that experiment. "Do what you do, best." |
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Replying to: kernick (Mar 04, 2009 7:33 am) I disagree (figures, right?  ). In spite of what people think of Calibers or Aveos, both GM and Chrysler brands have a tangible value. Goodwill and intellectual property, etc. Just buying the building gets you the steak but no sizzle. So you wind up paying McDonald's prices but you have to start from scratch and claw a long time before having a shot at becoming Ruth Chris.
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Replying to: kernick (Mar 04, 2009 7:33 am) >Do you have a paradigm that a non-auto company can't get into the auto business? Chery is a only an automotive company and only 11 years old. TATA is a over 100 year old Steel company (est. 1907) that has grown in many sectors & services including automobiles. So yes, non-auto companies can get into the Auto business. |
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Replying to: steve_ (Mar 04, 2009 10:35 am) Really?! My perception of those brand names right now is "Loser", and the brand drags down the value. I think that is reflected in many peoples' views in that sales are declining faster than others, and the depreciation is worse for the D3 vehicles. If anything having a Pentastar or GM badge drags down the value of a vehicle. So you wind up paying McDonald's prices but you have to start from scratch and claw a long time before having a shot at becoming Ruth Chris. Surely we can point out many companies that started out with premium products and premium prices - Bose, Starbucks, Tommy Bahama, ...
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Replying to: bpizzuti (Mar 04, 2009 9:47 am) |
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