Kaboom! Auto Bailout Talks Collapse!

[karsen]

Black Landlord wrote:
http://news.yahoo.com/s/ap/20081212/ap_o...ress_autos

That bill — the product of a hard-fought negotiation between congressional Democrats and the Bush White House — was virtually dead on arrival in the Senate, where Republicans said it was too weak in its demands on the car companies and contained unacceptable environmental mandates for the Big Three.

Environmental mandates? Unacceptable!

Ford is no longer asking for Federal money. So why would the bill have mandates that included them?

[karsen]

I did some quick research, if my numbers are off please feel free to correct me:

Toyota and GM's total vehicle sales were pretty close last year, from what I read Toyota surpassed GM and is now the World's largest auto maker. GM held the title for the World's largest auto maker for 76 years (vehicles sold.)

Toyota posted profits (some articles I read said record profits, others said close to record profits.)

GM posted losses.

GM on Wednesday said it sold 9,369,524 vehicles globally in 2007, up 3% from a year earlier, according to preliminary sales figures. Toyota said earlier this month it sold 9.37 million vehicles last year, but hasn't yet announced a more-precise figure.

9,369,524 vehicles sold up 3% from the previous year, yet they posted losses. How many vehicles do they need to sell to break even?

*Numbers above supplied by Yahoo Finance on 1/23/08. wrote:

Profits: at the end of the day the only metric that really counts is profit per vehicle sold followed by total profits. Look at the chart below comparing GM to Toyota and other major auto makers:



Toyota claimed the title of world’s most financially successful car maker years ago, a much more important title than having the largest market share or selling the greatest number of cars. Honda sells less than 25% of the total vehicles of GM in a given year, yet is a significantly more profitable company with a MUCH stronger balance sheet; fat lot of good selling more than 4X as many cars is doing GM.

Source: http://www.analyticalwealth.com/blog/200...s_ago.html

So GM wants a bridge loan to get them through to what? So they can survive and to create more loses for each vehicle sold? GM never came to Congress with a plan, constantly insisting they will make the changes after we give them the money. Sounds like the kind of planning that got them in the mess they are in in the first place.

[karsen]

lafinfil wrote:
"The group came close to agreement, but it stalled over the UAW's refusal to agree to wage cuts before their
current contract expires in 2011. Republicans, in turn, balked at giving the automakers federal aid."

So apparently I missed the part in the massive Wall Street bail out where all those bankers
agreed to taking huge salary cuts. Many are still getting multi million dollar bonuses.
I wonder how many of those bonuses it would have taken to made up the difference if they UAW took the cuts.

Chris Dodd had it right when he said that Rick Wagoner should step down as the head of GM

The Wall Street bailout was wrong too. That's the problem with handing out cash. Everyone that comes to ask for money will say "But you gave it to them." and there's no defined method of deciding who should get and who should be turned away. Why did Citi get funding and Lehman allowed to fail? Our government shouldn't be making these decisions.

[deckeda]

Lehman happened earlier, back when everybody thought this mess would be contained. Citi's also much larger.

karsen wrote:
So GM wants a bridge loan to get them through to what? So they can survive and to create more loses for each vehicle sold? GM never came to Congress with a plan, constantly insisting they will make the changes after we give them the money. Sounds like the kind of planning that got them in the mess they are in in the first place.

I would agree with that. GM doesn't make money because they haven't been able to remove cost from the business. Like you, I don't see how a cash infusion will fix that, because it doesn't address the issue.

The other 2 are really in the same boat almost. The only saving grace for Ford right now is that they borrowed right before the credit collapse. It's the only reason they're "OK" for now.

[mikeylikesit]

The auto makers are seeking less than 10% of the money that was allocated to banks who make nothing. What am I missing here?

[Mac1337]

GMs problem is that people aren't buying their cars. Why not give the money to the people who want to buy GM cars instead of giving them to GM and not knowing with they do with it? If I got a $10000 voucher, which will get me a new Cobalt for practically free, I would be on my way right now. $15b will sell 1.5 million cars.

[Mac1337]

mikeylikesit wrote:
The auto makers are seeking less than 10% of the money that was allocated to banks who make nothing. What am I missing here?

Here is what you are missing. What about Bright Automotive who is working on future technology. Are they getting anything? No.

[mikeylikesit]

Thanks for the red herring. How many employees does Bright Automotive currently have?

[karsen]

Dakota wrote:
GMs problem is that people aren't buying their cars. Why not give the money to the people who want to buy GM cars instead of giving them to GM and not knowing with they do with it? If I got a $10000 voucher, which will get me a new Cobalt for practically free, I would be on my way right now. $15b will sell 1.5 million cars.

Not true. Look at stats. In 2007 GM sold 9,369,524 vehicles, up 3% from the previous year. Due to labor costs and inefficiencies in the manufacturing process it costs GM approximately $2000 more to produce a vehicle than it does for Honda or Toyota. GM either has to sell an inferior vehicle or cut costs to be on par with the competition. Handing them billions of dollars isn't the answer.

[karsen]

mikeylikesit wrote:
Thanks for the red herring. How many employees does Bright Automotive currently have?

So your reasoning to hand them money is simply that GM employs so many people? I don't know anything about Bright Automotive, but maybe they should go out and hire a few thousand employees that they can't afford and start operating in the red. Would they be important like GM then?

GM has sat in front of Congress and refused to change their ways unless they get bail out money; if they do not make changes to their company GM is destined to fail. Unless of course, you want to get in the habit of giving them billions of dollars every quarter to keep them afloat. How does that help anyone?