Obama cripples US Car Industry

[asur]

The Obama Administration has put pressure on Chrysler, GM, etc. to develop green cars. That's the big push and it's not smart. It is hurting these companies. Yet he bails them out? Well they were in trouble before Obama, but is he helping? NO!


You know the green cars. The small, unsafe cars, that most people in the US don't like to buy. Go figure.

The fact is that the best selling vehicles are crossovers, SUVS and trucks.
In fact the gas drinking SUVS have kept the big three in business.
They are less expensive to make, in demand and also safer.

Obama must know this, yet he demands something that assures the US
car companies will never survive.

Forcing the US car companies to make small green cars will never work, unless he restricts the imports. Hmm, maybe he will.

 

[Andy]

I'm waiting to see the outcome. It's too early to tell what effects Obama will have. Granted I assume it will be negative, simply because I have yet to find a single instance of government handling things right. But it's too early to say that is the outcome.

 

[pocketfullofshells]

The Obama Administration has put pressure on Chrysler, GM, etc. to develop green cars. That's the big push and it's not smart. It is hurting these companies. Yet he bails them out? Well they were in trouble before Obama, but is he helping? NO!


You know the green cars. The small, unsafe cars, that most people in the US don't like to buy. Go figure.

The fact is that the best selling vehicles are crossovers, SUVS and trucks.
In fact the gas drinking SUVS have kept the big three in business.
They are less expensive to make, in demand and also safer.

Obama must know this, yet he demands something that assures the US
car companies will never survive.

Forcing the US car companies to make small green cars will never work, unless he restricts the imports. Hmm, maybe he will.

You should be the CEO at GM...you would be perfect....to drive it into the ground. your line of thinking is the reason why its in trouble in the first place...do you ever think that if they where actually doing things right...they would not be having the government tell them anything? Again I sold cars...and one of the hardest things I had to deal with, was our cars where flat out less efficient then others in mpg...big selling point for a large amount of my cust.

 

[Andy]

You should be the CEO at GM...you would be perfect....to drive it into the ground. your line of thinking is the reason why its in trouble in the first place...do you ever think that if they where actually doing things right...they would not be having the government tell them anything? Again I sold cars...and one of the hardest things I had to deal with, was our cars where flat out less efficient then others in mpg...big selling point for a large amount of my cust.

So focusing on automobiles that are the most profitable... in your world... is driving it into the ground?

Well honestly, if Obama pushes hard for GM to make tiny midget mobiles that get 80 MPG and can only fit one person and a lunch box...

In one year, we'll know if you were right. I'm not holding my breath. I suspect if Obama does that, GM will be a distant memory of American manufacturing.

 

[pocketfullofshells]

So focusing on automobiles that are the most profitable... in your world... is driving it into the ground?

Well honestly, if Obama pushes hard for GM to make tiny midget mobiles that get 80 MPG and can only fit one person and a lunch box...

In one year, we'll know if you were right. I'm not holding my breath. I suspect if Obama does that, GM will be a distant memory of American manufacturing.

you really think the GM can be turned around in a year? You don't have a clue then. If a car line is making a profit then yes make it, but show me one car they are making that is making a profit and then show me the government saying don't make it. I asked before of someone, and all I got was sales numbers....Profit does not equal sales numbers. So show me the profitable car line that is being told to be axed..Also keep in mind that getting rid of one car does not always mean you are really getting rid of the car with GM they make the same cars in many many names often with small changes...reducing the overlap could be very helpful. Sad thing is GM actually had a car line that was built to deal with the market , and could have been huge...Saturn....the problem is Saturn was to change the car industry in the US, and had some great new ideas....only problem is GM changed Saturn, not the other way around and both suffered greatly for it.

 

[pocketfullofshells]

Well honestly, if Obama pushes hard for GM to make tiny midget mobiles that get 80 MPG and can only fit one person and a lunch box...

well he is not, so you don't have to worry. Just take a look at what Ford has done with its new Fusion/Milan hybrid...a nice, very fuel efficient, mid size car that is better the Prius....GM has nothing like it...( the volt is a step in right direction, but they are far behind and may have come to the game with it to late) But its not hard to see why Ford is the US dealer not going under...the Escape and hits hybrid ( I never even got to see one on the lot they where backorderd so far) japan had its high MPG cars...and what did GM have? not much...what did Chrysler have? nada. Even the F-150, best selling truck of 30 plus years started loosing sales to the Tundra...a truck that lacked towing, HP, Ride, and durability of the F150...but had better mpg. For the real work trucks , that needed heavy duty we still won out...but for that large segment that just wanted to toe a smaller boat or just liked trucks to drive...we where loosing alot of sales.

 

[Andy]

you really think the GM can be turned around in a year? You don't have a clue then. If a car line is making a profit then yes make it, but show me one car they are making that is making a profit and then show me the government saying don't make it. I asked before of someone, and all I got was sales numbers....Profit does not equal sales numbers. So show me the profitable car line that is being told to be axed..Also keep in mind that getting rid of one car does not always mean you are really getting rid of the car with GM they make the same cars in many many names often with small changes...reducing the overlap could be very helpful. Sad thing is GM actually had a car line that was built to deal with the market , and could have been huge...Saturn....the problem is Saturn was to change the car industry in the US, and had some great new ideas....only problem is GM changed Saturn, not the other way around and both suffered greatly for it.

Oh without question they could turn at around in a year. Less even. It's real simple. File for bankruptcy, ditch the Union contracts, and they will be making a profit without question.

If Honda can sell a FRACTION of the cars GM is even at this moment, then clearly labor costs is the problem. Ditch union contracts, get labor cost in line, and they will be making profit.

Now, beyond that, I completely 100% agree with you about Saturn and the corporatism of GM. For the first 50 years of GM's existence, each branch of GM... Olds, Chevy, Buick, Cadillac, Pontiac... they all operated independently. They had their own styles, their own advancements, their own factories and so on.

This led to rapid advancement, because they were all competing against each other, not just external competition like Ford and Chrysler. Moreover, it led to a stable overall company, because when any branch was doing poorly, another branch was doing well.

Now, GM has brought all branches under the corporate control. This is why so many GM cars all look like other GM cars.

So you and I are on the same page there. But as far as making a profit, it's real simple.

Last month, March 2009, Honda sold 88,000 autos. GM sold 154,000 autos, more than half being the gas hog trucks.

Notice, Honda is profitable while selling almost half as many autos as GM.

So why is someone selling twice as many cars not making a profit?

It's real simple Pocket. The total cost for a labor hour at GM, is 59% higher than it is at Honda. It's interesting that GM's international subsidiaries are all making profit too. Holden in Australia is profitable. GM Europe is profitable. GM China is profitable.

But GM USA is not. Why? <look above> That's why. Union labor is too expensive. That's all there is too it. Kick the Unions out, dump the contracts, get labor cost back in line, and poof.... profit. Easily fixed in a year.

Now the question. Will it be? lol Heck no. Whatever Obama does, it won't fix it. That's my opinion, but we'll both find in a years time... if GM lasts that long.

 

[Andy]

well he is not, so you don't have to worry. Just take a look at what Ford has done with its new Fusion/Milan hybrid...a nice, very fuel efficient, mid size car that is better the Prius....GM has nothing like it...( the volt is a step in right direction, but they are far behind and may have come to the game with it to late) But its not hard to see why Ford is the US dealer not going under...the Escape and hits hybrid ( I never even got to see one on the lot they where backorderd so far) japan had its high MPG cars...and what did GM have? not much...what did Chrysler have? nada. Even the F-150, best selling truck of 30 plus years started loosing sales to the Tundra...a truck that lacked towing, HP, Ride, and durability of the F150...but had better mpg. For the real work trucks , that needed heavy duty we still won out...but for that large segment that just wanted to toe a smaller boat or just liked trucks to drive...we where loosing alot of sales.

Well I'm not going to argue subjective things with you. I wouldn't buy a hybrid yet, unless it was given to me for a dollar. Every time I do a Return On Investment, on a hybrid, you never break even, and often lose money trying to save a few gallons of gas. If you'd like, I can try it again with this one.

That said... maybe you missed it but hybrid sales have dropped faster than Ted Kennedy's car in Poucha Pond with an intern in the back.

Reported sales of hybrids in the U.S. dropped by 44 per cent in March 2009, compared with March 2008, for a total of 21,433 units, according to the Green Car Congress. The drop was worse than that of the total light duty vehicle market, which fell by 36.8 per cent in the same period.

Moreover, hybrid sales for 2008 as a whole, were lower than 2007. Even worse, there are more hybrids on the market now, than in 2007 when hybrid sales peaked, and 2008.

Further, for Toyota, only the Sequoia, and the Lexus LX570, were the only two models to actually increase sales. (Sequoia 14/19 MPG, LX570 12/18 MPG)

So based on the evidence, do you really think moving towards hybrids is the way to go? Because there is no evidence at all, right now, that suggests this is wise move.

 

[mdanley]

The Obama Administration has put pressure on Chrysler, GM, etc. to develop green cars. That's the big push and it's not smart. It is hurting these companies. Yet he bails them out? Well they were in trouble before Obama, but is he helping? NO!


You know the green cars. The small, unsafe cars, that most people in the US don't like to buy. Go figure.

The fact is that the best selling vehicles are crossovers, SUVS and trucks.
In fact the gas drinking SUVS have kept the big three in business.
They are less expensive to make, in demand and also safer.

Obama must know this, yet he demands something that assures the US
car companies will never survive.

Forcing the US car companies to make small green cars will never work, unless he restricts the imports. Hmm, maybe he will.

Your assumption that the bailout has not helped our economy is not true. While the bailout may not have been the best course of action, it certainly has helped our economy from going further into recession. According to the United States Department of Labor, over 5 million jobs has been lost since the beginning of the recession. The auto industry is an enormous industry that encompasses our entire economy. If it were to have failed, it would have put many more millions of people out of work. From the automakers themselves, to the suppliers, to the repair shops, all would have suffered from the crash of the auto industry. The bailout, though it is nowhere near the solution to the problem, did help a little bit to further prevent a complete meltdown of our economy

 

[top gun]

The Obama Administration has put pressure on Chrysler, GM, etc. to develop green cars. That's the big push and it's not smart. It is hurting these companies. Yet he bails them out? Well they were in trouble before Obama, but is he helping? NO!


You know the green cars. The small, unsafe cars, that most people in the US don't like to buy. Go figure.

The fact is that the best selling vehicles are crossovers, SUVS and trucks.
In fact the gas drinking SUVS have kept the big three in business.
They are less expensive to make, in demand and also safer.

Obama must know this, yet he demands something that assures the US
car companies will never survive.

Forcing the US car companies to make small green cars will never work, unless he restricts the imports. Hmm, maybe he will.

It's amazing how wrong someone can be... but you're up there!

As last I checked SUV's like the Ford Escape, Mercury Mountaineer, Cadillac Escalade, Yukons, Suburbans and so on now also come in hybrid form. So the whole small car thing is an obvious red herring.

On top of that low pollution emitting vehicles and good gas mileage vehicles are an obvious good thing for humans beings and the planet.

The US automakers were just in great measure late to the table with HIGH QUALITY, SUPER DEPENDABLE, GREAT WARRANTY, GREAT GAS MILEAGE vehicles.

From personal research I know on safety in general my wife's 07 VW Jetta or my new Audi A6 come out great in crash tests and we still can go in the 30mpg highway range.

As far as US automaker expenses the graph you show is not what what actual workers make but what it costs the company per worker with all legacy (retired workers costs) added in.

And of course a company that's been around in the US as long a GM or Ford would have a build up of retired workers. GM obviously did not handle this as well as Ford as Ford has not taken any bailout money.

And let's not forget that there is much overseas competition that pay their workers less but give them free heathcare. Sometimes even with cars built in the US many parts come from overseas with this same scenario.

Sure... it makes total sense to phase out (as has been happening) new legacy costs (retirement pensions, retirement healthcare etc.) due to the new dynamics in the automobile industry.

But it's dishonest or at least disingenuous to somehow blame Union workers. It was company management that approved these contracts when often times they were all raking in good profits. And to me it seems somewhat honorable for current Union workers to sometimes bargain away their own immediate pay increases to help insure a better retirement plan for others now and themselves later.

Fact is everyone is going to have to take cuts and GM will sell off things like Opal, Saab & Saturn and get rid of repetitive exact model copies by probably ending up as just Cadillac (high end) and Chevrolet (a combination of the best models now in Chevy, Buick & Pontiac plus many new models).

I look forward to seeing America with maybe less nameplates but better word class quality and gas mileage across the board. We've already started to get a glimpse... Chevy Malibu & Camaro... Pontiac G6 & G8... and more to come including the Chevy Volt!

What may start as mainly small to midsize American cars we will see turning into bigger & bigger American cars that get incredible mileage compared to now.

It's gonna get much better overall in the end... these are just major growing pains we're in right now.

 

[Pidgey]

Not so sure about Pontiac:

http://money.cnn.com/2009/04/24/autos/pontiac_obit/index.htm?postversion=2009042414

 

[top gun]

Not so sure about Pontiac:

http://money.cnn.com/2009/04/24/autos/pontiac_obit/index.htm?postversion=2009042414

You're right up on the breaking news. I just saw this report on CNN myself.

But I've seen this coming from the start and posted about it even when GM said they might just "cut back" to fewer Pontiac models... I knew they'd have to cancel some brands. There's no reason why some of the better more modern Pontiacs like the Pontiac G6 & G8 can't be the new Chevrolet G6 & G8. This has been done several times before.

Just like Acura/Honda... Infinity/Nissan... Lexus/Toyota... VW/Audi... GM can be lean and mean again with Cadillac/Chevrolet (Buick?).

If they're lucky they can sell off Opal, Saab and Saturn. These two things... the cost savings that comes from downsizing to fewer basically identical nameplates and the influx of cash that selling off some subsidiary brands will help GM compete better in the long run.

And yes there will be Union cuts & concessions as well as cuts on the management side.

But this is 2009 not 1969. Between the ever growing possibility of sky high gas price hikes and the fact Hondas and Toyotas aren't just little cheap imports anymore but good looking & extremely dependable and in demand vehicles this was bound to happen if Detroit didn't change.

It's better America has less but better car brands rather than just more that are simply copies of one another with many being just fair overall.

I actually think a new stronger GM highlighting and engaging with just Cadillac and Chevrolet will be more modern and maybe kinda neat.

But I also know that just like when they pulled the plug on Oldsmobile long time car buffs of the canceled brands will miss their old favorites. I myself was an old fan of the Hurst Olds 442... but I got over it.

 

[pocketfullofshells]

Oh without question they could turn at around in a year. Less even. It's real simple. File for bankruptcy, ditch the Union contracts, and they will be making a profit without question.

If Honda can sell a FRACTION of the cars GM is even at this moment, then clearly labor costs is the problem. Ditch union contracts, get labor cost in line, and they will be making profit.

Now, beyond that, I completely 100% agree with you about Saturn and the corporatism of GM. For the first 50 years of GM's existence, each branch of GM... Olds, Chevy, Buick, Cadillac, Pontiac... they all operated independently. They had their own styles, their own advancements, their own factories and so on.

This led to rapid advancement, because they were all competing against each other, not just external competition like Ford and Chrysler. Moreover, it led to a stable overall company, because when any branch was doing poorly, another branch was doing well.

Now, GM has brought all branches under the corporate control. This is why so many GM cars all look like other GM cars.

So you and I are on the same page there. But as far as making a profit, it's real simple.

Last month, March 2009, Honda sold 88,000 autos. GM sold 154,000 autos, more than half being the gas hog trucks.

Notice, Honda is profitable while selling almost half as many autos as GM.

So why is someone selling twice as many cars not making a profit?

It's real simple Pocket. The total cost for a labor hour at GM, is 59% higher than it is at Honda. It's interesting that GM's international subsidiaries are all making profit too. Holden in Australia is profitable. GM Europe is profitable. GM China is profitable.

But GM USA is not. Why? <look above> That's why. Union labor is too expensive. That's all there is too it. Kick the Unions out, dump the contracts, get labor cost back in line, and poof.... profit. Easily fixed in a year.

Now the question. Will it be? lol Heck no. Whatever Obama does, it won't fix it. That's my opinion, but we'll both find in a years time... if GM lasts that long.

is that US sales or World sales? its a world market...and yes they will sell more big trucks...because its about the only things that they actually make worth it if you need it. They don't make cars worth a crap. Honda barely even makes those types of trucks...and they are doing much better. And again, did anyone say they cant make and sell those trucks that are profitable? and again sales dont equal profit. And if you think just going chapt 11 and stop paying its workers will fix it....you better hope you still have workers that know what they are doing to keep it going.

 

[Andy]

Your assumption that the bailout has not helped our economy is not true. While the bailout may not have been the best course of action, it certainly has helped our economy from going further into recession. According to the United States Department of Labor, over 5 million jobs has been lost since the beginning of the recession. The auto industry is an enormous industry that encompasses our entire economy. If it were to have failed, it would have put many more millions of people out of work. From the automakers themselves, to the suppliers, to the repair shops, all would have suffered from the crash of the auto industry. The bailout, though it is nowhere near the solution to the problem, did help a little bit to further prevent a complete meltdown of our economy

I completely disagree, and moreover, you should be very careful in citing government sources as justification for things the government supports.

You don't think that the government twists and guides reports to politically supportive views? I'll give you two examples. In the late 1970s, Carter asked the US Geological Survey to do research on how much coal was left in the US. The researchers concluded that there was over 1,000 years of coal left in the US at the then current rate of increasing usage.

This didn't sit well with Carter who was trying to convince the population that we were in an energy crisis, and needed to find alternatives to coal which was running out. Carter had the researchers removed, and new ones installed, along with a new research project that came to more politically acceptable answers. This is documented in Thomas Sowell's book "Basic Economics".

In Thomas Sowell's other book "A personal Odyssey", Sowell himself worked for the US Department of Labor. He was asked to write up a report using four sets of data, and was told the administrations position. Two sets supported the position, and the other two did not. Sowell wrote this in his report. The administration edited his final report to only include the supporting evidence.

Point is, you can't trust (.gov) sources as being completely unbiased.

Question: Has the bailout helped?

Well let's look at some of the effects. The first bank to get a bailout was Bear Stearns.

In March 2008, the Federal Reserve Bank of New York provided an emergency loan to try to avert a sudden collapse of the company. The company could not be saved, however, and was sold to JPMorgan Chase for as low as ten dollars per share

That was $30 Billion down the drain. The company was ultimately bought out because giving a failing company money, just means more money is lost in the failure.

Countrywide Financial

At the same time the Federal Reserve Bank lowered the discount rate 0.5% in a last-minute, early morning conference call. The Fed accepted about $17.2 billion in repurchase agreements for mortgage backed securities to aid in liquidity. This also helped calm the stock market and investors promptly responded positively with the Dow posting gains.

The company still failed, sinking with $17.2 Billion in tax payer money. Ultimately was bought out by Bank of America. Ring a bell?

Bank of America received US $20 billion in federal bailout from the US government through the TARP program on 16 January 2009 and also got guarantee of US $118 billion in potential losses at the company.[25] This was in addition to the $25 billion given to them in the Fall of 2008 through TARP.

According to a March 15, 2009 article in The New York Times, Bank of America received an additional $5.2 billion in government bailout money which was channeled through American International Group.

Why did this happen? Because the Feds wanted BofA to buy Merrill Lynch, and pushed BofA to do that.

Hank Paulson, former US Treasury secretary, and Ben Bernanke, Federal Reserve chairman, were under scrutiny on Friday following disclosures about their alleged roles in putting pressure on Bank of America to complete its acquisition of Merrill Lynch, the troubled investment bank.

According to Andrew Cuomo, New York state attorney-general, Ken Lewis, the chief of BofA, told investigators under oath that his decision not to tell shareholders about the deterioration in Merrill assets before the takeover was completed was the result of pressure from Mr Paulson and Mr Bernanke. “I was instructed that: we do not want a public disclosure,” he allegedly said.

But it doesn't end there. How about the wildly successful AIG?

On the evening of September 16, 2008, the Federal Reserve Bank's Board of Governors announced that the Federal Reserve Bank of New York had been authorized to create a 24-month credit-liquidity facility from which AIG could draw up to $85 billion.

An additional $37.8 billion loan was extended in October. As of October 24, AIG had drawn a total of $90.3 billion from the emergency loan, of a total $122.8 billion.

On October 9, 2008, the company borrowed an additional $37.8 billion via a second secured asset credit facility created by the Federal Reserve Bank of New York (FRBNY). From mid September till early November, AIG's credit-default spreads were steadily rising, implying the company was heading for default. On November 10, 2008, the U.S. Treasury announced it would purchase $40 billion in newly issued AIG senior preferred stock, under the authority of the Emergency Economic Stabilization Act's Troubled Asset Relief Program.

The CEO of AIG said the following:

"The dividing of AIG is exactly what we're doing so the entity that existed for 90 years as AIG will over time cease to exist," Liddy said.

The $122 Billion given to AIG will also cease to exist. IndyMac, National City, Lehman Brothers, and the list goes on. All got bailout money either directly, or by giving it to another bank to buy them. In either case, the money is gone, and the bank still failed, and people still lost their jobs.

Let's not forget the billions given to GM and they are still considering bankruptcy.

So in that massive list of failure after failure, lost jobs, cut wages, sold companies, and screwed over investors....

Where do you claim the bailout helped anything?

 

[Andy]

is that US sales or World sales? its a world market...

What difference does it make? GM is number two in the world, and number one domestically. Of course it's international subsidiaries are making profit, only the domestic is not.

and yes they will sell more big trucks...because its about the only things that they actually make worth it if you need it.

The point being made is, when more than half of their sales are trucks, and they are selling more trucks than imports are, trucks and cars combined, then you can not claim that the reason for their failure is because they focused on trucks is it?

They don't make cars worth a crap. Honda barely even makes those types of trucks...and they are doing much better.

Interesting. In March GM sold 68,000 cars... supposedly not worth crap... but worth it to buyers.

Honda on the other hand, sold only 55,000 cars... supposedly worth crap.

So the company you claim can't make a decent car, is selling 13,000 more cars than the Honda which supposedly can.

The facts are not supporting your theory. (same link as prior post)

And again, did anyone say they cant make and sell those trucks that are profitable? and again sales dont equal profit. And if you think just going chapt 11 and stop paying its workers will fix it....you better hope you still have workers that know what they are doing to keep it going.

You are right, sales don't equal profit. Profit is when the cost of producing a product is less than the revenue from selling the product. GM can't make a profit when it's paying 59% more for labor than it's competitors. That's the whole point of my posts.

When did I say stop paying its workers? Of course you pay workers, just not as much as what they have enjoyed. Because honestly, there's only two options. Either GM will cut labor cost, or it will close down the entire company. Those are the only two options. When Honda can sell a fraction of the cars, and make a profit because it costs them nearly half of what it does GM, there is no way GM is going to make it without doing the same.