It's not looking good short term for GM - I just saw they posted a $15.5bn quarterly loss. I still think they are too big to go under but they may end up in chapter 11 bankrupcy to protect them. But if that happens it will not help their suppliers.
All mainly because the USA love of huge trucks is over and GM and Ford didn't see it coming??
I also see that it's finance arm (the bit that normally makes the profit) made a loss. Partly to the write down costs on the slow selling trucks and SUVs. Probably the guaranteed future value sort of thing.
Edited by rtj70 on 01/08/2008 at 13:45
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I posted a thread on this simultaneously - sorry.
This is earthshattering, I would think.
USA's second biggest mortgage lender, Indycorp, has filed for bankruptcy today, so GM going bust is not impossible. Forget recession, it's depression we're looking at.
Edited by Sofa Spud on 01/08/2008 at 13:49
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I too find it shocking how much they are losing. They won't fold but go into chapter 11 at first and maybe sell of some assets.
They are rather late in thinking of selling Hummer with the downturn in 4x4/truck sales. They wouldn't get too much.
What I was wondering was if someone would be interested in say Daewoo/Chevrolet, and OpelVauxhall and maybe Saab. Would anyone want to pick these up at the right price. Opel/Vauxhall have some very good cars including the new Insignia. A bit like Ford having to Sell Jaguar/LR and Aston after they put so much in?
Question: how can a company continue to lose money they clearly do not have in the bank?
And I was about to ask how did those two silly names mortgage lenders (Fannie May and Freddie Mac) end up with so much of the market. Then realised that Fannie May is actually Federal National Mortgage Association (FNMA) a government sponsored enterprise (GSE) of the United States federal government. Fannie May is the nickname because that company makes chocolats ;-)
Edited by rtj70 on 01/08/2008 at 13:57
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They are at present reorganising the whole worldwide operation with new equipment ,solar generation many billions of dollars.15billion is just a flash in the pan there will be GM next year and for many more years to come as far as the old Daewoo the operation it is doing very well they must sell millions in the middle and far east.
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>>All mainly because the USA love of huge trucks is over and GM and Ford didn't see it coming??
People kept buying bus-sized passenger vehicles, so GM kept building them. So did Toyota, Nissan, etc., etc. The problem is that when the crunch came, GM and Ford did not have a range of vehicles that buyers perceived as economical and well-made. Ford is pinning a lot of hope on the new Fiesta in the US market. Imagine, the Fiesta is being thought of as a revolution in automotive engineering!
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Exactly. When it came to anything that was not a truck or SUV the USA buyers often went for Japanese (Honda/Accura, Nissan/Infinity, Toyota/Lexus or even Mazda) vehiles which are often built in the States. And of course VW, Audi, BMW and Mercedes.
An Audi Q7 might be big here but a Dodge RAM or Cheverolet Tahoe is huge... but cheap to build.
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You must wonder at the future of a company that sets up to sell Cadillacs to the UK with a four-model range, and then sells only 3 total in the month of June. You may be able to get away with those sort of numbers selling supercars, but not in their marketplace.
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They can make massive losses as it isn't liquid capital but money owed to suppliers/ If you were a supplier you couldn't cut off a company likr GM for not paying on time
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Fannie May and Freddie Mac were established during the last Depression to level out the lending market. They should have been wound up in the 1950s, but by then the US economy, and the arms dealers it underwrites, was dependent on them.
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This is hijacking my own thread but I find it unbelievable the States has "companies" like:
- Fannie Mae (Federal National Mortgage Association) and
- Freddie Mac (Federal Home Loan Mortgage Corporation)
that basically have underwritten half of all the USA mortgages. I am speechless. And they have got so big they cannot be let to fail - but Iraq is probably costing more.
I then found out the "cute name" for the mortgage entity for farmers is Farmer Mac :-) And the student loan company over there is known as Sallie Mae.
Isn't the USA great for all of us ;-) If they allow this no wonder Ford and GM are in a bad way.
Anyway quoting the great Wiki:
"Fannie Mae was founded as a government agency in 1938 as part of Franklin Delano Roosevelt's New Deal to provide liquidity to the mortgage market. For the next 30 years, Fannie Mae held a virtual monopoly on the secondary mortgage market in the United States.
In 1968, to remove the activity of Fannie Mae from the annual balance sheet of the federal budget, it was converted into a private corporation. Fannie Mae ceased to be the guarantor of government-issued mortgages, and that responsibility was transferred to the new Government National Mortgage Association (Ginnie Mae)."
So not like Northern Rock at all then ;-)
Edited by rtj70 on 01/08/2008 at 18:10
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I just saw they posted a $15.5bn quarterly loss
Assume that a quarter has 92 days, then put it in terms that the UK press revel in using:
$15.5 billion a quarter = $168 million a day = $7 million an hour = $117,000 a minute = $1900 a second !
How much is the loss expressed per vehicle sold?
Note - according to
www.bloomberg.com/apps/news?pid=20601087&sid=a16Rw...e
GM made an even bigger quarterly loss last year:
"The biggest quarterly loss, $39 billion in last year's third quarter, topped a ..."
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This isn't good news, but their annual turnover is $180BN though, which puts it into some perspective.
Also they have excellent foreign divisions producing good products
And they have some good products here in the US as well, like the Malibu. It's not all 10MPG SUV's.
So I don't expect to see the end for them anytime soon
Unlike Chrysler, I'm sad to say, which looks like it could be on the way out.
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I personally think they should have seen the end of the popularity of the truck and SUV and adapted. The Japanese car makers have been making cars in the USA for a long time now.
My brother ran a 5.2 V8 Jeep Grand Cherokee for a few years and switched to a VW Beetle diesel in 1998/9 and still has it. His wife runs a Honda Civic which is the low emission VTEC variant and that's from the same period. Reason for switch to the Bug was fuel cost and that was long before we see today's prices.... it's been coming. So why did GM and Ford stick their heads totally in the sand?
What GM/Ford/Chrysler should have done IMO is to continue to produce the big SUVs/trucks with plans to switch easily (and around now) to cars. It's a bit much to say the Fiesta is going to make a big impact - it's too small on their roads still. A Focus sized car maybe but they do have VW Rabbits/Golfs.
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A Focus sized car maybe but they do have VW Rabbits/Golfs.
They already have a NA built Focus. It is the market that is demanding smaller however, I do agree with you regarding the Fiesta, fine car that it is, I think once the Americans set eyes on it and try to fit Oivy and Myrtles rear ends in the front seats the market will change and move back up to Focus&Golf size as their small hatch models.
If I were in charge at Ford, I'd import a limited number of European cars (which obviously require some modification for American safety tests and emission laws) and see what the market makes of them before ploughing billions into factory refits.
Edited by gmac on 01/08/2008 at 18:42
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The Americans have cottoned on, in Boston it seemed like every other car was either a Subaru, BMW or MINI - Looks like one of the big three need to build a small, reliable, chic and economical new car, too late BMW already did !
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>> And they have some good products here in the US as well like the Malibu.It's not all 10MPG SUV's.
isn't the Malibu a re-badged, slightly bodily tweaked Opel/Vauxhall Omega, unless you're talking about the 2008 new one (and that looks suspiciously like the Insignia, certainly at the front)
Edited by Westpig on 01/08/2008 at 18:54
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My reference to a Fiesta being too small was not that they couldn't fit in but with the still too many huge SUV/trucks and their HGVs you feel very vulnerable on their freeways. Especially with their standard of driving.
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I realise you were talking about mixing it in traffic with bigger cars. I still, without being disrespectful to Americans, do not believe the Fiesta is capable of taking the average American frame.
I worked with an American in Ruesselsheim who was talking about taking a Smart car back to the States with him. His plan was to use it to tow his lawn mower around the garden.
Edited by gmac on 01/08/2008 at 19:03
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>>I realise you were talking about mixing it in traffic with bigger cars. I still, without being disrespectful to Americans, do not believe the Fiesta is capable of taking the average American frame.
Ford introduced the Fiesta in the US in the late 70s-early 80s. It was billed as 'the world car' and was imported from wherever it was being produced in Europe at the time (germany? rings a bell). No one bought them and they were withdrawn. Given how many Americans squeeze themselves into miniscule airline seats to visit the UK, I reckon they can manage with a Fiesta.
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>> And they have some good products here in the US as well like the Malibu. >> It's not all 10MPG SUV's. >> isn't the Malibu a re-badged slightly bodily tweaked Opel/Vauxhall Omega unless you're talking about the 2008 new one (and that looks suspiciously like the Insignia certainly at the front)
I don't know for sure but I'd be surprised if they designed a new car from scratch just for the US when they have a perfectly good car already in Europe!
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>isn't the Malibu a re-badged, slightly bodily tweaked Opel/Vauxhall Omega,
I think the old Malibu was based on the Vectra platform - not sure about the new one.
The Omega was rebadged and sold as a Cadillac Catera, advertised as "The Caddy that Zigged" because it handled better than the usual Cadillac. It sold quite well at first until reliability problems gave it a reputation as a bit of a lemon.
Kevin...
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