Auto Talk > General Automotive

If Wagoner goes...

(1/4) > >>

gasoline:
Bob Lutz goes.

And GM would be screwed.

People are saying Wagoner would have to go if GM gets a bailout. Wagoner's one good move is Bob Lutz and Bob Lutz saved GM's automotive (not financial) craw.

Anybody who is not a fanboy of other companies would know this.

Anyways, that is just my two cents.

http://www.autoblog.com/2008/11/14/autoline-on-autoblog-with-john-mcelroy/


--- Quote ---Last year's UAW contract was truly historic in that it will completely remove the health care cost burden off the Big Three. Though they have to give the union the money to assume this burden, they're paying 40% less than it would otherwise cost them. After 2010 they stop paying billions in health care every year and start dropping that money to the bottom line.

Moreover, there will no longer be any pensions for new hires. They'll get 401k's instead. Again, massive cost savings going forward.

On top of that the UAW workforce takes big pay cuts, and new hires come in at a wage rate that is roughly the same that Toyota, Honda, Nissan, et al, are paying their American workers. In other words, the Big Three can finally compete with the transplants from a labor cost standpoint. That means they can now make small cars in America without losing money on every one they make.
The Big Three can finally compete with the transplants from a labor cost standpoint.
Another benefit of that new labor contract is that the Big Three are no longer pressured to keep building cars and trucks in the face of weak demand. Under the old labor contract it was cheaper to build cars and slap big incentives on them than it was to not build them in the first place. Now, they can build to actual demand, and they're running on much tighter inventory.

That means they'll be able to slash their incentives. Every $1,000 that General Motors cuts from incentives will drop roughly $4 billion to the bottom line. And GM has an average of $3,500 in incentives!

Plus, the Big Three are taking out a huge amount of overcapacity, roughly two million units. To fulfill demand in the future their plants will have to run at full capacity, and that's when car companies literally become cash machines.

What this means is that when the economy finally starts to recover and the car market begins to grow again, GM, Ford and Chrysler will be in an extremely competitive position, one they haven't been in for more than 40 years.

And that's why those who say giving them a bailout is just throwing good money after bad are dead wrong.
--- End quote ---

Those of you who have been following the industry carefully would see a clear difference in what has been coming out lately.

And Ford is not far behind at all. They have had a similar parallel shakeup--though not as extensive and promising.

Letting them go under would be a disaster. People aren't really qualified to be car enthusiasts if they do not understand how this would explode beyond car manufacturing into software, supercomputer tech, scientific research and on and on.
GM is the world's single largest purchaser of steel. Outright.
Thousands upon thousands of suppliers would go under.
Look at how Delco and Continental went into bankruptcy and they are the largest suppliers (and this was before all this madness).

GM and Ford did not create the credit crisis.

A collpse would be bad, bad bad.

Chrysler ha proven that money loaned can be repaid with profit. There is a precedent here and it is a good one.

If you want to balk, balk at GE and AIG getting money--not the car industry. The military implications (for one) would be devastating, especially when there is Russia and Iran to worry about.

gasoline:
Oh, and there is no coming back from chapter 11. None.

Line up ten of your friends who would ever buy GM or Ford again if warranties go to crap in bankruptcy court.

If an airline goes under it comes back as a different name. Nobody cares because airlines come and go and flights don't cost $20,000 on average.
They also don't require follow-up care and service.

Not to mention that one airline gone bankrupt might have a few thousand lights a day.

Gm sells what? A few million cars a year? 6 million? multiply that by 5 years for the number of pissed-off warranty-holders.

ifcar:
It's a myth that you lose your warranty if your car's automaker files for bankruptcy protection.

gasoline:
That one won't fly with consumers. And who will make the replacement parts?

All they have to do is be afraid.

ifcar:
To start, it's wrong to say "there's no coming back from Chapter 11." Yes, if an automaker disappears completely, there will be problems for people who bought their products. But bankruptcy doesn't mean disappearance.

And there would be plenty of third-party parts suppliers, just as there are now.

Navigation

[0] Message Index

[#] Next page