"the UAW is screwing Ford & definitely GM over with health insurance costs and things related to the UAW."

Spray004, where did you come up with this?? I would like to know how the UAW is screwing Ford? First off, the health benefits are negotiated between Ford and the UAW. Negotiated meaning they both agreed to the terms. Second, when I started working for Ford, my healthcare was absolutely free, but that changed 3 years ago. We now have co-pays just like most people. Can you honestly tell me that if your employer came to you and negotiated healthcare for you, you would not try to get the best deal possible for yourself???? You even stated that Jaguar, Volvo and Land Rover are losing their butts. Correct me if I'm wrong, but the UAW had nothing to do with those purchases or with the way things are going with those 3. So don't go and try to blame the UAW for Ford's problems. Sounds like another case of blaming someone else for your problems instead of stepping up to the plate and taking the blame yourself. Ford has screwed up their Premier Auto Group with some very weak products and then they blame health care costs for the company's problems as a whole. Give me a break.

I would also like to know what you meant by "other things UAW related"

 

The big problem is what Ford traditionally used to be in the stock market: A sure thing.

At one time Ford was always a money maker. If you had some money that you wanted something better than bank interest on, you could get it from buying stock in Ford. You wouldn't make very much money, but you would make some.

Now they're falling out of that conservative investment class because so many other suppliers have entered the market. Now they're looked at as a potential short term money maker based on new product successes and failures.

What scares the hell out of me is their pre-occupation with government standards rather than the sales floor. What I mean by that is the lobbying to keep fuel economy standards down, safety standards low to keep production costs down, while other manufactures (SAAB and Honda come to mind) could care less because they realize the customer expects WAY more than those standards. People are flocking to the Honda dealerships for hybrids and their MPG, SAAB for their safety; both of which exceed our government madates by huge margins.

Times are changing--even the NHRA has rules for electric dragsters now. (Seriously!)

So my take on the situation is bad management, plain and simple. They desperately need to clean house. I have a feeling when the next contract comes up, we'll be seeing the last union-built Ford. A deal is a deal, but as far as automobile manufacturing in today's stock market goes, the terms "Buy" and UAW are perfectly diametrical.

-Fatz

 

The reason Ford & GM are hurting is as several pointed out, Health Care. It is a huge drain on their companies.

Another reason is: GM & Ford sell their vehicle for much, much less than value. My truck's window sticker said $33200. I paid $24000 out the door with all fees & taxes. That means either one of two things:
1 The vehicles are overpriced blatantly
2 They are sold at a loss

In GM & Ford's case, most vehicles are sold at a loss. ANYONE who pays sticker for a GM (other than a VETTE) is a freaking moron. The last GM car I bought was my a 2000 Cavalier for the wife. It stickered at $17000, we paid $13000 and didn't even ask for that discount. We simply said that we weren't sure that it was the car we wanted and POOF, instant rebate of $4000

The German companies do not have this ridiculous process of negotiating the price of the vehicle. If the Mercedes has stick on it for $40000, you're paying $40000 + whatever your state's sales tax is. The is no negotiating. I know, I've been trying for the last 8 years to buy a MB, BMW or Audi. I can't afford one.

The Japanese companies do well because they have dumped (term for purposely selling vehicles under market value) since day one. Take the example of the Honda Accord. Plenty of room, leather seats, 260HP V6, 17" aluminum wheels, Nav system, 12 CD changer, etc. Sticker for $25000, yeah right... My *** that car is only $25000. A BMW 3 series with all the same options is almost $38000. That is a realistic price for a premium car based on the cost of raw materials and labor. Its not as if the Japanese cars are any better than anything else, they are simply cheaper. When's the last time you saw a 12 year old Honda on the road? Not very often I'll bet, most trade them in for another one.

Now look at the F150 I own. A nearly 6000lb truck (mostly metal, very little plastic or composits used in the body), huge axle, V8, leather interior, 6 disc CD, all the bells & whistles, etc... I paid $24000... Again, my *** that vehicle only costs $24000.

This is a process that will never change. Americans simply will not buy an AMERICAN badged vehicle at full price. It will never happen.

Another problem is fleet sales. Almost every customer for fleet sales gets a HUGE discount. Ford's claim of the #1 vehicle 27 years running is partly true. Vehicle sales to fleet use, rental companies, construction companies, etc count in that total. Take that out & only use vehicles sold for personal use and you will see that the Chevy/GMC twins OUTSOLD Ford every year since the mid 90's until 2004. Same goes for the Taurus. It was America's best selling car for years. It was passed by the Accord & then the Camry. Almost 50% of the Taurus sales were to rental car companies. So even though Ford has the best selling vehicle on earth for 27 years, they lose money on probably 40% of them.

I see no hope for GM. Ford is slightly better off and Chrysler has MB to fall back on. You can bet your *** that that MB will pull the plug if they start posting losses. MB isn't in business to lose money and they sure won't let Chrysler drag them down.

KC-10 FE out...

 

when did I say it was the UAW's fault regarding Jag, Volvo, & Rover????
I knew I'd **** some UAW worker off.

Its not 1920, I dont see the point of unions anymore IMO. Labor conditions are FAR superior. Ford is still paying pensions from its old retired factory workers just like GM and Dodge. What is the avg annaul salary of a UAW factory worker? Other manufacturers seem to keep a union free workplace, but the Big 3 can't shake them.

 

The pricing of Japanese automobiles is right on target, actually. In fact, the overall price of automobiles (the drastic change in price compared to vehicles sold prior to 1980) is attributed to a tariff placed on Japanese vehicles to protect Chrysler.

How so?

The Tariff on Japanese automobiles was per unit, not a dollar amount. Back in the early 80s demand for Japanese cars was so incredibly high that people were willing to pay a premium to own them over their american alternatives. What did the Japanese do? What any of us would have done. They packed every single option they could imagine into these cars to get the most $$$ out of each unit. Air conditioning, power windows, power seats, power everything, electronic this and that, turbocharged, fuel injected..the list goes on and on.

That's the history of how it happened--that's how the relative price of automobiles shot up across the board. American automakers were forced into the same marketing plan simply to compete; but they had to do it a lower price AND a higher quality to be successful at it.

One more thing. The 'healthcare costs' are just another way of saying 'labor costs' without raising red flags on wallstreet.

Edit: just one more thing. I promise. I can't confirm this, but I believe Japanese auto makers might actually have LOWER transportation costs per unit because Teamster and UAW problems. I've been told the Japanese can ship a car from Japan to the US cheaper than Ford can send a Ranger from Minneapolis to Chicago.

-Fatz

 

Well, I can darn-near guarantee you that it's not #2. Ford is not selling vehicles at a loss. They may not be selling them for as much profit as they used to- but they aren't in the business of giving cars away.

You can bet if you, or a fleet manager walked out the room you lost and Ford won. Meaning that Ford made money and you have to pay; even if you got what you wanted...

Years ago I read that Ford makes $15,000 Profit on every new Lincoln Navigator it makes, and $10,000 on the Expedition. If course, that was in 1998 when the Expedition was $30,000 and the Navigator was $35,000. Today (7 years later), a fully loaded Navigator tips the bank scales at $63,000.00. In fact, you don't have to go that far- because in 2000 if you checked every box, a 'Gator would cost you $60,000.

Have the cost of product sold doubled in 4-8 years? No, not hardly. Were that true, everything else would be double what it cost in 1998; not much has doubled. So, Ford is making money, probably just not as much....\\\\

I see lots of old Honda's on the road. There are at least four 1991-1993 Accords in my parking lot right now- not to mention the old Civics- I'm talking back to the 1988's....

You're right, Honda buyers are often repeat buyers. You're right again, Honda doesn't give you much of a discount- but I disagree; BMW will negotiate...

Honda can be so "In your Face" about pricing because:

1.) They build an excellent product.
2.) The reliability factor.
3.) Resale value. (You won't get screwed at trade time)
4.) It's high resale value makes it a logical lease choice because you can afford a nicer car, with a smaller payment due to reduced depreciation and a higher expected residual value at the end of 24/36/48 months...

 

So if Ford doesn't sell vehicles at a loss, then you confirm my first theory: The Vehicles (not just Fords) are ridiculously overpriced. If the dealer laughs his way to the bank after you leave, then something not kosher is going on.

We can surmise that build costs will be similar from a Ford truck to a Chevy truck (when I ordered my truck, I could have purchased a Chevy with all the same options off the lot for about $20000, they were offering up to $10000 in rebates). So, either both companies sell at a loss or the vehicles are overpriced and they assume that a customer that gets a $5000 rebate is a happy customer. In reality, the company be it Ford or whoever, can sell the vehicle for a $5000 "loss" since the consumer doesn't know any better anyway. I like the people that say in the dealer, "I know what this vehicle costs, I looked it up on the internet". Unless they sell at a loss, they must give a rebate to make the sale. That either cuts out part of the profit or the vehicle is overpriced to begin with. Ford & GM both admit they lose money on passenger cars. They make most of their money from SUV's (the holy grail of cash cow in the auto world, my friend that works for the State of NJ as a vehicle mechanic heard at a Ford dealer that Ford makes a $25000 profit from Navigator) and to a lesser extent, trucks. I don't believe for one minute that a Lariat cost more than $14000 more to build than a XL. Translation, pure profit.

When I bought my truck, the dealers all laughed at me when I said I could get a Lariat for $23000+tax. I told ALL OF THEM to ***** off and purchased from the Overseas Military Program.

YES, the Japanese sell their vehicle below value. It is a commonly know fact. If you can get a, say Pontiac Grand Prix with a V8 and all the goodies for $33000 (that's the price I just got from the BUILD YOUR OWN function on Pontiacs web site) and an Accord is basically the same size car for $25000, either one is overpriced or one in being sold at less than market value. Take your pick. Again, look at the German companies. You don't see them winking and saying "let me go talk to the manager, I'll see what I can do." You might think you can negotiate, but you can't. I know 3 sale guys at three different German dealers and they laugh every time some cretin with a Neon comes in to look at a 3 Series/A4/C Class. Just cause you got a Neon for $9700 doesn't mean your getting a BMW for less than its value. You may be able to negotiate a little, but you ARE NOT GETTING a German car for less than what its worth, it just doesn't happen.

At any rate, it really doesn't matter. The US auto industry is a monster that will never get any better. When Chrysler was about to go out of business in the 80's, what happend? The US Government bailed them out. So when GM finally goes bankrupt (I say no more than 7 years) the government will be there to bail them out.

KC-10 FE out...

 

Ford is not losing money when they sell vehicles to a dealer. But when they are coughing up 2-5K bucks in rebates, figure up the profit lost X1,000,000 autos.

 

2003 earnings per share=.27. 2004 earnings per share=1.97. Ford is not hurting they are doing better than they have in a few years.

 

ford went though in 2003 and strongarmed all its suppliers into cutting there prices. didn't see that passed on to customers. you say labor conditions aren't the same as the 20's? they still would be if it wasn't for the unions. We just passed a contract today that has us paying more for insurance including future retirees

 

No, they don't; and no, it isn't. You're leaving out that the Japanese have a comparative advantage in the manufacture of automobiles; they're more efficient at it for one reason or another. On a macro-economic level, Japan devotes less of resource A to produce X amount of cars. America has to devote some amount greather than A to produce the same X that Japan does.

I'm only talking the price to manufacture. Japan gets further ahead of us in the market elasticity area--they can bump the prices of their vehicles up a greater amount than american dealers can and still retain buyers.

Additionally, the dealership tradition is uniquely American. A long time ago palms were greased to pass laws making it illegal for auto manufacturers to sell to the public--the HAVE to sell to a dealer. If you want a car in Japan, you can very nearly call the factory and give them your bank# and go pick up your car. I can't believe those laws haven't been tested by the big 3 (well, 2) yet.

-Fatz

 

Yeah, you guys are bringing up some good points..

I have a friend back home that just bought a 2005 BMW 530i. The first one he looked at stickered for $51,000 and some change (Can you believe that *****?- For a 5-series!!!) He'd gone to one dealership, and priced one out- and was going to get it; but it wasn't EXACTLY what he wanted. He wanted black on black, and all they had was black with parchment leather. Long story short, he went to another BMW dealer- they had the car he wanted- but it was $56,000 and it had the sport package.

To make the sale, the dealer sold him $56,000 5-series for $51,000 (Matching the other dealer's stripper 530) in order to make the sale... So yes, they will negotiate. But, I know why you think the way you do- and that is because for SOOO LOOONG, BMW, MB & Audi didn't negotiate. To even ask for something off was not PC in an upscale dealership like those. That is to say, if you must ask how much it costs, or to negotiate the price- you obviously can't afford it....

However, to remain competitive, BMW has started learning how to dance... It's a buyer's market, so to move units, you must get in the game..

So far, Honda is still Honda. If you get $500.00 off sticker, you have done a good job of negotiating at a Honda dealership.. The only Honda's you can get a good deal on, or "demo's" or
program" cars... In all my years of automotive enthusiasm, I have yet to ever see Honda offer a rebate..

Never...