http://www.detnews.com/article/20111114/AUTO01/111140434/1361/U.S.-boosts-estimate-of-auto-bailout-losses-to-$23.6B

Gee, giving taxpayer money to a corporation that has proven for over 30 years that they couldn't compete was a great idea!

 

Unfortunately, the government is not good at controlling business. There is an excess supply in the auto marketplace. That still has not been worked out. As long as that excess is allowed to remain the industry will have a tough time. Chrysler and GM were failing because nobody was buying their cars. Allowing them to stay in business by giving them a bailout only continues the problem. At least one of the auto companies will go out of business. It is inevitable the one that is least efficient will be forced out of business or the government will continue to step in and allow the excess to remain.

 

It is no longer counting the $5 billion for auto suppliers ?
Why is this, $ 5B is now considered a rounding error, so there is no point in counting it ?

GM's stock price dropping really has nothing to do with the federal govt being involved.
That is what happens to a pension fund masquerading as a auto manufacture.
GM has had this stigma for years, and closing out the previous stock and making a new one for the same company did not change that.
You could tell it was going to be a bad IPO, when anyone that was dumb enough, could get in at the IPO price before the 1st trading day.

GM is not a case of not selling cars, it is a case of selling cars for $ 2K more than the similar model due to cost overruns.
Add to this, it is a a really crap place to work at.
They abuse their employees a lot, and know they can get away with it, as Ford or Chrysler are not hiring right now. Until things make a serious turn around, they know they have the employees by the short hairs.

They were looking for suckers to buy into the stuff, as the underwriter was going to have to float a boat load of the stuff.

Bad enough GM did not get to eject the pension ( like UAL et all, did back in the day ) to the fed govt, now they have to pay the UAW 9% interest on billions in bonds that the CA teacher's pension got the big stick on.
Union brotherhood; all for 1 and 1 for all.
- until it comes to money then it is every man for himself.

See what happens with Chrysler, think the govt is out of that stock all together now ( private issuance ).
The employees own a chunk, and Fiat the remainder, and we have all seen how well Fiat is run as a company.
When it get tough, expect the head in Italy to eject the US part 1st, to save fellow countryman's jobs.

 

Part of GM's stock drop is based on lost sales from people that have moved to Ford, Honda, etc. Many people refuse to buy from GM and Chrysler since they have taken taxpayer money.

 

Kind of hard to qualify this as a fact, with the lack luster auto sales the past 3 years.

GM did take a big hit in MAR of this year, but rebounded quickly.

when compared to the others, they are doing just as well if not better than Ford and very well compared to the pounding that Honda and Toyota took in Q2.



GM is not lighting the world on fire, but OCT 2010 to OCT 2011 GM has a domestic car sales increase of 15%, where Ford's domestic car sales are down 8%. Gm as a whole is up ~ 200K units year over year.
Q2 revenues increase by 19% ( I stuck with revenue, as profit margin is not a fair compare to Ford, they did not eject most of their debt like GM )
Number wise this is 60K units for GM, and 49K units for Ford in OCT-2011 ( Ford had 54K units in OCT-2010 ).

Chrysler year over year ( OCT-2010 to 2011 ) is a stupid 60% increase, but when you go from 20K units to 32K units, it is not a market leader.

Toyota also took a 8% drop in domestic car sales and Honda is flat year over year.

 

The fact is, GM would've been doing better if they were allowed to fail and re-emerge leaner and meaner instead of taking bailouts. There's obviously no way possible to quantify it, as you said, but I have read many posts on this and other forums from people that have abandoned GM over the bailouts.

What is sad about GM is knowing what could have been if they would have produced better cars over the last 40 years. 60% percent market share in America would have been possible, and bailouts would have been totally out of the question.

 

GM was too busy killing off mass transit and promoting their product to worry about making it better.

However, GM IS leaner and meaner now, in spite of the bailouts (or maybe because of them).

- Jack

 

GM had one of the largest advertising campaigns in history up until the 1990's. If what you said was true, they wouldn't be able to make cars/trucks fast enough.

As for the bailouts, that's called crony capitalism and we'll see how it turns out for them in the long-term.

 

If they failed, hard to say what would have come out of the other end.

GM made dumb mistake after dumb mistake.

Not selling off the Hummer line, letting Saturn die rather than sell it to a consortium of dealers, along with waiting too long to kill off redundant product lines.

Management had no clue what they were doing.

Ford did not make much better cars in the 60s and 70s, build quality was not a concern for any US auto maker ( or could not be controlled with UAW contracts in place ).

Couple build quality with not building cars for the 70s oil embargo, and this is why Datsun became such a strong player in the US in the 70s. The cars rusted to bits, but still ran and got good MPGs.

US car companies were late to the build quality game. Lee pushed the low cost higher MPG with the K-Kar. Got them to repaying the bail out loans early, so it was on the right track, just too late in into.

 

Agree 100%. GM did not put products first, and they paid the price. IMO, that's why bailouts are a bad precedent to set. A brother in law of mine is a manager at an import dealer, and they literally laugh at GM and Chrysler products and discount them as "eye candy". GM and Chrysler knew they could go to DC with hat in hand if they ever got in trouble. And they did.

If GM and Chrysler were allowed to go bankrupt, they could've emerged with better management dictated by the market, not lifer bureaucrats and politicians.

 

Chrysler did get fed assistance in 1979 with the loans being guaranteed by the fed govt.
This would be similar to the 2nd step that GM and Chrysler got this round.

Lee did turn the place around but then the stupidity started again, trying to convert the AMC line into the Jeep-Eagle line with those awful cars. The Jeep line did well for them for years along with organic development.
The fast forward to the sale to DB, and the mess that ensued with that. after failed integration into the new parent company ( more Detroit knows best ) and the spin off.

This almost points to you cannot have the company come out the other side, it needs to have house cleaning, and start over with external people, and this does not mean a retread auto exec that did time in another part of the auto supply chain.

Ford did it by bringing in the head from Boeing, he cleaned house, got money when rates were good just in case, and started the process to stream line the products.
See what happens when you get rid of the old baggage in day to day operations, and just give them a title to make them feel like they are part of the family history. Bill Ford suffers from the Child Trust fund disease.

 

Yep. The argument can and should be made the auto bailout precedent was set in 1979.

 

We are in danger of winding up like the British car industry............nothing, all gone overseas.

 

Seem to recall this was due to loan backing for rail roads and / or airlines...

The Fed Govt seems to have been in the position of "assisting" private corp for some time.

 

Autos, airlines, railroads, etc. All the bailouts are bad. If they were never passed, life would still go on and someone better would be managing them.

I'm sure we're on the same page.