You just wait, when wall street does finally utterly crash, on all the displays in time square there will be a giant "Financial re spawn in 5, 4, 3..."
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GM Target Price Downgraded to $0.00/Worthless
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Actually the problem really isn't GM's cars, as sh*tty as they are. The problem is their future pension liabilities. A company as large as GM probably has three pensioners for every current employee, and that ratio will be going up rapidly. That means that every employee working now, has to produce enough profit to support his share of the company's current operations and management, plus his own salary, plus the pension of 3-4-5 retirees, forever. It's like a pyramid scheme and it simply isn't sustainable. Especially when pensions have been negotiated to around 80% of pre-retirement income, plus lifetime benefits. So really, don't blame GM -- they're doing the best they can against impossible odds. Blame the UAW and their blind greed, to give their members unreasonable retirement luxury at the expense of their employer's very future.
Perhaps the best thing that could happen is for the feds to say "No" and GM to go bankrupt. Sure it would decimate the economy of the world for a few years, but we'll recover. But after that, people will start earning what they deserve again -- and factory workers won't make more than doctors anymore.
Perhaps the best thing that could happen is for the feds to say "No" and GM to go bankrupt. Sure it would decimate the economy of the world for a few years, but we'll recover. But after that, people will start earning what they deserve again -- and factory workers won't make more than doctors anymore.
So what happens to the pensions if GM goes bankrupt?
Do the retires lose them?
What about if the government takes them over?
Do the retires lose them?
What about if the government takes them over?
The reason the target price goes to zero is because in most bankruptcy reorganizations, shareholder equity is wiped out.
There's no obligation on the government to honor the pensions, but realisticallty, we don't want to have a flood of homeless, starving and sick retirees all over the place either.
RE the contracts between the UAW and GM, you can't blame one side or the other--they both made this deal. Blaming the UAW more than GM is silly.
Also, Ford makes some great cars and so does GM (Buicks are not my cup of tea, but my in-laws have one and d*mn is it nice--blows the snot out of my wife's BMW--makes it look like a, er, Honda...which is what I drive).
I think the biggest problem the auto industry in general has is dealerships--how well can you do, long term, if the face of your company tries to scam your customers in any way possible?
But for domestic auto makers, the mistake they made, of course, was to basically bet the farm that gas prices would never go over $2/gal. Would it have killed them to hedge their bets a little? Just divert a small percentage of resources away from making bigger trucks into making a couple good smaller lines? I mean, the big-truck thing was mostly a fashion thing anyway (most of the people buying the big SUVs had little need for them) and the fashsion would have changed at some point, even if gas/oil prices hadent surged.
RE the contracts between the UAW and GM, you can't blame one side or the other--they both made this deal. Blaming the UAW more than GM is silly.
Also, Ford makes some great cars and so does GM (Buicks are not my cup of tea, but my in-laws have one and d*mn is it nice--blows the snot out of my wife's BMW--makes it look like a, er, Honda...which is what I drive).
I think the biggest problem the auto industry in general has is dealerships--how well can you do, long term, if the face of your company tries to scam your customers in any way possible?
But for domestic auto makers, the mistake they made, of course, was to basically bet the farm that gas prices would never go over $2/gal. Would it have killed them to hedge their bets a little? Just divert a small percentage of resources away from making bigger trucks into making a couple good smaller lines? I mean, the big-truck thing was mostly a fashion thing anyway (most of the people buying the big SUVs had little need for them) and the fashsion would have changed at some point, even if gas/oil prices hadent surged.
Two insightful commentaries from Time.com:
Is General Motors Worth Saving?
The 50 Worst Cars of All Time
Is General Motors Worth Saving?
The 50 Worst Cars of All Time
Very entertaining reading, this is. He managed to hit most of the low spots, though I'm surprised he managed to find only one Fiat car for his list, and no Renault cars. My favorite comment: "the Yugo had the distinct feeling of something assembled at gunpoint."
Delta did the same thing. When reorganized, they started back at $20 a share. Hopefully, GM will as well.
But what happened to existing shareholder equity in that case? Probably it was wiped away, and new stock was offered. The only time I can recall existing shareholders not getting completely stiffed in a bankruptcy reorganization was when K-Mart went Chapter 11. I believe the shareholders kept some fraction of their equity that time, but they really had to gang up on the courts to get it.
I agree that was a great read.
He really did rip the Yugo - I think he thought it was the worst of the lot.
Yep. But either way, this is probably the end of a lot of GM car brands as others have said.
I believe it was a copy, or homage, or just misguided Xeroxing. Most unlikely car to have been the star of a movie (Drowning Mona). I can't believed he omitted the early '70's Subarus, though.
Looking it up, the Yugo was based mechanically on the Fiat 128 under license from Fiat.
I'll believe when I see it. Not that GM doesn't need to consolidate but each division has it's own consituency...
We own two cars. Mine is a Ford made in Mexico and my wife's is a US made Japanese car. It's it odd that Toyota can come to the US, build a factory and make money while the US company can't. It's really to bad we can't let GM fail. In the long run it would be better.
You got it slightly wrong. The Camaro, GTO and Corvette ZR1 were a "cheap, reliable, economical car" that sold at a very high price. They made a ton of money off those cars.
The problem is that it cost not much different to make a Toyota Colloa as a Corvette or an SUV. But peole for whatever reason are willing to pay more for the Corvette.
I own a Ford ranger pickup. I bought it brand new for $12,000 (in 1993) and the time I parked it next to a Ford Explorer. I opened up the hood and doors and compared parts. ABSOLUTLY IDENTICAL from the front seat forward. Every eletrical cable and bolt and screw was the same. Under the truck ame story from tail pipe to bumber. The differentce was the Ranger has a truck bed in back and the explorer had seats. BUT,... the explorer cost over twice as much money. Damned expensive seats, I say. You don't have to think hard to see why Ford liked to sell SUVs
One of the biggest differences between the US auto makers and the overseas manufacturers is that the US companies are burdened by huge health care costs, not just for their current employees, but for their retired employees as well. So even if they make a good product (which on occasion they have done) it will end up costing more than the import. GM may "fail" in the sense that bankruptcy and reorganization seems quite likely at this point.
I know exactly what GM needs to do to return quickly to profitability:
Reintroduce the Pontiac Aztek.
.
...snerk.
...snicker...
...bwaaaHAHAHAHAHAHAAAAAA!!!!
Seriously, though...
Agreed. Buick's well overstayed its welcome; it should've exited alongside Oldsmobile, but such a move would have looked really bad to shareholders at the time.
Much of Pontiac could be folded into Chevrolet, as "sport"-branded versions of their Chevy counterparts, and the S-10 and Equinox can be moved to GMC. Either the Yukon or Suburban could be ditched. The Uplander can go bye-bye as well; let Chrysler have the fading minivan market to itself.** Cadillac can absorb one or two Buick models as entry-level models.
I also envision Cadillac taking the Saturn Sky for itself (adding a little Caddy bling, of course) and the rest of the Saturn brand sold off. The Sky is the only GM product that seems interesting at the moment, in my insignificant opinion.
**P.S. Don't get me started on Chrysler's current minivan lineup-- they're downright fugly now.
Reintroduce the Pontiac Aztek.
.
...snerk.
...snicker...
...bwaaaHAHAHAHAHAHAAAAAA!!!!
Seriously, though...
Agreed. Buick's well overstayed its welcome; it should've exited alongside Oldsmobile, but such a move would have looked really bad to shareholders at the time.
Much of Pontiac could be folded into Chevrolet, as "sport"-branded versions of their Chevy counterparts, and the S-10 and Equinox can be moved to GMC. Either the Yukon or Suburban could be ditched. The Uplander can go bye-bye as well; let Chrysler have the fading minivan market to itself.** Cadillac can absorb one or two Buick models as entry-level models.
I also envision Cadillac taking the Saturn Sky for itself (adding a little Caddy bling, of course) and the rest of the Saturn brand sold off. The Sky is the only GM product that seems interesting at the moment, in my insignificant opinion.
**P.S. Don't get me started on Chrysler's current minivan lineup-- they're downright fugly now.
I just saw a ton of ads for the new Hummer truck on tonight's college football game. Not only is investing tons of R&D into making massive SUV's a dumb move right now, dumping advertising dollars into promoting something nobody wants to buy may also be part of the problem with GM's strategy.
I've got an idea... how about using those dollars to catch-up on fuel efficiency like all of your foreign competitors have been doing for the past decade. Oh, and you can take the budget you've been spending on lobbying the government against higher fuel standards and put that into your fuel economy R&D too. If GM gets a bailout of some kind, every us taxpayer should get to kick GM's CEO in the nuts. Not seeing gas prices rise is like getting run over by NASA's crawler transporter that has a top speed of 1/mph fully-loaded (and may be the only vehicle on the earth to get worse fuel economy than the Hummer).
I've got an idea... how about using those dollars to catch-up on fuel efficiency like all of your foreign competitors have been doing for the past decade. Oh, and you can take the budget you've been spending on lobbying the government against higher fuel standards and put that into your fuel economy R&D too. If GM gets a bailout of some kind, every us taxpayer should get to kick GM's CEO in the nuts. Not seeing gas prices rise is like getting run over by NASA's crawler transporter that has a top speed of 1/mph fully-loaded (and may be the only vehicle on the earth to get worse fuel economy than the Hummer).
GM and Flex Fuel Technology
GM needs to be saved. It is through GM that we, as the United States, have begun more responsible development of cleaner fuel burning vehicles. SAVE CHEVY!!
GM needs to be saved. It is through GM that we, as the United States, have begun more responsible development of cleaner fuel burning vehicles. SAVE CHEVY!!
Even though I'm a Ford guy, something must be done.
However, at what point should the government decide what businesses deserve help and which don't? I like a capitalistic, free-market society, and if a business happens to fall through, well, that's the risk investors take.
I still don't know whether to make heads or tails of this, but I feel if we look at the Great Depression (history repeats itself) we can properly determine the resolution to this mess. If Obama borrows a page from FDR, we may be on the right track.
However, at what point should the government decide what businesses deserve help and which don't? I like a capitalistic, free-market society, and if a business happens to fall through, well, that's the risk investors take.
I still don't know whether to make heads or tails of this, but I feel if we look at the Great Depression (history repeats itself) we can properly determine the resolution to this mess. If Obama borrows a page from FDR, we may be on the right track.
If all 3 companies go away it might be a good thing too. Wait a few years and think about what they did to get that way and start a new company and start over with a new name. It could be the greatest thing ever.