Oil prices slumped below $64 a barrel on Monday. When oil prices went crazy last time it was all on speculation. Will prices drop low - again on speculation? It sounds like the word-on-the-street is that speculators are planning on making more money by pushing the price of gasoline down.
This is great for consumers if this is true. It would equivalent to about $2/gallon of gasoline. That would help every one's budgets.
Ford Executive Chairman Bill Ford and Auto Nation CEO Mike Jackson were just two voices that spoke out in favor of a higher gas tax earlier this year. If gas taxes do increase - consumer will NOT see a savings at the pump.
"Per The Wall Street Journal: which maintains that a higher gas tax isn't just a good way to encourage sensible car purchases, it also stands to be helpful in saving troubled domestic automakers like General Motors."
"The federal fuel tax is highest on the most efficient fuel (diesel) and below zero on the least efficient fuel (ethanol). Cars get about 30% better mileage on diesel than on gasoline, and cars running mainly on gasoline get about 30% better mileage than they would using 85% ethanol."
If the Cap & Trade and the new Energy Policy pass the House and Senate you will see severe gas taxes - more than we can imagine.
So what are these "super high" gas taxes to be used for anyway - it would add funds to the depleted federal highway trust. And force consumer that do have money and need cars to consider hybrid cars.
Since GM, is already under government control, this would push us to buy the cars that the government wants us to buy and not vehicles we want. Nothing like controlling the auto industry, oil and everything else in our lives. If this is the change you wanted - then you got it.
If consumera would purchase diesel power vehicles, which are clean burning low-sulfer vehicles we would save 1.3 million gallons of oil. That is what we import annually. That would help everyone.
Please tell your representatives that we - the one that voted you into office - DO NOT WANT THE ENERGY BILL or CAP AND TRADE TO PASS!
If we fail to send a message it will cost YOU $3300 per family of which much of this is a carbon tax and fuel taxes.
There must be other ways - but more taxes on an already down economy is asking for a larger disaster!
Monday, July 6, 2009
Sunday, June 14, 2009
New GM Chairman: "I Don't Know Anything About Cars"
New GM Chairman: "I Don't Know Anything About Cars"
Edward E. Whitacre Jr has been appointed as the new chairman of GM and will take post after the company emerges from chapter 11, despite admittedly knowing nothing about cars.
"I don’t know anything about cars," Whitacre, the 67-year-old former chairman of AT&T, said yesterday in an interview with Bloomberg News after his appointment. "A business is a business, and I think I can learn about cars. I’m not that old, and I think the business principles are the same."
But there has been concern in some quarters over his ability to lead the nation's biggest auto company out of bankruptcy. According to the Associated Press, Telecom industry analyst Victor Schnee called Whitacre's appointment "bizarre." Although Schnee admits that Whitacre has accomplished a great deal, he does not have much confidence in his ability to run GM better than previous management.
However, others seem to be more positive in the new appointee. "GM is not now about just making cars," Jim Hall, an auto industry consultant and former GM engineer, told Bloomberg. "It's about re-creating itself as a 21st-century car company. They have to have somebody at the top that understands they have to make a new GM.
Michael Robinet, an automotive analyst at CSM Worldwide Inc. told Bloomberg, "Let’s face it: The chairman is not necessarily operational… The chairman is about ensuring a strategy is followed."
GM's interim chairmen Kent Kresa said that Whitacre was "an excellent choice" after being recommended for the position by Steve Rattener, one of President Obama's senior automotive advisers.
“We need to bring back the confidence of the American public in this company,” Kent Kresa, the automaker's interim chairman, told the New York Times. “Having a strong board is a big piece of that.”
LAUREN FIX, The Car Coach SAYS:
SO WHAT IS HE GOOD AT:
If he doesn't know about cars then what good is he for GM?
Is Whitacre a good delegator - is what many of these executives really are?
Is Whitacre good at reading a teleprompter and motivating the people and management?
Is Whitacre good at attending meetings and using large words that confuse consumers?
Is Whtacre good at axing jobs and saving the company some money because the majority stock holder tells him too?
In order to be a great Chairman at GM, he needs to be an icon like Roger Smith and surround himself with people who are knowledgeable about cars!
It's not just GM that gets me so frustrated - it's the Automotive Task Force that also doesn't know what it's doing.
Do we really want the government to run the auto industry - ok, they say they don't want to run the auto industry. But want to watch over it in a "God like way". If that doesn't scare you in many ways then you are sleeping.
We will never see our taxpayer money back...
We know the government doesn't want to run the auto industry - but it is...
There is NO exit plan in place...
Don't we learn from history - look at the British Auto Industry - what industry? It's gone.
Now that they've given Chrysler away to Fiat - will the Italians close our plants in order to
bring in their small cars? It wouldn't surprise me.
Fiat is already keeping its executives in Italy to avoid our cap on executive salaries.
This is a sign of things to come ...
ON a brighter note - Ford is putting its best efforts forward and you will see that in the Fiesta and 2010 Taurus. GM is trying to come up with new products that have great fuel efficiency. So there is a serious shift in the auto industry.
Remember - the auto industry is the victim of the banking industry - NOT the criminal!
Edward E. Whitacre Jr has been appointed as the new chairman of GM and will take post after the company emerges from chapter 11, despite admittedly knowing nothing about cars.
"I don’t know anything about cars," Whitacre, the 67-year-old former chairman of AT&T, said yesterday in an interview with Bloomberg News after his appointment. "A business is a business, and I think I can learn about cars. I’m not that old, and I think the business principles are the same."
But there has been concern in some quarters over his ability to lead the nation's biggest auto company out of bankruptcy. According to the Associated Press, Telecom industry analyst Victor Schnee called Whitacre's appointment "bizarre." Although Schnee admits that Whitacre has accomplished a great deal, he does not have much confidence in his ability to run GM better than previous management.
However, others seem to be more positive in the new appointee. "GM is not now about just making cars," Jim Hall, an auto industry consultant and former GM engineer, told Bloomberg. "It's about re-creating itself as a 21st-century car company. They have to have somebody at the top that understands they have to make a new GM.
Michael Robinet, an automotive analyst at CSM Worldwide Inc. told Bloomberg, "Let’s face it: The chairman is not necessarily operational… The chairman is about ensuring a strategy is followed."
GM's interim chairmen Kent Kresa said that Whitacre was "an excellent choice" after being recommended for the position by Steve Rattener, one of President Obama's senior automotive advisers.
“We need to bring back the confidence of the American public in this company,” Kent Kresa, the automaker's interim chairman, told the New York Times. “Having a strong board is a big piece of that.”
LAUREN FIX, The Car Coach SAYS:
SO WHAT IS HE GOOD AT:
If he doesn't know about cars then what good is he for GM?
Is Whitacre a good delegator - is what many of these executives really are?
Is Whitacre good at reading a teleprompter and motivating the people and management?
Is Whitacre good at attending meetings and using large words that confuse consumers?
Is Whtacre good at axing jobs and saving the company some money because the majority stock holder tells him too?
In order to be a great Chairman at GM, he needs to be an icon like Roger Smith and surround himself with people who are knowledgeable about cars!
It's not just GM that gets me so frustrated - it's the Automotive Task Force that also doesn't know what it's doing.
Do we really want the government to run the auto industry - ok, they say they don't want to run the auto industry. But want to watch over it in a "God like way". If that doesn't scare you in many ways then you are sleeping.
We will never see our taxpayer money back...
We know the government doesn't want to run the auto industry - but it is...
There is NO exit plan in place...
Don't we learn from history - look at the British Auto Industry - what industry? It's gone.
Now that they've given Chrysler away to Fiat - will the Italians close our plants in order to
bring in their small cars? It wouldn't surprise me.
Fiat is already keeping its executives in Italy to avoid our cap on executive salaries.
This is a sign of things to come ...
ON a brighter note - Ford is putting its best efforts forward and you will see that in the Fiesta and 2010 Taurus. GM is trying to come up with new products that have great fuel efficiency. So there is a serious shift in the auto industry.
Remember - the auto industry is the victim of the banking industry - NOT the criminal!
Saturday, May 23, 2009
New Fuel Economy Rules are more than meets the eye!
New Fuel Economy Rules are more than meets the eye!
President Obama announced his new plans to force auto manufacturers to make revolutionary fuel economy improvements.
The new fuel economy standards are more than meets the eye. I'm so unhappy about this sudden change and the mafia tactics of pressuring the auto industry to stand there smiling like puppets while President Obama makes statements that mean more than just higher fuel economy, lower greenhouse gas emissions and greener cars.
Just to state the facts first:
• President Obama has raised the CAFE (Corporate Average Fuel Economy) standards to unified national standard of 35.5 mpg by 2016.
• Cars must achieve 39 MPG.
• Trucks must get 30 MPG.
• Currently, the DOT (Department Of Transportation) manages fuel economy, and the EPA
(Environmental Protection Agency) deals with emissions - now they are working together on the auto industry.
• California, under the Clean Air Act wants all 50 states to use the more stringent rules. This
could create a situation where car makers have to deal with rules from three agencies.
• The CAFE standards will increase by five percent each year, building on the 2011 standard, until we get to 2016. This means an Industry standard of 35.5 mpg by 2016, an average increase of eight mpg per vehicle.
• The Obama Administration has inflicted a body blow to large vehicles by radically ratcheting up federal CAFE, which harms the Detroit automakers more than their foreign competitors. The new global-warming regulations backed by the Administration will destroy millions of jobs and “decrease average household purchasing power" which leads to cutting auto sales and further hurting automakers. The same automakers that stood there smiling as the President made his speech.
Now you have the facts - here a few FALSE statements:
=> "Drivers will recoup the additional cost to buy one of these more-efficient vehicles in three years." This is only true when gasoline is $3.50 per gallon - President Obama, are you telling us something we don't know? Is there a $1 or more per gallon gas tax coming in the New Energy Policy?? Because we all want more taxes - NOT!!
=> "Drivers will, over the life of the vehicle, save $2,800, on average." Obama claims the new rule will save 1.8 billion barrels of oil over the next five years, and is the projected equivalent of taking 58 million vehicles off the road.
=> "We have tested other options to reduce the use of foreign oil and the government and your tax dollars supplemented it": Yes. Hydrogen fuel cell cars and Ethanol - NOW both are being shelved and ethanol production plants in the midwest stand stagnant. Farmers changed their fields to produce more corn and our food prices went through the roof. Has anyone thought of the ramifications of these changes when we have already invested in this technology?
Many other automotive journalists have agreed "there is a HUGE flaw in this plan that will having devastating results on the American car business and American jobs."
• American car companies do produce hybrid and many fuel efficient vehicles, but consumers are NOT buying them.
• Consumers are NOT buying cars for many reasons (and not just American cars), they've lost their jobs, credit is tight, consumer confidence is down - not even Honda, Nissan and Toyota are selling cars like they were. So what would push Americans to buy a car in today's climate?
$4 a gallon gas? MAYBE.
Only if you have good credit, have a secure job, feel confident the economy is growing and you need a new car!
Who's to say that we won't purchase import cars?
Who's to say we want cars built by the government or Congress? I DON'T.
Now that the Automotive Task Force is in charge of Chrysler and GM; many consumers would only buy a Ford or other brands. These companies are building great cars, safe cars and hybrids.
WE ALL WANT HIGH FUEL ECONOMY, LOWER GREENHOUSE EMISSIONS, LESS DEMAND ON FOREIGN OIL AND LOWER GAS PRICES - BUT WHAT IS THE REAL COST? HIGHER TAXES - THAT MANY PEOPLE CAN'T AFFORD!
So the writing is on the wall.
If you thought the auto industry was in trouble before, this new program is the final nail in the coffin for them. We need to save American jobs first then we WILL buy more cars!
See more at: http://www.youtube.com/watch?v=9zdA2rxqVmk
President Obama announced his new plans to force auto manufacturers to make revolutionary fuel economy improvements.
The new fuel economy standards are more than meets the eye. I'm so unhappy about this sudden change and the mafia tactics of pressuring the auto industry to stand there smiling like puppets while President Obama makes statements that mean more than just higher fuel economy, lower greenhouse gas emissions and greener cars.
Just to state the facts first:
• Cars must achieve 39 MPG.
• Trucks must get 30 MPG.
• Currently, the DOT (Department Of Transportation) manages fuel economy, and the EPA
(Environmental Protection Agency) deals with emissions - now they are working together on the auto industry.
• California, under the Clean Air Act wants all 50 states to use the more stringent rules. This
could create a situation where car makers have to deal with rules from three agencies.
• The CAFE standards will increase by five percent each year, building on the 2011 standard, until we get to 2016. This means an Industry standard of 35.5 mpg by 2016, an average increase of eight mpg per vehicle.
• The Obama Administration has inflicted a body blow to large vehicles by radically ratcheting up federal CAFE, which harms the Detroit automakers more than their foreign competitors. The new global-warming regulations backed by the Administration will destroy millions of jobs and “decrease average household purchasing power" which leads to cutting auto sales and further hurting automakers. The same automakers that stood there smiling as the President made his speech.
Now you have the facts - here a few FALSE statements:
=> "Drivers will recoup the additional cost to buy one of these more-efficient vehicles in three years." This is only true when gasoline is $3.50 per gallon - President Obama, are you telling us something we don't know? Is there a $1 or more per gallon gas tax coming in the New Energy Policy?? Because we all want more taxes - NOT!!
=> "Drivers will, over the life of the vehicle, save $2,800, on average." Obama claims the new rule will save 1.8 billion barrels of oil over the next five years, and is the projected equivalent of taking 58 million vehicles off the road.
=> "We have tested other options to reduce the use of foreign oil and the government and your tax dollars supplemented it": Yes. Hydrogen fuel cell cars and Ethanol - NOW both are being shelved and ethanol production plants in the midwest stand stagnant. Farmers changed their fields to produce more corn and our food prices went through the roof. Has anyone thought of the ramifications of these changes when we have already invested in this technology?
Many other automotive journalists have agreed "there is a HUGE flaw in this plan that will having devastating results on the American car business and American jobs."
• American car companies do produce hybrid and many fuel efficient vehicles, but consumers are NOT buying them.
• Consumers are NOT buying cars for many reasons (and not just American cars), they've lost their jobs, credit is tight, consumer confidence is down - not even Honda, Nissan and Toyota are selling cars like they were. So what would push Americans to buy a car in today's climate?
$4 a gallon gas? MAYBE.
Only if you have good credit, have a secure job, feel confident the economy is growing and you need a new car!
Who's to say that we won't purchase import cars?
Who's to say we want cars built by the government or Congress? I DON'T.
Now that the Automotive Task Force is in charge of Chrysler and GM; many consumers would only buy a Ford or other brands. These companies are building great cars, safe cars and hybrids.
WE ALL WANT HIGH FUEL ECONOMY, LOWER GREENHOUSE EMISSIONS, LESS DEMAND ON FOREIGN OIL AND LOWER GAS PRICES - BUT WHAT IS THE REAL COST? HIGHER TAXES - THAT MANY PEOPLE CAN'T AFFORD!
So the writing is on the wall.
If you thought the auto industry was in trouble before, this new program is the final nail in the coffin for them. We need to save American jobs first then we WILL buy more cars!
See more at: http://www.youtube.com/watch?v=9zdA2rxqVmk
Friday, April 24, 2009
Will we say Goodbye to Chrysler?
Next week should be very exciting with Fiat pushing the GO or NO-GO button on Chrysler-it would be sad to see Chrysler forced to bankruptcy.
It will be a sad day if America looses an icon like Chrysler. But after taking $4 billion dollars in tax payer money how can we keep giving them more when the UAW won't budge. They will be really unhappy when more workers are out of jobs. The domino effect will be passed on to more than just the auto industry. Every one will be impacted.As for Chrysler, the Jeep line has value and we shall see what happens to the rest of the line. They make some great cars - but even with CAW (Canadian Auto Workers) making a tentative agreement - the Lovely Auto Task force has the final say and can pull the plug!
What really ticks me off is the the Auto Task Force has no real experience in the industry. No manufacturing experience, No marketing to this segment, No background in this industry - so how can they decide the future of the automotive industry. There are so many talented, amazing people that really, truly know what can be done and have real, possible solutions. Instead no one consults with the industry - we just sit here and wait for the next show to drop.
I'm hopping mad, that things have come to this point. Again and again I have stated that the auto industry is the VICTIM!
We will miss Pontiac and the rest of the cars that make America wonderful and the great memories we have of these icons. It's been a great ride! Thank you!
Monday, April 13, 2009
Do you want GM and Chrysler to go Bankrupt?
Whether we want it or not - the government has slithered its way into the auto industry. They are micro-managing yet another company they can't run efficiently and effectively. So now we are forced into a "surgical bankruptcy" on June 1st.
Don't you just love these terms that are supposed to let consumers think that everything is "OK"? Are we that stupid that we don't understand that the economy is in a slump and everyone is hurting? In many different ways, WE GET IT!!!
I wasn't a fan of giving money to the auto industry, but there weren't many choices--too many jobs and careers are tied to the auto industry. Although GM and Chrysler took money to pay off debt, health care and retirement costs, it didn't get them very far.
Basically, if the government hadn't loaned these funds to GM and Chrysler, GM would be forced to restructure and cause a severe down turn in the economy and Chrysler would have had to sell off or close down. So we are here AGAIN!
We've given GM and Chrysler government funds and no one read the small print. As a result we have an Automotive Task Force made up of people who have never worked in the industry (and I mean no manufacturing experience, marketing, PR, or anything to do with the industry) telling us what automobiles we have to drive and what we want to drive!
A "surgical bankruptcy" means that the government will plan for or with GM, telling them what to shut down, what to keep, and what to build! This is a disaster in the making. If GM and automotive industry people rebuild GM - GM will survive. If the government keeps their fingers in GM, we will revisit history with the British auto bailout of the 70's, which ruined a major manufacturer there.
GM must save 3 brands: Cadillac, Chevrolet and Buick. The rest, sadly, have to either be sold or closed. This is so sad as GM builds good, safe cars that people really do want. As the brand choices increase - everyone loses sales.
The truth is that Chrysler is in bad shape too. If Fiat partners with Chrysler, they will be able to bring in cars from Fiat such as the 500. Fiat can utilize the Chrysler dealer network - but even if Fiat saves Chrysler and Jeep, they still have a lot of debt and Americans aren't buying cars at the rate we were a few years ago - will they be able to survive?
Unfortunately, the bottom line is that the auto industry is the victim of greedy bankers, government oversight, and scams and financial institutes who have given loans to consumers and businesses they could never repay. As a result, we all pay the price for others' poor choices!
Don't you just love these terms that are supposed to let consumers think that everything is "OK"? Are we that stupid that we don't understand that the economy is in a slump and everyone is hurting? In many different ways, WE GET IT!!!
I wasn't a fan of giving money to the auto industry, but there weren't many choices--too many jobs and careers are tied to the auto industry. Although GM and Chrysler took money to pay off debt, health care and retirement costs, it didn't get them very far.
Basically, if the government hadn't loaned these funds to GM and Chrysler, GM would be forced to restructure and cause a severe down turn in the economy and Chrysler would have had to sell off or close down. So we are here AGAIN!
We've given GM and Chrysler government funds and no one read the small print. As a result we have an Automotive Task Force made up of people who have never worked in the industry (and I mean no manufacturing experience, marketing, PR, or anything to do with the industry) telling us what automobiles we have to drive and what we want to drive!
A "surgical bankruptcy" means that the government will plan for or with GM, telling them what to shut down, what to keep, and what to build! This is a disaster in the making. If GM and automotive industry people rebuild GM - GM will survive. If the government keeps their fingers in GM, we will revisit history with the British auto bailout of the 70's, which ruined a major manufacturer there.
GM must save 3 brands: Cadillac, Chevrolet and Buick. The rest, sadly, have to either be sold or closed. This is so sad as GM builds good, safe cars that people really do want. As the brand choices increase - everyone loses sales.
The truth is that Chrysler is in bad shape too. If Fiat partners with Chrysler, they will be able to bring in cars from Fiat such as the 500. Fiat can utilize the Chrysler dealer network - but even if Fiat saves Chrysler and Jeep, they still have a lot of debt and Americans aren't buying cars at the rate we were a few years ago - will they be able to survive?
Unfortunately, the bottom line is that the auto industry is the victim of greedy bankers, government oversight, and scams and financial institutes who have given loans to consumers and businesses they could never repay. As a result, we all pay the price for others' poor choices!
Sunday, March 8, 2009
Will GM go Chapter 11? This will impact everyone? What are your thoughts...
This is a hot topic right now; GM is fighting back. Here is something to chew on, but let's see your thoughts!
GM is considering bankruptcy--what it will mean for GM car owners? Auditors say the company won't survive? I don't think GM will disappear!
GM's auditors have issued a warning based upon their growing concern that they cannot continue without going bankrupt. The grim sales results and massively shrinking sale statistics are proof alone. Americans are keeping their vehicles longer (9.4 years) and that means less cars are sold. Total car sales are down 53% for GM, 50% for Ford, Toyota 40% and Subaru, KIA and Hyundai sales are even or up. We are in an automotive depression.
Yet this is NOT the nail in the coffin!
FACT: GM has sustained large and continuing losses that have now reached $82 billion over the last four years.
How much federal money eventually flows to GM is guesswork at this point. The company warned that it might need up to $30 billion. The amount will fluctuate with the changing economic climate. Meanwhile, Wagoner assures us GM is prepared to start paying off these emergency loans by 2012, assuming the company doesn't go broke first.
What does this mean to the consumer? Despite consumer concern, cars will still be sold and most dealers will still stand. For current GM vehicles owners, warranties will still be in place. The bankruptcy will have a financial interest in preserving the warranties to help prop up the companies and the value of the various brands that are left.
If resale value is a concern, avoid buying a make that might be phased out. Yet if you plan to keep the car for a long time, depreciation is less of a factor, and buying from a brand going out of business could make it easier to find a good deal.
Sadly, scaremongers have suggested that the auto manufacturers might actually be liquidated! These "calls to panic" are designed to promote anxiety. Unfortunately, when "calls to panic" are repeated frequently by the news media, people start to believe they are true. GM may go Chapter 11 and re-organize but will not dissolve in a Chapter 7 bankruptcy.
There will be great deals for consumers. GM will NOT disappear. If GM finds itself in Chapter 11, there will be even better deals on their autos as they reorganize. Yes, suppliers will suffer too, but this will not help the economy in any way and if the government gives GM their $30 billion dollars - they will most likely be back for more. This will burden everyone and the economy even more - how much money can we afford to pull from the government to fund the auto industry?
What about the economy? Sadly we already have major job losses and there will be more. Either way, these auto makers must cut costs; they must become competitive in the
world marketplace. There is going to be pain and, sadly, we are already feeling the first pangs.
At least the company won't be sitting out a booming market if they go Chapter 11 now and reorganize before the market comes back, possibly even fending off Chapter 7 liquidation by acting now. Given the hard data GM's auditors have collected and its already severely depleted share price, a swift pit-stop in bankruptcy court could be preferable to a long, protracted restructuring with no kick start from consumers. It's certainly still an option and Wagoner knows it, even if he's still publicly banking on more federal money to get him to the finish line.
The expense of "public opinion" and "good will" has to be considered - this is important to a company that hopes to remain in business, which is the point of Chapter 11.
The Future of GM - A consolidation of GM would occur. The surviving brands would likely include only Chevrolet, Buick, GMC and Cadillac. If you own another brand line you would still have coverage from the GM dealers. And most likely Hummer, Saturn and Saab will be sold to other corporations.
Chapter 11 will provide an opportunity for the automakers to reorganize themselves as well as renegotiate union contracts. The outcome will not be controlled by politicians. Rather, it will be controlled by the bankruptcy courts that will follow bankruptcy laws and will not be subject to the whims of politicians seeking reelection in less than two short years.
What about the UAW? Under Section 1113 of the Bankruptcy Code, the protection of Chapter 11, union contracts will be renegotiated immediately with significant reductions in wages and fringe benefits, legacy costs will be reduced, the number of dealers probably cut in half, and executive salaries and benefits cut.
So why is this happening? Clearly, the three automakers are in serious trouble. They suffer from 1) years of mismanagement by overpaid executives,
2) a strong UAW union that does not want to renegotiate its extraordinarily high wages and benefits until its current contract expires,
3) legacy costs that drain billions each year and
4) inefficient dealer networks controlled largely by state franchise laws.
This represents the status quo.
So what happened to the "bridge loan money"? It was spent to cover operating expense because the shrinking car market has forced GM to shrink their output of cars. Which means less cash flow while fixed and variable operating expenses are still in place. Bills have to be paid, and the bridge loan money went partially to union fees owed and the balance to corporate expense and NOT executive salaries.
So don't tell me we are all buying foreign cars, many of which are produced in this country. The issue is so much larger than that - the auto manufacturers are victims of the banking failures and not the culprits!
GM is considering bankruptcy--what it will mean for GM car owners? Auditors say the company won't survive? I don't think GM will disappear!
GM's auditors have issued a warning based upon their growing concern that they cannot continue without going bankrupt. The grim sales results and massively shrinking sale statistics are proof alone. Americans are keeping their vehicles longer (9.4 years) and that means less cars are sold. Total car sales are down 53% for GM, 50% for Ford, Toyota 40% and Subaru, KIA and Hyundai sales are even or up. We are in an automotive depression.
Yet this is NOT the nail in the coffin!
FACT: GM has sustained large and continuing losses that have now reached $82 billion over the last four years.
How much federal money eventually flows to GM is guesswork at this point. The company warned that it might need up to $30 billion. The amount will fluctuate with the changing economic climate. Meanwhile, Wagoner assures us GM is prepared to start paying off these emergency loans by 2012, assuming the company doesn't go broke first.
What does this mean to the consumer? Despite consumer concern, cars will still be sold and most dealers will still stand. For current GM vehicles owners, warranties will still be in place. The bankruptcy will have a financial interest in preserving the warranties to help prop up the companies and the value of the various brands that are left.
If resale value is a concern, avoid buying a make that might be phased out. Yet if you plan to keep the car for a long time, depreciation is less of a factor, and buying from a brand going out of business could make it easier to find a good deal.
Sadly, scaremongers have suggested that the auto manufacturers might actually be liquidated! These "calls to panic" are designed to promote anxiety. Unfortunately, when "calls to panic" are repeated frequently by the news media, people start to believe they are true. GM may go Chapter 11 and re-organize but will not dissolve in a Chapter 7 bankruptcy.
There will be great deals for consumers. GM will NOT disappear. If GM finds itself in Chapter 11, there will be even better deals on their autos as they reorganize. Yes, suppliers will suffer too, but this will not help the economy in any way and if the government gives GM their $30 billion dollars - they will most likely be back for more. This will burden everyone and the economy even more - how much money can we afford to pull from the government to fund the auto industry?
What about the economy? Sadly we already have major job losses and there will be more. Either way, these auto makers must cut costs; they must become competitive in the
world marketplace. There is going to be pain and, sadly, we are already feeling the first pangs.
At least the company won't be sitting out a booming market if they go Chapter 11 now and reorganize before the market comes back, possibly even fending off Chapter 7 liquidation by acting now. Given the hard data GM's auditors have collected and its already severely depleted share price, a swift pit-stop in bankruptcy court could be preferable to a long, protracted restructuring with no kick start from consumers. It's certainly still an option and Wagoner knows it, even if he's still publicly banking on more federal money to get him to the finish line.
The expense of "public opinion" and "good will" has to be considered - this is important to a company that hopes to remain in business, which is the point of Chapter 11.
The Future of GM - A consolidation of GM would occur. The surviving brands would likely include only Chevrolet, Buick, GMC and Cadillac. If you own another brand line you would still have coverage from the GM dealers. And most likely Hummer, Saturn and Saab will be sold to other corporations.
Chapter 11 will provide an opportunity for the automakers to reorganize themselves as well as renegotiate union contracts. The outcome will not be controlled by politicians. Rather, it will be controlled by the bankruptcy courts that will follow bankruptcy laws and will not be subject to the whims of politicians seeking reelection in less than two short years.
What about the UAW? Under Section 1113 of the Bankruptcy Code, the protection of Chapter 11, union contracts will be renegotiated immediately with significant reductions in wages and fringe benefits, legacy costs will be reduced, the number of dealers probably cut in half, and executive salaries and benefits cut.
So why is this happening? Clearly, the three automakers are in serious trouble. They suffer from 1) years of mismanagement by overpaid executives,
2) a strong UAW union that does not want to renegotiate its extraordinarily high wages and benefits until its current contract expires,
3) legacy costs that drain billions each year and
4) inefficient dealer networks controlled largely by state franchise laws.
This represents the status quo.
So what happened to the "bridge loan money"? It was spent to cover operating expense because the shrinking car market has forced GM to shrink their output of cars. Which means less cash flow while fixed and variable operating expenses are still in place. Bills have to be paid, and the bridge loan money went partially to union fees owed and the balance to corporate expense and NOT executive salaries.
So don't tell me we are all buying foreign cars, many of which are produced in this country. The issue is so much larger than that - the auto manufacturers are victims of the banking failures and not the culprits!
Tuesday, February 3, 2009
Cash For Clunkers - Does this make sense??
Final Chance To Prevent A Federal Program
To Crush Newer Model Trucks & SUVs
Our efforts to prevent Congress from including a nationwide “Cash for Clunkers” program in the economic stimulus package were successful in the U.S. House of Representatives. Thousands of SEMA members and SEMA Action Network (SAN) enthusiasts contacted House Speaker Nancy Pelosi in opposition to the plan. The Speaker’s Office informed us that your emails, calls and faxes were received and, thanks to your work, Cash for Clunkers was not included in the economic stimulus package passed by the House. However, some lawmakers now want to include a vehicle scrappage program in the Senate version of the economic stimulus bill to be voted on during the first week of February. The legislation (S 247) would give $8 billion in taxpayer dollars to consumers who turn-in their “gas guzzlers” to have them crushed. Lawmakers need to scrap this idea!
Contact Senator Diane Feinstein (D-CA) IMMEDIATELY to Oppose S. 247
The so-called “Accelerated Retirement of Inefficient Vehicles Act” is Cash for Clunkers with a twist. Instead of focusing exclusively on older cars, this program would target vehicles with low fuel economy ratings of any model year. Vehicles targeted for the scrap pile will likely include Chevy Blazers, Chevy Silverados, Chevy S-10s, Chevy Tahoes, Dodge Dakotas, Dodge Rams, Ford Explorers, Ford F-Series, Jeep Cherokees, Jeep Wranglers and any other SUV or truck that obtains less than 18 miles per gallon. Participants would receive cash vouchers ranging from $2,500 to $4,500 based on the model year and whether the replacement vehicle was a more fuel-efficient new car or used car (MY 2004 or later). Fuel-efficient is defined as getting at least 25 percent better mileage for the corporate average fuel economy (CAFE) target for its class. It would be illegal to resell the scrapped vehicles. Up to four million pickups and SUVs would be destroyed over the next four years.
_________________________
Don’t Delay! Please contact Senator Diane Feinstein today and tell her that you oppose S 247.
• Click here to send an email: http://feinstein.senate.gov/public/index.cfm?FuseAction=ContactUs.EmailMe
• Call: (202) 224-3841
• Fax: (202) 228-3954
________________
Talking Points
Oppose the Use of U.S. Taxpayer Dollars for Accelerated Vehicle Retirement
• I am writing to urge lawmakers not to approve an “accelerated vehicle retirement” program. This is a misguided attempt to spur car sales and claim that the country’s fleet fuel mileage is being improved.
• An accelerated vehicle retirement program is flawed because it does not factor-in how many miles-a-year the collected vehicles are currently being driven. Given the minimal $1,500-$4,500 voucher value, U.S. taxpayers will be buying rarely-driven second and third vehicles that have minimal impact on overall fuel economy and air pollution.
• The program will reduce the number of vehicles available for low-income individuals and drive up the cost of the remaining vehicles and repair parts.
• The program will remove the opportunity to market specialty products that are designed exclusively for the targeted pickups and SUVs, including equipment that increases engine performance and fuel mileage.
• The program will hurt thousands of independent repair shops, auto restorers, customizers and their customers across the country that depend on the used car market. This industry provides thousands of American jobs and generates millions of dollars in local, state and federal tax revenues.
• The program fails to acknowledge driver needs, such as the ability to transport a family, tow a trailer or rely upon the performance, safety and utility characteristics associated with the larger vehicles.
• The idea that the trucks and SUVs must be scrapped in order to save energy is irrational. The program’s “carbon footprint” does not factor in the amount of energy and natural resources expended in manufacturing the existing car, spent scrapping it and manufacturing a replacement car.
• Many states have considered scrappage programs in the past as a way to help clean the air or increase mpg, but abandoned the effort because they simply don’t work. The programs are not cost-effective and do not achieve verifiable fuel economy or air quality benefits.
• We hope we can count on you to reject “Accelerated Vehicle Retirement.” Thank you for your consideration on this very important matter.
Please send a copy of your message to Sen. Feinstein to briand@sema.org.
To Crush Newer Model Trucks & SUVs
Our efforts to prevent Congress from including a nationwide “Cash for Clunkers” program in the economic stimulus package were successful in the U.S. House of Representatives. Thousands of SEMA members and SEMA Action Network (SAN) enthusiasts contacted House Speaker Nancy Pelosi in opposition to the plan. The Speaker’s Office informed us that your emails, calls and faxes were received and, thanks to your work, Cash for Clunkers was not included in the economic stimulus package passed by the House. However, some lawmakers now want to include a vehicle scrappage program in the Senate version of the economic stimulus bill to be voted on during the first week of February. The legislation (S 247) would give $8 billion in taxpayer dollars to consumers who turn-in their “gas guzzlers” to have them crushed. Lawmakers need to scrap this idea!
Contact Senator Diane Feinstein (D-CA) IMMEDIATELY to Oppose S. 247
The so-called “Accelerated Retirement of Inefficient Vehicles Act” is Cash for Clunkers with a twist. Instead of focusing exclusively on older cars, this program would target vehicles with low fuel economy ratings of any model year. Vehicles targeted for the scrap pile will likely include Chevy Blazers, Chevy Silverados, Chevy S-10s, Chevy Tahoes, Dodge Dakotas, Dodge Rams, Ford Explorers, Ford F-Series, Jeep Cherokees, Jeep Wranglers and any other SUV or truck that obtains less than 18 miles per gallon. Participants would receive cash vouchers ranging from $2,500 to $4,500 based on the model year and whether the replacement vehicle was a more fuel-efficient new car or used car (MY 2004 or later). Fuel-efficient is defined as getting at least 25 percent better mileage for the corporate average fuel economy (CAFE) target for its class. It would be illegal to resell the scrapped vehicles. Up to four million pickups and SUVs would be destroyed over the next four years.
_________________________
Don’t Delay! Please contact Senator Diane Feinstein today and tell her that you oppose S 247.
• Click here to send an email: http://feinstein.senate.gov/public/index.cfm?FuseAction=ContactUs.EmailMe
• Call: (202) 224-3841
• Fax: (202) 228-3954
________________
Talking Points
Oppose the Use of U.S. Taxpayer Dollars for Accelerated Vehicle Retirement
• I am writing to urge lawmakers not to approve an “accelerated vehicle retirement” program. This is a misguided attempt to spur car sales and claim that the country’s fleet fuel mileage is being improved.
• An accelerated vehicle retirement program is flawed because it does not factor-in how many miles-a-year the collected vehicles are currently being driven. Given the minimal $1,500-$4,500 voucher value, U.S. taxpayers will be buying rarely-driven second and third vehicles that have minimal impact on overall fuel economy and air pollution.
• The program will reduce the number of vehicles available for low-income individuals and drive up the cost of the remaining vehicles and repair parts.
• The program will remove the opportunity to market specialty products that are designed exclusively for the targeted pickups and SUVs, including equipment that increases engine performance and fuel mileage.
• The program will hurt thousands of independent repair shops, auto restorers, customizers and their customers across the country that depend on the used car market. This industry provides thousands of American jobs and generates millions of dollars in local, state and federal tax revenues.
• The program fails to acknowledge driver needs, such as the ability to transport a family, tow a trailer or rely upon the performance, safety and utility characteristics associated with the larger vehicles.
• The idea that the trucks and SUVs must be scrapped in order to save energy is irrational. The program’s “carbon footprint” does not factor in the amount of energy and natural resources expended in manufacturing the existing car, spent scrapping it and manufacturing a replacement car.
• Many states have considered scrappage programs in the past as a way to help clean the air or increase mpg, but abandoned the effort because they simply don’t work. The programs are not cost-effective and do not achieve verifiable fuel economy or air quality benefits.
• We hope we can count on you to reject “Accelerated Vehicle Retirement.” Thank you for your consideration on this very important matter.
Please send a copy of your message to Sen. Feinstein to briand@sema.org.
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