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  1. #1
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    auto bailout - why doesnt another company come in and buy the distressed companies?
    this is something that i not heard anyone talk about yet, but its what happens in the auto and other industries frequently. am i missing something?

  2. #2
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    Because the distressed companies have flawed business models - they aren't attractive investments (or good candidates for a takeover), as you inherit the unions, the contracts, the credit, etc etc. Basically everything that caused them to fail in the first place.

  3. #3
    The affiliate formerly known as ojmoo
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    Yes, you aren't buying the company, you are also buying its debt and obligations. You also have to retool the cars to sell what people want. Of course did the $$.00+ gas price scare people to changing their behavior even though not gas is 1/2 that. I don't know if the peoiple will be short sighted.

    Plus don't forget that Chrysler was just sold recently...remember it used to be diemler/chrysler...i suppose the people who bought them didn't make out well.

    Also, the economic crisis/recession whatever you call it is global so that it'll take a while to return to profitability. There are a whole list of reasons not to buy up a car company at this time.

    What I think is that the US govt shouldn't lend them money I think that it should simply buy cars. It should modernize the fleet of cars used by govt employees. It should mandate that the cars it will buy (several million of them) should be hybrids that get at least 50 mpg (or maybe run on alternative fuels like hydrogen) with other environmental friendly features and must be made entirely from parts produced in the US. The ripple effect of this on the economy would be great. Well that is what I think and they don't seem to be talking about that either.
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  4. #4
    ABW Ambassador mailman's Avatar
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    How about the thousands of jobs that are affected plus all the the industries that are also a part of the Auto Industry? These are the people that need help.

  5. #5
    Moderator BurgerBoy's Avatar
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    Quote Originally Posted by mailman
    How about the thousands of jobs that are affected plus all the the industries that are also a part of the Auto Industry? These are the people that need help.
    There have always been people and industries that need help. We didn't bail them out.

    If the US auto industry can't run with the others auto manufactures big dogs then the need to stay on the porch.

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  6. #6
    ABW Ambassador 2busy's Avatar
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    I'm more curious about why a person would register here in ABW to post about this?
    As mentioned above Cerberus owns Chrysler, if they don't want to take care of their companies why should the taxpayers? As for GM if all the money we could get our hands on were forked over to them they would still be in the same position so why not save the money to help the victims of the implosion? If the big three were handed $300 billion they still would not be able to sell their cars in the current and expected credit climate. Why are they still building units and forcing them on their dealers? It is easy to point to all the jobs that will be lost, millions have already been lost in all kinds of industries. For a detailed look at why bailing them out is senseless go to the industry insiders forum at http://www.thetruthaboutcars.com/ where they do not discuss affiliate marketing much.

  7. #7
    Full Member Greywolf's Avatar
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    Regarding the original question, if the automakers went into bankruptcy, their brands would probably be more attractive to buyers since the judge could strip away those "bad" parts of the company. meaning Chevrolet could be sold to another company, without necesarily taking on all of the legacy costs.

    It should mandate that the cars it will buy (several million of them) should be hybrids that get at least 50 mpg
    This is the biggest insanity coming out of the congressional hearings. Are the U.S. auto companies failing because their cars don't get good enough gas mileage? ludicrous! The best selling vehicle for at least the last decade has been the F150. SUVs are the most profitable vehicle they make. They make what the public was demanding. With gas prices now retreating, SUV and truck sales are picking up.

    2busy makes a good point about Cerberus Capital Management, parent company of Chrysler. A Cerberus executive was on CNBC last week when Kudlow pointed out that Cerberus had $25 billion in cash, and why weren't they willing to invest it in Chrysler. The exec tapped danced away, but the bottom line is Ceberus doesn't feel it would be wise to throw any more cash at Chrysler, but they think it would be great for the U.S. taxpayer to do so. Incredible audacity!
    "Somebody may beat me, but they are going to have to bleed to do it." Steve Prefontaine

  8. #8
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    "SUVs are the most profitable vehicle they make. They make what the public was demanding. With gas prices now retreating, SUV and truck sales are picking up."

    Those SUVs are not selling like they used too, things have changed. Do you have a link about SUV sales going back up? Those low gas prices have been low just recently and our economy is bad, I didn't see any news reports about SUV and truck sales up again but I could have missed them.

    But I think it's a little different now. People realize those prices can go back up and are looking at smaller vehicles, ones that get better gas mileage, hybrids etc. and part of the problem is the US car makers didn't have the vision to see that.

    And gas prices can go right back up. I was reading elsewhere that around the 19th, they're supposed to cut down on the production, so we could be seeing them go up again.

  9. #9
    Full Member Greywolf's Avatar
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    Trust, ask and you shall receive.

    From Automobile Magazine:

    A look at the 10 best-selling models in November reveals a far more traditional lineup than the topsy-turvy world of last May, when Americans all but left their SUVs idling by the side of the road as they ran to dealerships demanding something - anything - that would rescue them from the pain of $100 fill-ups:

    May 2008
    Honda Civic
    Toyota Corolla/Matrix
    Toyota Camry
    Honda Accord
    Ford F-series
    Chevrolet Silverado
    Nissan Altima
    Ford Focus
    Chevrolet Cobalt
    Chevrolet Impala

    November 2008
    Ford F-series
    Chevrolet Silverado
    Toyota Camry
    Toyota Corolla/Matrix
    Honda Civic
    Honda Accord
    Dodge Ram
    Chevrolet Impala
    Honda CR-V
    Nissan Altima


    Americans LOVE those full size trucks!

    More Auto Mag:

    It may surprise many media pundits to see how sales of the fuel-efficient favorites from the fervid, $4-a-gallon days last spring and summer have swooned in November. (And these drops are versus one year ago; they'd be much steeper compared to the inflated levels of May and June.)

    Toyota Prius -48% (the gold standard stumbles)
    Toyota Corolla/Matrix -13%
    Toyota Yaris -17%
    Scion (all) -45%
    Honda Civic -30%
    Honda Fit -8%
    VW Rabbit -44%
    Nissan Versa -18%
    Nissan Sentra -39%
    Ford Focus -38%
    Chevrolet Aveo -36%
    Chevrolet Cobalt -54%
    Pontiac Vibe -14%
    Kia Spectra -33%
    Hyundai Accent -11%


    Here's the link to the full article:
    http://www.automobilemag.com/feature...les/index.html
    "Somebody may beat me, but they are going to have to bleed to do it." Steve Prefontaine

  10. #10
    Analytics Dude Kevin's Avatar
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    But I think it's a little different now. People realize those prices can go back up and are looking at smaller vehicles, ones that get better gas mileage, hybrids etc. and part of the problem is the US car makers didn't have the vision to see that.
    I agree Trust. In fairness though, American car buyers are a strange lot. I think the car buyers failed to recognize how bad gas prices could get.

    A lack of vision from many people, in many places.
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  11. #11
    Kung Fu Master Eathan's Avatar
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    November 2008
    Ford F-series
    Chevrolet Silverado
    Toyota Camry
    Toyota Corolla/Matrix
    Honda Civic
    Honda Accord
    Dodge Ram
    Chevrolet Impala
    Honda CR-V
    Nissan Altima

    4 out of 10 doesn't really say that US auto makers are making what the public is demanding, more that foreign auto makers are still winning. I mean Honda alone managed 3 out of the top 10. Imagine if the big three had to also compete with European manufacturers. I think we'd see a lot of little Peugeots, Renaults and Citroens zipping about town.
    Eathan Mertz

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  12. #12
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    I think a lot of what vehicles are being sold now depends on the ability of buyers to get financing. Middle class people looking to buy more inexpensive, efficient vehicles are having a harder time getting financing than more affluent buyers, some of whom can even pay cash or have near-new trade-ins that cover much of the cost, and that are more set in their ways re fancy SUVs and other luxury vehicles. Also, a fair share of big pick-ups are bought for business purposes.

    This article (re tax planning for last year but still applicable) spells out some of the tremendous tax benefits of buying a large, expensive SUV for business purposes.
    Last edited by Phil Kaufman aka AffiliateHound; December 17th, 2008 at 02:16 PM.
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  13. #13
    ABW Ambassador writerguy's Avatar
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    Quote Originally Posted by Kevin
    I agree Trust. In fairness though, American car buyers are a strange lot. I think the car buyers failed to recognize how bad gas prices could get.

    A lack of vision from many people, in many places.
    I think it's fundamentally because the American consumer is so easily distracted by just about any ...

    OOOOOHHHH! LOOKY!! BRIGHT, BIG, SHINY OBJECT!! MUST HAVE ... !!!!!!

    Sorry. Typical consumer that I am, I was quickly distracted.

    Seriously, when gas prices decline, people go back to the big, shiny gas guzzlers for the most part. When gas prices go UP again -- they'll act shocked and indignant that more people (i.e., anyone but THEM) aren't demanding and buying fuel efficient smaller vehicles.

    Consumers. Gotta love 'em.
    Generate more fake news.

  14. #14
    Full Member Greywolf's Avatar
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    Quote Originally Posted by Eathan
    4 out of 10 doesn't really say that US auto makers are making what the public is demanding, more that foreign auto makers are still winning. I mean Honda alone managed 3 out of the top 10.
    So Ford sucks because they are number 1? and GM, well you are only number 2. What kind of logic is that?

    The U.S. companies are not competetive because their labor and legacy costs are enormously higher than any foreign auto maker that built plants in the south.

    Quote Originally Posted by Eathan
    Imagine if the big three had to also compete with European manufacturers. I think we'd see a lot of little Peugeots, Renaults and Citroens zipping about town.
    They do compete with the Europeans. Peugot and Renault did try selling cars in the U.S. They failed and slinked back across the Atlantic.
    "Somebody may beat me, but they are going to have to bleed to do it." Steve Prefontaine

  15. #15
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    as someone who works within the auto industry, with several large US makers, these companies are so screwed up in planning and arrogant attitude throughout that I can not see anyone wanting to purchase them. A fix would require an entirely different environment. They have made sooo many enemies of business partners that they have screwed themselves. Very few suppliers want to do business with them any more and still, they feel they are doing everyone a favor because they are the Great _____. That doesn't even touch on all of the other problems such as being far behind on design.

    I can not tell you how awful it is. Easier to let them go bankrupt and buy plants than get rid of the rot.

  16. #16
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    For Sale Cheap ...
    Well, I would be interested in buying SAAB from General Motors.

    No brainer to make money with that brand. Plus the Swedish Government
    has indicated they would take a minority stake in it. So, now all we need
    is a price from GM and to get some bank who just got a bushel of dough
    from the TARP pool to loan us the money to do the deal.

    But we have a chicken and egg problem ... it would be easy to get the money to do the deal IF we had an actual deal to do.

    If you cut out all of the GM overhead which SAAB is expected to pay,
    you can drop the price of the cars by 25% and still make a nice profit.

    Cut the number of available 'cars' per type from 3 to 1 - the top of the line one ... discontinue the convertible and make everyone with NO options but
    color - you get the best of everything standard. Throw in a Kia type warantee of 10 years or 100K miles and go for the gold.

    The new SAABs are awesome ... go to your local deal and test drive one
    and see for yourself. Problem is they are GROSSLY overpriced. I would bet everyone you know who could afford $300 per month would buy the small
    SUV with new high mileage, kick keister engine, if they could walk out the
    door with it for $20K.

    You can keep the rest of the GM junk.

  17. #17
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    Quote Originally Posted by teezone
    Because the distressed companies have flawed business models - they aren't attractive investments (or good candidates for a takeover), as you inherit the unions, the contracts, the credit, etc etc. Basically everything that caused them to fail in the first place.
    Although we only hear about "the big 3" being in so much trouble, that does not mean that all other auto-makers are thriving. In fact, all auto-makers are having hard times. Some are having much much harder times than others, but no-one is really booming.

    With a looming recession that may last through 2010 no auto-makers are not going to spend huge sums of money to aquire companys that are deep in debt. They would then have to pay-off that debt and spend more money to restructure the unprofitable operations that also come with these businesses.

    These companys want to keep their reserves full to ride out this economic downturn.

  18. #18
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    The companies that are doing well are also taking steps to cut back. Taking a risk of acquiring another company might be seen as a reckless act which could send the stock thumbling down.

    I have many friend who lost their jobs is a mass layoff. The company is doing well but taking actions to ride out the storm if things gets worst.

  19. #19
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    If you go look you will find that Ford is discounting those trucks big time.

    And since most people will lose their home to foreclosure and move, they need a big pick up to do the job.

    In addition, since the fastest way to get friend to mooch off of is own a pickup truck they can borrow, it stands to reason the sales are at the top of the list ... but since the net numbers are way down.

    One dealership here had a buy a new car or pickup and get another one free.

    And did you know the CEO of GM makes $15 million a year ... it was a bad year so he didn't get the usual mega bonus. But if you assume the gross profit margin is about 50% off retail, GM has to sell 1,000 of those trucks just to pay his salary and probably another 500 for his perks.

  20. #20
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Here's the quandry and mystery about any rebirth of the big 3 USA auto makers. Why do the prestine high performance gas guzzlers of the 60's and 1970, that all cost less then $5000, now sell for 10 times original sticker price. Why do Americans, who love to drive and use personal computers, not recognize the performance quadrupled and price cut in half for the average PC... while their poor performance cars were priced 500% more in 2008 then 1968.

    Now you expect someone to buy up the old auto parts & body production and assembly plants to crank out Echo friendly Unicorn Mobiles. The resulting Pulosi designed Urkelmobile will instantly become the 21st century's death trap Pinto. At 100 miles per gallon of water (drank by driver) It runs perfectly down hill from a hybred methane gas engine and combo wind powered sail and windmill, with solarpowered GPS/Radio/CD player & heater/air conditioner. Basically a 2009 Spanky & Our Gang soapbox derby car with a huge Al Gore carbon offset rebate check. Now comes the hard part. How do you get it effecently back up to the top of the Rocky or Smokey Mountains and make sure all consumer and service destinations are moved to along the downward path...

    Fact. Take away all the UAW entitlements and forced pay raises, since I worked at a Ford production plant to put myself through college, and todays Mustang would be like todays personal computer. Much more reliable and powerful at half the cost of the first models.
    Last edited by ecomcity; December 21st, 2008 at 12:54 PM.
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  21. #21
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    Japanese and European manufacturers are in the same situation as well, with sales down 30-50%. Similarly, they are asking for help in the countries they are based.

    The main issue is why a worker at the big three cost twice as much as workers at Japanese owned car factories in the US. Unless those costs can be cut down, the big three will always be at a great disadvantage.

  22. #22
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    Mike,

    I have no problem with the UAW guys making $400/day to put together cars.
    It's a very skilled job and experience matters.

    On the other hand, I DO have a problem paying the paper pushers more than the factory guys get, degree or no degree. It is insanely stupid to pay some
    marketing manager twice what the guys who build the cars get.

    Sure you have to sell the cars, but there are only three reasons why people
    really buy cars or trucks: utility, (you need one to get around or do some job), status (it's considered socially 'cool' to have one and/or a specific brand) and availability of credit (can you get some sucker to loan you the money to buy a depreciating asset).

    Perception matters: Ford Trucks are decent, the rest of their stuff is fix or repair daily. Ditto GM. Plus, they nickel and dime you to death on options.

    The reason Ford & GM are in the shape they are in is simple: They are managed by MORONS who are prisoners of the culture of 50 years ago.

  23. #23
    2005 Linkshare Golden Link Award Winner  ecomcity's Avatar
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    Lightbulb
    Quote Originally Posted by net4biz
    Mike,

    I have no problem with the UAW guys making $400/day to put together cars.
    It's a very skilled job and experience matters.

    On the other hand, I DO have a problem paying the paper pushers more than the factory guys get, degree or no degree. It is insanely stupid to pay some
    marketing manager twice what the guys who build the cars get.

    Sure you have to sell the cars, but there are only three reasons why people
    really buy cars or trucks: utility, (you need one to get around or do some job), status (it's considered socially 'cool' to have one and/or a specific brand) and availability of credit (can you get some sucker to loan you the money to buy a depreciating asset).

    Perception matters: Ford Trucks are decent, the rest of their stuff is fix or repair daily. Ditto GM. Plus, they nickel and dime you to death on options.

    The reason Ford & GM are in the shape they are in is simple: They are managed by MORONS who are prisoners of the culture of 50 years ago.
    The only $400/day assembly workers that will be left are all assembly line robots. Your worthless executive paper pushers comment is right on the mark. Therefore this explains why the first Automotive Big 3 VP's to take early retirement this last week were the heads of Marketing/Advertising (ie; all Adwhores) and the fix or repair daily parts managers and VP's of dealer servicing. Someone must have pulled down their opaq curtains revealing the auto version of the Wizzard of Oz.

    It's amazing seeing on TV and hearing on the radio how the "incentive" auto marketing wanks are going out of business with just one more final offer..
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  24. #24
    Full Member Greywolf's Avatar
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    Quote Originally Posted by ecomcity
    Fact. Take away all the UAW entitlements and forced pay raises, since I worked at a Ford production plant to put myself through college, and todays Mustang would be like todays personal computer. Much more reliable and powerful at half the cost of the first models.
    Your theory lacks a lot in fundamentals. If it were true then why do non-UAW companies sell their cars for the same price range as the big three?

    The price of a car has risen because productions cost have risen. Raw materials, energy, and labor costs are all higher than they were in the 60s. It's true that big 3 labor costs are significantly higher than Detroit South, but it's not just labor costs that establish today's cost/price structure.

    Also, auto performance has risen drastically from the 60s. HP per CI is much higher, handling is drastically better, reliability has improved by leaps and bounds.

    PC prices have dropped because the components have become a commodity. The first cars were only bought by the wealthy. With time (and Henry Ford), they became something that every hard working individual could afford.
    "Somebody may beat me, but they are going to have to bleed to do it." Steve Prefontaine

  25. #25
    Full Member Greywolf's Avatar
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    Quote Originally Posted by net4biz
    I have no problem with the UAW guys making $400/day to put together cars.It's a very skilled job and experience matters.
    No. Assembly line work is not considered "very skilled."
    "Somebody may beat me, but they are going to have to bleed to do it." Steve Prefontaine

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