GM-Chrysler Merger Won't Help Either Group

[Principessa]

A GM-Chrysler Merger Is Still on the Table - If the Feds Help

Date posted: 2008-10-28 14:03:00.0
DETROIT — Emergency financial help from the U.S. government may be on the way to Detroit to support a merger between General Motors and Chrysler.

The New York Times reported on Tuesday that the Bush administration is looking into "a range of options for providing emergency financial help to spur a merger between General Motors and Chrysler." Reuters said the two automakers have asked the feds for "roughly $10 billion in an unprecedented rescue package" for such a merger. And the Associated Press said the financing arms of the automakers might be eligible for federal help under the bank stock-purchasing portion of the government's $700 billion financial rescue package.

If GM and Chrysler were to merge, such an entity would control about a third of the U.S. auto market by sales and include 11 automotive brands from Cadillac to Jeep.

The Detroit automakers are under growing pressure to come up with a plan to stave off bankruptcy filings. Late Monday, Moody's Investors Service sent its ratings on GM and Chrysler deeper into so-called "junk" status. Ford was put on review for a possible downgrade. All of the aforementioned moves add to the jitters about the domestic auto industry's financial health.

Among the options that the U.S. government is considering: tapping into a $25 billion loan program that Congress set up to help the auto companies modernize their plans and returning to Congress after the November 4 election for authority to spend funds aimed specifically at the auto industry, said the Times report.

However, the $25-billion loan program was originally designed to provide low-interest loans to the domestic auto industry for retooling to make fuel-efficient cars such as the Chevrolet Volt. The original intent was not to orchestrate a merger between Chrysler and GM. It is unclear what a diversion of funds from the loan program may mean for the development of more fuel-efficient vehicles.

Inside Line says: Nothing is cast in stone yet on federal aid for a Chrysler-GM merger — but it's clear some kind of help is imperative. — Anita Lienert, Correspondent



This is the stupidest thing I have heard in weeks. Why merge two mediocre car companies into one big piece of averageness?

 

[B_pinoyurge]

what is that all about?>

 

[Principessa]

http://www.nytimes.com/2008/10/11/business/11auto.html

Sorry, I forgot to post the link. :redface:

 

[1BiGG1]

...

This is the stupidest thing I have heard in weeks. Why merge two mediocre car companies into one big piece of averageness?

General Motors has sold more cars then anyone else worldwide for more than 7 decades including over 9 million annually again last year. Hardly what I would call “mediocre” anymore then Chrysler is.

 

[2322]

General Motors has sold more cars then anyone else worldwide for more than 7 decades including over 9 million annually again last year. Hardly what I would call “mediocre” anymore then Chrysler is.

If the goal of a business is to make money for the shareholders, then mediocre is an understatement. Your numbers also illustrate a point. How does a company that produces so much make so little in return? Many foreign manufacturers have built plants here in the US quite profitably and they continue to do so.

The fact is that all three have built junk since the 1970s. Despite the writing being on the wall for three decades, all three have relied on just one market segment to be profitable, refusing to learn from the Japanese. Now that market segment has dried up, they have no profit center at all as they made no contingency for the day the next oil crisis would return. Once again, they want the US taxpayer to come to their rescue because they refuse to take responsibility for their untenable business models. For those too young to remember, the US has bailed-out Chrysler before back in the early 80s. We were promised a newer, smarter, more competetive Detroit and once the auto market improved, all those promises were so much paper in a file cabinet.

Let them fail or be broken-up, let new, competetive, auto companies rise in their place.

 

[1BiGG1]

If the goal of a business is to make money for the shareholders, then mediocre is an understatement. Your numbers also illustrate a point. How does a company that produces so much make so little in return?

Because they have been forced to compete on an unfair playing field here with the UAW like legacy costs, wages and benefits the foreign companies do not suffer from.

Many foreign manufacturers have built plants here in the US quite profitably and they continue to do so.

Again, foreign companies do not play the same game here like explained above but on this note, China recently overtook Europe as the second largest auto market and GM is the number one import there, and number one domestic manufacturer and very profitable. GM also has profitable operations around most of the rest of the planet.

The fact is that all three have built junk since the 1970s. Despite the writing being on the wall for three decades, all three have relied on just one market segment to be profitable, refusing to learn from the Japanese.

This is absurd. Take note of JD Power quality ratings sometime and take note of market segments around the planet. GM built what was selling here like they do around the rest of the world.

Now that market segment has dried up, they have no profit center at all as they made no contingency for the day the next oil crisis would return. Once again, they want the US taxpayer to come to their rescue because they refuse to take responsibility for their untenable business models. For those too young to remember, the US has bailed-out Chrysler before back in the early 80s. We were promised a newer, smarter, more competitive Detroit and once the auto market improved, all those promises were so much paper in a file cabinet.

Chrysler got loan guarantees from the government, not loans and history shows they paid their loans back well in-advance of the due date.

And a “newer, smarter, more competitive Detroit?” So are you for letting the automakers here dissolve the previous contracts and pension obligations allowing them to compete on an even playing field?

Let them fail or be broken-up, let new, competetive, auto companies rise in their place.

Oh, never mind my last question as you answered it here. Yes, this is the answer the government should insist on when backing restructuring loans that employ 100’s of thousands of people in this country = allow the auto companies to get rid of their pension and other legacy costs like pensioners health care and allow them to abolish current UAW contracts and instill wages/benefits like foreign companies manufacturing on our soil have.

 

[2322]

If that's what's needed to be competitive, then yes. It matters little what GM's few profitable areas are if they're failing overall. Again, it comes down to profit for the shareholder. If the big three can't manage profit for the shareholder then they deserve what they get. The only reason public companies exist is to make profit for the shareholders. That is management's single legal fiduciary responsibility and in doing that, they have all failed.

JD Power is specious at best as they only rank companies who have paid JD Power to be in their rankings. The product line from each of the big three in no way competes with the likes of Honda, Toyota, Volkswagen, or BMW nor do they have their reputation or build quality. Japan and even Europe have made inroads on the Americans' manufacturing strengths and each time the Americans have had to cede leadership to the foreign builders. Now that Japan is building full-size pickups, the last stronghold is about to fall.

Once again, they've had 30 years to fix all these problems and they haven't. If the pension obligations were so onerous, then they should have worked to make more profit to cover their obligations. It isn't as though they didn't know they'd have pensions to pay years down the road. And that illustrates Detroit's number one problem: failure to plan. They did not plan for this oil crisis, they did not plan for the day that SUVs would lose popularity, nor did they plan to increase style and build quality to compete with foreign imports. Back in the early 70s Detroit did not understand the appeal of the Honda CVCC, the Toyota Corolla, nor even the Volkswagen Beetle. They never once set a benchmark to compete against these makers and succeed, despite yet again, 30 years to do so! They're still building gas guzzlers and luxury cars with more crap than quality. Fit and finish of Detroit vehicles does not compete against the imports and hasn't in ages. Christ, the Corvette still has leaf springs!! LEAF SPRINGS!!!

Sorry, but I'm tired of the endless excuses the big three have offered for their failure to be competitive despite warchests of billions and the ability to pay for the best engineers and designers in the world. Detroit worries about the short term, the quarterly profit. They have not abandoned the costly and consumer-ridiculed practice of rebadging the same cars with minor trim differences, and they haven't worked to make profitable each market segment they occupy. 30 years ago GM should have jettisoned every single badge except Chevrolet and Cadillac and then followed the Japanese model by investing in quality control and engineering. They did NOT do it. Ford has some great cars, yet they still crank out the ridiculous Lincoln and Mercury products which haven't been competitive in years. At least Chrysler has tried some originality despite the fact their quality is as abysmal as the K-car era.

 

[TurkeyWithaSunburn]

General Motors has sold more cars then anyone else worldwide for more than 7 decades including over 9 million annually again last year. Hardly what I would call “mediocre” anymore then Chrysler is.

That's the point. They make mediocre cars, and that's an opinion shared by many. I didn't even think of a GM or Chrysler product when I shopped for my last car. The perception is they make junk. Everyone, everyone, that I know said get a Honda or Toyota.

Although they have been the largest car company for decades the problems they are suffering are now. High gas prices have scared consumers into buying smaller cars. Trucks and SUVs have a higher profit margin and that's what the big 3 have concentrated on for years. They virtually abandoned being highly competitive in the small car market.

 

[1BiGG1]

If that's what's needed to be competitive, then yes. It matters little what GM's few profitable areas are if they're failing overall. Again, it comes down to profit for the shareholder. If the big three can't manage profit for the shareholder then they deserve what they get. The only reason public companies exist is to make profit for the shareholders. That is management's single legal fiduciary responsibility and in doing that, they have all failed.

JD Power is specious at best as they only rank companies who have paid JD Power to be in their rankings. The product line from each of the big three in no way competes with the likes of Honda, Toyota, Volkswagen, or BMW nor do they have their reputation or build quality. Japan and even Europe have made inroads on the Americans' manufacturing strengths and each time the Americans have had to cede leadership to the foreign builders. Now that Japan is building full-size pickups, the last stronghold is about to fall.

Once again, they've had 30 years to fix all these problems and they haven't. If the pension obligations were so onerous, then they should have worked to make more profit to cover their obligations. It isn't as though they didn't know they'd have pensions to pay years down the road. And that illustrates Detroit's number one problem: failure to plan. They did not plan for this oil crisis, they did not plan for the day that SUVs would lose popularity, nor did they plan to increase style and build quality to compete with foreign imports. Back in the early 70s Detroit did not understand the appeal of the Honda CVCC, the Toyota Corolla, nor even the Volkswagen Beetle. They never once set a benchmark to compete against these makers and succeed, despite yet again, 30 years to do so! They're still building gas guzzlers and luxury cars with more crap than quality. Fit and finish of Detroit vehicles does not compete against the imports and hasn't in ages. Christ, the Corvette still has leaf springs!! LEAF SPRINGS!!!

Sorry, but I'm tired of the endless excuses the big three have offered for their failure to be competitive despite warchests of billions and the ability to pay for the best engineers and designers in the world. Detroit worries about the short term, the quarterly profit. They have not abandoned the costly and consumer-ridiculed practice of rebadging the same cars with minor trim differences, and they haven't worked to make profitable each market segment they occupy. 30 years ago GM should have jettisoned every single badge except Chevrolet and Cadillac and then followed the Japanese model by investing in quality control and engineering. They did NOT do it. Ford has some great cars, yet they still crank out the ridiculous Lincoln and Mercury products which haven't been competitive in years. At least Chrysler has tried some originality despite the fact their quality is as abysmal as the K-car era.

Excuses, lack of quality products or anything else you mentioned is not the problem. The problem is what I stated it is and like United Airlines and many others did, they need the ability to jettison legacy costs and pay their workers on the same scale foreign competition does.

 

[1BiGG1]

That's the point. They make mediocre cars, and that's an opinion shared by many. I didn't even think of a GM or Chrysler product when I shopped for my last car. The perception is they make junk. Everyone, everyone, that I know said get a Honda or Toyota.

Although they have been the largest car company for decades the problems they are suffering are now. High gas prices have scared consumers into buying smaller cars. Trucks and SUVs have a higher profit margin and that's what the big 3 have concentrated on for years. They virtually abandoned being highly competitive in the small car market.

That's the point. They make mediocre cars, and that's an opinion shared by many. I didn't even think of a GM or Chrysler product when I shopped for my last car. The perception is they make junk. Everyone, everyone, that I know said get a Honda or Toyota. [/quote]



GM makes cars that beat Toyota and Honda in both initial and long term quality for one thing and both Toyota and Honda have a no lack of business at their dealership service departments.

Although they have been the largest car company for decades the problems they are suffering are now. High gas prices have scared consumers into buying smaller cars. Trucks and SUVs have a higher profit margin and that's what the big 3 have concentrated on for years. They virtually abandoned being highly competitive in the small car market.

Not true at all, they manufacture small cars in markets that buy small cars and manufacture large cars in markets that buy large cars. A very short time ago you could hardly give a small car away in this country so they built what was selling and lets not forget, they needed to sell highly profitable vehicles here because of the unfair playing field the foreign competition enjoys.

 

[Principessa]

The best cars Chevy has made in the last 25 years were the Corsica LT and the Lumina. Both of which are no longer made. :irked: These cars weren't the sportiest; but they were like Clydesdales. I miss my 1990 Corsica LT to this day. I had her for 13 years and a little over 181,000 miles, I cried when she died.

 

[Ed69]

I've always bought Chevy the last one died at 300'000 miles.My Chevy truck at over 200,0000 is still going strong.