Big 3 Auto bailout

[kbohip]

http://www.businessweek.com/bwdaily/...091_796652.htm


See what happens when you read real news.


Thanks to the clunkers rebates, Ford was able to drop its incentive spending in August by $451 per car, and the total that the company spent per vehicle on incentives dropped below $3,000 for the first time in at least two years. That's about $1,800 less than its incentive spending a year earlier. Ford executives say their cars are fetching better prices, which should bode well for third-quarter earnings. Two of Ford's offerings—the Focus and the Escape—were among the top-selling vehicles under the clunkers program. Sales of the Focus rose 56%, while those of the Escape crossover climbed 49%.
Ford economists estimated that without the clunkers program the industry would have seen a 10.5 million annualized selling rate in August. That's historically very weak, but better than the first half, when cars sold at an annualized pace of around 10 million. That indicates the economy may be starting to come back, albeit slowly.

Yes, Ford made out great under CFC...or did they really?

http://www.leftlanenews.com/clunkers...roduction.html

So they sold 6,400 more than they normally would have? Am I reading that right? If so can you say drop in the bucket? I also read that in 2006 Ford was losing $4,000 to $5,000 on every Focus it was selling. They were working to rectify that for the '08 model year but I wonder if they ever did. But wait it gets worse, much worse. Obama and the CFC supporters like to point out that the Escape Hybrid (Obama owns one of these btw) was a big winner in the CFC scheme. I don't think Ford will be too excited about that though as they lose money on every Escape hybrid they sell!

Ford is artificially restricting supplies to limit their loss-per-vehicle. True dat. Until and unless Ford can find a way to reduce its costs, the automaker has capped production of "the most fuel-efficient SUV on Earth" at 25k special order units per year (so much for Bill Ford's 250k hybrid pledge). Tales of three month waits are not unknown. The question is, what, if anything, are we missing?

The Ford Escape Hybrid may be the politician's PC whip of choice, but it's still overpriced for the mainstream. If The Blue Oval Boyz aren't making money at this price, limiting supply makes a lot of sense. But you know what would make even more sense? Taking the hit.

So Ford has gone from selling very profitable vehicles like their full size suvs and trucks to selling very low profit (or even taking a loss as is the case of the Escape hybrid) vehicles. Yea, they sound like the newest "winners" in Obamas plan.

http://www.thetruthaboutcars.com/200...hybrid-review/

[AMDScooter]

Quick.. toss a few billion more of our dollars at the UAW..

Chrysler May Not Make it Another Year!
Financial woes.

Rumors, credible rumors, are beginning to circulate in the car industry and the automotive press, that Chrysler may not make it another year primarily due to its falling sales and growing financial losses at partner Fiat.

Chrysler sold a 62,197 cars in September, down 42% from the same month last year. The figure was down from 93,222 in August when traffic to dealers was pushed up by the ”cash for clunkers” program.


Chrysler’s problems may only be beginning and, if so, Fiat, the ”managing partner” among Chrysler’s owners may not be able to keep the American company intact.


Chrysler has operated at a disadvantage to the Japanese for some time. That has been true of all three U.S. car companies. Now that each has restructured, each has more leverage against a lower costs base. That should allow General Motors, Ford (F), and Chrysler to make an operating profit even with domestic light vehicles sales running at a rate of only 10 million a year. But, Chrysler still has disadvatages which start with the age of its fleet and extend to the problem that it no longer has enough market share to cover even a lower cost base.


GM has the capital and the daring to offer its cars for a 60-day test drive. There is some financial risk to the action, but GM has enough new models coming to market that the odds of people turning in cars is relatively small.


GM had a hard September with sales down 45% to 156,673, but the new promotion ought to improve its share in October and November. Ford has demonstrated the ongoing strength of its new model line. In September, Ford’s sales only dropped 5% to 114,655. That means that Ford is picking up market share rapidly and some of that is probably coming at Chrysler’s expense.


The Congressional Oversight Panel has already said taxpayers will not see most of the $81 billion that they put into the American car industry. The $14.3 billion put into Chrysler is more and more likely to be lost completely. The biggest single loser if Chrysler cannot survive is the UAW which owns 55% of the company.


The daily management of Chrysler is controlled by Fiat which owns 20% of the U.S. company with options which could take that amount to 35%. Fiat has not put any money into Chrysler, so if the American firm becomes a significant operational or management burden there are very few reason for the Italian company, which has sales troubles of its own in Europe, to stay long term. Fiat lost $254 million in the second quarter, so its board may eventually believe that Chrysler is a distraction and one without a future.


Chrysler is not just up against the traditional competition of its two domestic rivals and Toyota (TM), Honda (HMC), and Nissan. South Korean upstart Hyundai is posting sales improvements even as the car market remains weak and in September it posted a sales increase of 27% to 31,511, about half of Chrysler’s sales for the month. Hyundai’s strength is in small fuel-efficient cars, the market where Chrysler needs to find success with its products and those from Fiat.


At this point, the Chrysler product line is still dominated by mid-sized sedans, SUVs from Jeep, minivans, and pick-ups like the Dodge Ram. The company has no real product in the alterative energy/hybrid segment. Chrysler’s domestic market share in September 2008 was 11.1%, according to Edmunds. Based on sales figures released by the industry today, that share is now closer to 7.5%


Even Chrysler’s traditional rivals are doing well despite a harsh market. Nissan sold 55,393 light vehicles last month, down only 7% from a year ago. Toyota sold 126,015, down12.7% and now has sales which are about double Chrysler’s. Honda’s sales for the month were 77,229 cars and light trucks. The number was down 20%, but it means Honda was still very likely to have picked up share in the American market.


Chrysler sales are now running at the rate of 750,000 a year. It probably does not have the capital to wait through another year of low US car sales with a market share that is almost certainly to stay below 8%. It does not have models tailored to the current market tastes. Chrysler is going out of business. The company just hasn’t made it official.

[kbohip]

One thing that wasn't touched on in that article was the reason why Ford sales were down so much less than rival GM's. They like to state it's because of it's new model line. I wonder if the fact that they never got their hands in the stimulus pie had anything to do with it? I know that if I were in the market for a new car I'd have to do some hard thinking about buying a GM car when they took money out of taxpayers pockets. As for Crapsler, they've been dead in the water for years. The fact that the government has stolen our money to keep them afloat a bit longer leaves a very bad taste in my mouth. What a complete waste of money.

[Dutchcedar]

^^^ I think you're onto somethin'. The article makes it sound as if Chrysler lagged because they don't have any alternative energy/hybrid vehicles. Well, blow me down, but let's just say they did. Do you think people would buy it?

Let's see, the company is teetering on going totally blinko blanko but they have this awesome new 60 mpg Neon Windmobile. Jeez Martha, let's buy one for us and one for each of the college kids. Sure thing.

And didn't the two government motor companies just close a sheetload of their dealerships? Jeez, on a good day that would kinda bang on your sales figures, no?

[AMDScooter]

New Obama Administration Motto:

"That narrowly crafted dodge became our mantra."

Way to lay those cards out, Steve Rattner.

Read the linked story..

The auto bailout: How we did it
The man who led the effort gives an inside look at the bankruptcies that shook America.

[kbohip]

Alright BO administration, that attack Fox News thing didn't work out so well for you. What to do now? Oh yea, attack Edmunds for pointing out the flaws in your CFC program.

http://www.thetruthaboutcars.com/whi...s/#more-333553

I like this reply to BO and Co. from Edmunds:

It is also claimed we missed the possibility that Cash for Clunkers generated excitement and consumers bought vehicles even if they didn’t qualify for the program — a claim that has been widely supported by anecdote but by little analysis. It does, after all, seem a bit odd that masses of consumers would elect to buy a vehicle because of a program for which they don’t qualify — doubly so when you add in the fact that prices shot up during Cash for Clunkers, creating a disincentive to buy.

GM and Crapsler are going to report horrible sales again for October. Strange as the recession is over. I wonder how BO and Co. will spin this one? Why we need another CFC program of course!

[AeroSim]

Alright BO administration, that attack Fox News thing didn't work out so well for you. What to do now? Oh yea, attack Edmunds for pointing out the flaws in your CFC program.

http://www.thetruthaboutcars.com/whi...s/#more-333553

I like this reply to BO and Co. from Edmunds:

It is also claimed we missed the possibility that Cash for Clunkers generated excitement and consumers bought vehicles even if they didn’t qualify for the program — a claim that has been widely supported by anecdote but by little analysis. It does, after all, seem a bit odd that masses of consumers would elect to buy a vehicle because of a program for which they don’t qualify — doubly so when you add in the fact that prices shot up during Cash for Clunkers, creating a disincentive to buy.

GM and Crapsler are going to report horrible sales again for October. Strange as the recession is over. I wonder how BO and Co. will spin this one? Why we need another CFC program of course!

Yeah- also, what they even knew back then, the government money did not save the customer hardly a penny. I kept some car ads from April and when CFC was offered, prices jumped (I'm sure by coincidence- ahem) $2-4000 on many models- especially the Prius. Do a little research on this yourself. It follows capitalistic, if not corruption, logic-

http://butasforme.com/2009/07/17/cas...arketing-tool/

However, the cash for clunkers program gives opportunistic dealers and/or individuals

* a chance to bait-and-switch the consumer at best or to commit outright fraud in the worst of scenarios.
* a motive to increase prices on good MPG cars as a result of supply/demand.
* an opportunity to steal your identity through fraudulent websites.

We the People got took on this in so many different ways- and got caught in the herd mentality to deficit spend some more....

[AMDScooter]

Which of the 3 did not take the bailout $$ again.. oh ya. Of course the UAW is doing it's very best to wrest control of that type of activity (turning a profit) from the folks running the joint.

Ford Reports Surprise $1 Billion 3Q Profit

DEARBORN, Mich. —
Ford, the only Detroit automaker to dodge direct government aid and bankruptcy court, surprised investors with net income of nearly $1 billion in the third quarter and forecast a "solidly profitable" 2011.

The automaker said Monday earnings were fueled by U.S. market share gains, cost cuts and the Cash for Clunkers program, which drew flocks of buyers to showrooms this summer. Ford's stock rose 40 cents, or 5.7 percent, to $7.40 in pre-market trading.

The latest results signal that Ford's turnaround is on more solid ground. The company lost more than $14.6 billion last year and hasn't posted a full-year profit since 2005. While it made a profit in the second quarter, that was mainly due to debt reductions that cut its interest payments.

Dearborn, Mich.-based Ford reported third-quarter net income of $997 million, or 29 cents per share. Ford also forecast a "solidly profitable" 2011. Previously the automaker said it would be break-even or better.

Its key North American car and truck division posted a pretax profit of $357 million, the company's first quarter in the black since early 2005. Ford cited higher pricing, lower material costs and increased market share for the improvement.

Excluding one-time items, Ford earned 26 cents per share, blowing away analysts' expectations of a loss of 12 cents.

The earnings came despite an $800 million revenue drop. But Ford said it cut costs by $1 billion during the quarter, accomplished through layoffs in North America and Europe, reduced pension and retiree health care costs and improvements in productivity and product development.

Chief financial officer Lewis Booth said the company took in $1.3 billion more than it spent in the quarter, an improvement over its $1 billion cash burn in the second quarter.

"That's a huge deal," Booth said.

Ford's plan to create demand and get better prices for its products, coupled with cost cuts, gives the company confidence that it will make money in 2011, Booth said.

But Ford still faces obstacles in its turnaround. Last week, workers overwhelmingly rejected an agreement with the United Auto Workers that would have brought Ford's labor costs in line with rivals General Motors Corp. and Chrysler LLC. Workers objected to clauses limiting their right to strike and freezing entry-level wages, and felt the company was healthy enough and didn't need further concessions.

Ford also has $26.9 billion in debt, up $800 million from the second quarter.

Ford didn't quantify the impact of Cash for Clunkers, which offered buyers rebates to trade in their vehicles. The program helped Ford cut costly incentives and raise production. It also won buyers; the Ford Focus and Ford Escape were among the top five sellers in the program. Ford sales were up 17 percent in August thanks to the program.

Ford's revenue fell $800 million for the quarter, to $30.9 billion, due mainly to its financial services arm, Ford Motor Credit, making fewer loans.

But the division still posted a pretax profit of $677 million, and revenue from auto operations rose slightly to $27.9 billion.

Ford also has benefited from consumer goodwill after it declined government bailout money and didn't go into bankruptcy over the summer as GM and Chrysler did. Ford grabbed sales from its rivals, posting the largest increase in market share of any automaker in September. Ford expects an overall gain in U.S. market share in 2009, a feat it hasn't accomplished since 1995.

[JustinC939]

Which of the 3 did not take the bailout $$ again.. oh ya. Of course the UAW is doing it's very best to wrest control of that type of activity (turning a profit) from the folks running the joint.

Ford Reports Surprise $1 Billion 3Q Profit

Good for them

[Pixels303]

I wonder if this would work:
Oil companies raise the price on oil.
To save money on fuel, people buy more fuel efficient vehicles.
American auto industry goes bankrupt as they built a majority of poorly built gas guzzlers.
Oil company waits for opportunity to buy up the bankrupt car companies.
Oil company decreases the cost of oil and owns another monopoly.


I am sure that if fuel costs go up another 100% the next two years, people will be forced to go green with solar, wind and Geothermal energies.
That would not go well for the oil companies.
Just a thought.

[JustinC939]

Yes, Ford made out great under CFC...or did they really?

Apparently they did

[AeroSim]

Apparently they did

I'm glad to hear someone did-
It certainly was not the car purchasers or the American taxpayers.

[Enmore]

General Motors cancels Opel sale


General Motors (GM) has announced it has cancelled plans to sell its European car business Opel, including its UK brand Vauxhall.

The US giant said in a statement that its board had made the decision because of "an improving business environment for GM over the past few months".

GM had agreed to sell Opel and Vauxhall to Canadian car parts firm Magna.

The Magna deal had the backing of the German government, which had pledged 4.5bn euros ($6.7bn; £4bn) of loans.

Good news. The German backed bid would have meant trouble for the UK-based manufacturing arm.

Plus, GM would have lost a division that makes half-decent cars.

http://news.bbc.co.uk/1/hi/business/8341485.stm

[JustinC939]

Because there were none. It was an artificial bump that cost us $3 BILLION tax dollars that we did not have and had to borrow to give! It only benifited the auto industry. And what makes you think that program that already ended will have had any impact whatsoever if the prediction that car sales will increase slowley in the coming months comes true?

and why do you think they'll increase? more people than ever are without jobs... people have reasons not to buy and no reason to buy.

Because they have.


http://money.cnn.com/2009/11/03/news...ion=2009110315

U.S. light-vehicle sales -- bolstered by General Motor Co.'s first gain in 21 months -- declined less than 1 percent in October as the industry showed signs of a recovery without the aid of government incentives.

The drop was the smallest this year and made October the year's strongest month aside from August, which received a lift from the federal cash-for-clunkers program. The seasonally adjusted annual sales rate was 11.2 million. The rate had not risen above 9.9 million this year without clunkers help.
“Numbers in that range certainly are not, by historic standards, good numbers. But thinking of where we've come from, it's certainly a positive signal,” said Jeff Schuster, executive director of global forecasting at the market research firm J.D. Power and Associates. “We're through the worst, and we're beginning the slow trek to recovery.”
Gains from most of the biggest automakers propelled sales to within 216 units of October 2008's total.
GM's U.S. sales rose 5 percent last month -- the automaker's first advance since January 2008. Ford Motor Co. grew 3 percent.
Among Asian automakers, Nissan North America climbed 6 percent, Toyota Motor Sales gained less than 1 percent and Hyundai-Kia soared 47 percent. Subaru, Daimler AG, Volkswagen Group and Porsche all were up.
Chrysler Group, meanwhile, plunged 30 percent as it continued to struggle after its bankruptcy. Mazda and American Honda also declined. Suzuki fell 50 percent, while BMW Group trailed year-earlier sales by 19 percent.
The results show automakers benefiting from year-earlier comparisons, after the collapse of Lehman Brothers last October sent the U.S. economy into a deeper tailspin. Industry sales fell 32 percent in October 2008, dragging the seasonally adjusted annual sales rate below 11 million for the first time since 1983.
Industrywide sales remained stuck at 27-year lows this year until the federal government's clunkers incentive pushed demand to rates of 11.1 million units in July and 13.7 million in August. Without the clunkers benefit, September's sales rate dropped to 9.5 million units.
Ford's report of a year-over-year sales gain, its third in the past four months, came a day after the automaker posted a surprise $997 million net profit in the third quarter and its first operating profit in North America since the beginning of 2005.
Sales of the freshly redesigned Ford Taurus sedan more than doubled, while deliveries of the car to individual customers almost tripled from year-earlier levels.
Other automakers
Subaru gained 41 percent in October. Its sales have now risen 13 percent from 2008 levels -- the biggest increase among the few companies that have advanced this year.
Hyundai-Kia is also up for the year, reporting a 5 percent increase.
Volkswagen's results included a 1 percent slip from its Audi brand compared with a year earlier, when the brand set a record for October sales. Audi's Q5 crossover, introduced in February, sold 1,238 units last month or 17 percent of the brand's total.
Last month's GM gain compares with October 2008, when demand fell 45 percent, the most among the top six automakers.
“We're not going to declare victory here today, but we're making progress,” said Susan Docherty, GM's vice president of U.S. sales, on a call with journalists and analysts.
Despite the sales gain and a 0.9 percent year-over-year increase in market share, GM said it had decreased its fourth-quarter North American production forecast by 35,000 units to 620,000. That's 24 percent fewer than the automaker built last year.
The reduction mostly accounts for the loss of Saturn production, said Mike DiGiovanni, GM's executive director of global market and industry analysis. GM had not adjusted its forecast after Penske Automotive Group Inc. in September backed out of its deal to buy the Saturn brand and initially fill it with vehicles GM produced.
GM's “truck month” incentives helped push the company's light-truck sales up 18 percent. Because of its success, Docherty said, GM is extending the program through January 4.
Chrysler's 30 percent decline comes on the heels of a 35 percent drop the previous October. The Dodge Avenger sedan and Caravan minivan were Chrysler's only vehicles to post year-over-year sales increases.
Bottomed out
October's sales indicate that the industry probably bottomed out in the second quarter, said Standard & Poor's equity analyst Efraim Levy.
“Going forward, we should see a fairly steady increase in demand,” he said. “How fast, no one knows, but the trend is there.”
Higher sales will mean higher production, Levy said.
“That helps companies all over the industry,” he said. “Whether you're an automaker, auto supplier or auto retailer, it's good for you.”
The U.S. annual sales rate had averaged 10.2 million units through September, down from 13.2 million last year and 16.2 million in 2007.

[JustinC939]