Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The collapse is happening right now. European new car sales are dropping like a rock. Ford announced several European plant closings recently.
The fact that Ford is responding to economic weakness in Europe is a good thing. All automakers (some foreign) and many other industries will feel the impact of a European recession. This doesn't mean "the auto industry is collapsing" or that saving GM and Chrysler and an estimated 1 million jobs in the heartland was a bad thing. Time will tell, but these sorts of crises in confidence often present excellent investment opportunities for the long haul. Morningstar gives Ford (and GM) a 5 star rating and you could have bought Ford stock for less than $2 three years ago, Currently it trades at $11.25 a share, with a fair value estimate of $20. GM sells at approximately $24 a share with a fair value estimate of $48.
Of course, those who predict collapse and turmoil at every turn rarely benefit from these opportunities.
Whose lead do we follow, random posters on forums? Or the Morningstar analysts and folks like Warren Buffett? Following Buffett's strategy of buying good companies during periods of economic weakness has always served me well.
Last edited by shaker281; 11-28-2012 at 10:25 PM..
The fact that Ford is responding to economic weakness in Europe is a good thing. All automakers (some foreign) and many other industries will feel the impact of a European recession. This doesn't mean "the auto industry is collapsing" or that saving GM and Chrysler and an estimated 1 million jobs in the heartland was a bad thing. Time will tell, but these sorts of crises in confidence often present excellent investment opportunities for the long haul. Morningstar gives Ford (and GM) a 5 star rating and you could have bought Ford stock for less than $2 three years ago, Currently it trades at $11.25 a share, with a fair value estimate of $20. GM sells at approximately $24 a share with a fair value estimate of $48.
Of course, those who predict collapse and turmoil at every turn rarely benefit from these opportunities.
Whose lead do we follow, random posters on forums? Or the Morningstar analysts and folks like Warren Buffett? Following Buffett's strategy of buying good companies during periods of economic weakness has always served me well.
European cars have been building in scab factories in the south and then charging european prices. Meanwhile their reliability has plummeted. Their problems have to do with their product
The fact that Ford is responding to economic weakness in Europe is a good thing. All automakers (some foreign) and many other industries will feel the impact of a European recession. This doesn't mean "the auto industry is collapsing"
It means the auto industry is contracting. Not a good thing. Definitely not "growing the business".
Yessir! And both GM and Chrysler paid back the loans with interest. We The people still hold a great deal of GM stock though. I really think some of the folks who post the sour predictions for the US auto industry would prefer to see failure to validate their political beliefs, even if it is harmful to the US economy, it would still make them happy.
I do not believe it all has to do with ones political belief's. Having government pick the winners and losers in tough economic times is a problem. Look how many Retail chains went out of business in 2009 and 2010, one in particular Circuit City who had stores all over this country. One day working next day the workers were out in the streets. How come they did not get a bailout? Sure blame Circuit Cities management and selling methods but at the end of the day didn't GM and Chrysler have management issues and selling method problems? Yet, GM got $50 Billion dollars and counting of our U.S. tax money, including the tax money from those Circuit City workers and other out of business Retail company employees while the retail industry got a pink slip and a few months or up to a year or two of unemployment checks..... Why was the auto industry workers anymore important than the Retail industry employees?
So I don't view it through political lenses, I try to be objective and ask the simple question of why one industries workers are more important than another? Why was the Retail Industry allowed to just work it out and close stores and distribution hubs? What if some of these Retail Companies got bailouts and were exempt for up to 20 years from Federal Income taxes....maybe just maybe some of them would still be around now that the economy is finally off of life support.
Oh yea....having us own stock is really an I.O.U, no? When one party pays another party 'off' it typically is a monetary value agreed upon by both parties or a asset that is worth the value at what was borrowed....using that criteria we tax payers are still billions short. Remember what Uncle Wimpy told Popeye, I will surely pay you tomorrow for a hamburger today.......
Another sign that the next recession and subsequent Auto Industry slump is right around the corner is that the conventional wisdom says otherwise.
Well put.
Quote:
Originally Posted by ram2
The collapse is happening right now. European new car sales are dropping like a rock. Ford announced several European plant closings recently.
It takes time for that kind of thing to spread. The Fed is printing money like mad but I think they just can't print it fast enough to feed the leaks in the system.
I do not believe it all has to do with ones political belief's. Having government pick the winners and losers in tough economic times is a problem. Look how many Retail chains went out of business in 2009 and 2010, one in particular Circuit City who had stores all over this country. One day working next day the workers were out in the streets. How come they did not get a bailout? Sure blame Circuit Cities management and selling methods but at the end of the day didn't GM and Chrysler have management issues and selling method problems? Yet, GM got $50 Billion dollars and counting of our U.S. tax money, including the tax money from those Circuit City workers and other out of business Retail company employees while the retail industry got a pink slip and a few months or up to a year or two of unemployment checks..... Why was the auto industry workers anymore important than the Retail industry employees?
So I don't view it through political lenses, I try to be objective and ask the simple question of why one industries workers are more important than another? Why was the Retail Industry allowed to just work it out and close stores and distribution hubs? What if some of these Retail Companies got bailouts and were exempt for up to 20 years from Federal Income taxes....maybe just maybe some of them would still be around now that the economy is finally off of life support.
Oh yea....having us own stock is really an I.O.U, no? When one party pays another party 'off' it typically is a monetary value agreed upon by both parties or a asset that is worth the value at what was borrowed....using that criteria we tax payers are still billions short. Remember what Uncle Wimpy told Popeye, I will surely pay you tomorrow for a hamburger today.......
Exactly! Why didn't other companies get bailouts? Why are they perceived as more important?
What about all the Pharma and Medical Device companies that are going to be impacted by Obamacare? Why aren't those jobs important enough to save? They are scientists who develop medicines and devices to help save people's lives.. Why aren't they important, but the assembly line workers at an auto plant are?
Funny how the UAW workers with GM received $12,000 in bonus money last winter after having just claimed bankruptcy a year before... What a joke.
I am not so naive as to believe that whatever a CEO says about his company or his industry is necessarily accurate, but nonetheless this short interview with the heads of GM and Ford is a contribution to the discussion of this thread.
The point about the "break-even point" of the industry was interesting to me. If the auto industry as a whole can now break even on annual sales of 11 to 12 million vehicles, and if they are on track to sell 14.5 million this year, then that is a lot of profit to put back into research and development.
Not sure if Op is talkig about the domestic auto inductry but its now a wrold market.Sales last month were good ebcause people have keep vehilces longer because of the economy. Its alos shown by the lower numbers pof later model used vehicles and price of them.But overall with teh number being sold i China and other emerging markets more vehicles are sold now than ever i history. Even here families own more vehilces and drive more miles than ever.
I do not believe it all has to do with ones political belief's. Having government pick the winners and losers in tough economic times is a problem. Look how many Retail chains went out of business in 2009 and 2010, one in particular Circuit City who had stores all over this country. One day working next day the workers were out in the streets. How come they did not get a bailout? Sure blame Circuit Cities management and selling methods but at the end of the day didn't GM and Chrysler have management issues and selling method problems? Yet, GM got $50 Billion dollars and counting of our U.S. tax money, including the tax money from those Circuit City workers and other out of business Retail company employees while the retail industry got a pink slip and a few months or up to a year or two of unemployment checks..... Why was the auto industry workers anymore important than the Retail industry employees?
So I don't view it through political lenses, I try to be objective and ask the simple question of why one industries workers are more important than another? Why was the Retail Industry allowed to just work it out and close stores and distribution hubs? What if some of these Retail Companies got bailouts and were exempt for up to 20 years from Federal Income taxes....maybe just maybe some of them would still be around now that the economy is finally off of life support.
Oh yea....having us own stock is really an I.O.U, no? When one party pays another party 'off' it typically is a monetary value agreed upon by both parties or a asset that is worth the value at what was borrowed....using that criteria we tax payers are still billions short. Remember what Uncle Wimpy told Popeye, I will surely pay you tomorrow for a hamburger today.......
I agree that the government should not be the one to pick winners and losers in a capitalistic society. But, using your "Wimpy" analogy, letting two huge manufacturing giants implode in the midst of a global financial crisis, in the hopes that something good would emerge from the ashes, may be the ultimate "bird-in-the-hand" scenario. I doubt that any other country would not have helped out a flagship manufacturing entity under similar circumstances.
It is estimated that 30,000 jobs were lost when Circuit City went under. Mostly not so great paying retail jobs. It was estimated that without government intervention more than 1,000,000 jobs would have been lost in the already suffering "rust belt". A huge difference!
FWIW: "In all, the Center for Automotive Research (CAR) in Ann Arbor, Mich., reckons the government's bailouts of the U.S. auto industry spared more than 1.14 million jobs in 2009, and prevented "additional personal income losses" of nearly $97 billion in 2009 and 2010. Another 314,400 jobs were saved in 2010. The research organization based its conclusions on the potential impact of auto-industry collapse for jobs at U.S. automakers and suppliers, and ripple effects on the economy at large. Like it or not, the auto industry is critical to the U.S. economy. CAR estimated the loss of 3 million jobs over three years if GM and Chrysler were allowed to go belly-up, with only about 240,000 jobs being at the auto manufacturers themselves. The rest were the attendant industries that interconnect with autos. The loss of personal income by the end of 2011 would have been $400 billion by the end of 2011, and the costs to the U.S. Treasury would have been $156 billion, according to CAR."
Circuit city was a retailer in a sea of other retailers. GM and Chrysler are both US manufacturing giants. Long before Circuit City closed it's doors the products it sold were already rerouted to other distribution channels. Not nearly the same overall impact as seeing 2/3 of US automotive manufacturing snuffed out.
Until the GM stock is sold, no one knows how much the US taxpayer lost. Fair Market Value of GM stock is estimated to be twice what it currently trades at. Meanwhile GM has regained their #1 top selling position and is generating billions in tax revenues annually, while their employees continue to earn wages. Not all bad.
So, just a few pieces of info to view through your objective lenses. As far as the political thing, I'll give you the benefit of the doubt. But, an individuals own determination of their objectivity is mainly, well, subjective! And support of the auto industry bailout is very much split along lines of political ideology. "Elected officials such as Alabama Senator Richard Shelby, who can't count a Detroit auto plant among his constituents, has been against the bailout. But Shelby, against government assistance for private companies in general, has been nonetheless supportive of hundreds of millions of dollars in taxpayer subsidies going to Mercedes-Benz, Hyundai, Kia and Honda and parts companies to attract those companies' plants to Alabama"
Last edited by shaker281; 12-11-2012 at 02:18 AM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
News: Interviews with heads of GM, Ford
