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Old 08-01-2008, 09:25 AM
 
Location: The Frenchie Farm, Where We Grow 'em Big!
2,080 posts, read 6,930,530 times
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Wow. They are in a world of hurt, aren't they!?!? $15 BILLION!!!! What do you guys and gals think. Downward spiral or a total revamp of the corporation's vehicle line-up?

GM Posts $15.5 Billion Loss in Q2 2008 | Carscoop
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Old 08-01-2008, 10:33 AM
 
Location: RSM
5,113 posts, read 19,749,936 times
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well the loss in the actual automotive divison was 4billion, which we all know they're going to lose money there until they redesign their vehicle lineup or until gas drops dramatically. the rest of the losses were one time charges.

gm would do very well to simplify their brand. drop buick, keep cadillac as a luxury brand, spin off saturn(which still runs semi-autonomously at this point and as far as ive heard is profitable on its own), use gmc for all trucks, and merge pontiac and chevy operations into each other and keep a small line of vehicles with 1 vehicle in each class(similar to how nissan works).

efficiency at gm in their model lines is absurd. you should not have 4 cars in 1 class no matter how you look at it.
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Old 08-01-2008, 10:40 AM
 
Location: Mill Creek Hundred
310 posts, read 777,058 times
Reputation: 559
You need to keep in mind that when these companies show a loss, it's not an actual loss. They, more oftan than not, call it a loss if they don't meet their projected income. Also, when the Dow goes up and down, it's not as across the board as it sounds. The Dow Jones Ind. is made up of 30 companies, yeah, 30 companies. Always try to keep that in mind.

Also, why we're at it, how ever bad the economy may seem, it's not as bad as it sounds. There are 2 major things going on that have made the economy what it is.

1. The nightly news, on average, has the highest proffit of any regular shows on TV, cost to produce VS income generated. That is why the most popular anchors are pretty people. If I can have more sensational, interesting, etc, news than you, more people watch and I can charge more for commercial time than you.

2. The stock market went down the toilet so many people sold their stocks and bought bigger and better houses. So many people were doing this that banks, etc , were making rediculous deals to make more money available to make more money. The housing market is actually just about where it should be on the long term.
It's not that I don't feel sorry for the poor saps that fell into this, it's just that you need to remember that if it seems too good to be true, it probably is! If somebody is giving you something for free, it will usually cost you more than if you just bought it.

OK time to pass the soap box...
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Old 08-01-2008, 11:15 AM
 
8,405 posts, read 7,392,050 times
Reputation: 8742
Quote:
Originally Posted by ltdontcare View Post
You need to keep in mind that when these companies show a loss, it's not an actual loss. They, more oftan than not, call it a loss if they don't meet their projected income.
No, they're actually losing money, not failing to 'meet their projected income'.


They spend money on
  • management
  • design
  • engineering
  • marketing
  • office building upgrades and maintenance
  • assembly plant upgrades and maintenance
  • assembly line rebuilding and maintenance
  • raw materials (iron, glass, plastic, rubber, etc.)
  • contracted sub-components (audio systems, seats, brake assemblies, etc.)
  • labor for building the actual automobiles
  • health benefits to both current and retired employees
  • pensions to retired employees
  • property taxes and sales taxes to state and local goverments
They earn money on
  • dealership sales. GM, Ford, and Chrysler don't sell to dealerships, they ship the vehicles on consignment to the dealerships and don't get paid until a consumer actually buys the vehicle.
  • aftermarket sales of items that license their brands. Everything from ball caps with the Ford Logo to personal stereos with the Jeep brand name on it. This isn't much, but it's better than nothing.
  • car payments to their financial services divisions. Ford Credit is still owned by Ford, but GM sold GMAC to raise money.
When they spend more money than they earn for a given fiscal quarter, they have a loss.


Lots of trucks and SUVs are sitting on dealer lots unsold. These vehicles represent all of the expense incurred by the car company, but deliver no revenue.

And when trucks and SUVs are backing up on the lots instead of selling, the assembly lines get slowed down or shut down. If the lines shut down, the auto workers get laid off. Laid off auto workers still get 90% of their pay and all of their benefits. Bad for the car companies, they're still incurring labor expenses even if the assembly lines are shut down. Good for the union auto workers, they have a safety net in such an event.

The solution isn't to cut away the safety net, the solution is to start building vehicles that people will buy. Unfortunately, you can't just start immediately building new Fiestas on the same assembly line than used to build Expeditions. It takes anywhere between 6 months and a year to perform such a switchover.
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Old 08-01-2008, 11:53 AM
 
Location: Chicago
38,707 posts, read 103,099,071 times
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This after losing 40 billion last year... Where are they getting the cash to stay afloat...
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Old 08-01-2008, 12:04 PM
 
48,502 posts, read 96,785,962 times
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With those losses not like they have the money to completely redo they models they need .Retooling for a new vehicle take alot of tme and $$$.They need to cut their expenses and become a smaller compny IMO.
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Old 08-01-2008, 01:26 PM
 
Location: Mill Creek Hundred
310 posts, read 777,058 times
Reputation: 559
[quote=djmilf;4692291]No, they're actually losing money, not failing to 'meet their projected income'.

You are missing the point. Before they loose anywhere clost to 15 Bil. You will see MANY more layoffs, GM will bring that South American car up here that burns sugar cane bio fuel, etc.
They would NEVER let themselves get into the position of 15 bill. actual loss!
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Old 08-01-2008, 01:51 PM
 
763 posts, read 2,259,209 times
Reputation: 238
They are selling off assets. I foresee them filing bankruptcy, which will let them void their union contracts, and they can get that monkey off their back then start a revamp. They have the ability to make a great vehicle if they can get rid of the union millstone.

My wife bought a GMC van against my advice, and to be honest, it has a great engine that will probably run for many more years. But, it had to have a new tranny with only 125k miles on it, and the van itself is simply falling apart and doesn't have 150k on it yet!
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Old 08-01-2008, 01:53 PM
 
3,743 posts, read 13,690,814 times
Reputation: 2787
GM is in the middle of its turn around and its getting killed because it has no good small car capacity - we won't know until 2012 or so if the changes GM started implementing in 2004 are successful, but GM has been slow to react and it bet wrong on the market (so did everyone else save Honda, actually).
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Old 08-01-2008, 01:54 PM
 
3,743 posts, read 13,690,814 times
Reputation: 2787
Quote:
Originally Posted by elgusano View Post
They are selling off assets. I foresee them filing bankruptcy, which will let them void their union contracts, and they can get that monkey off their back then start a revamp. They have the ability to make a great vehicle if they can get rid of the union millstone.

My wife bought a GMC van against my advice, and to be honest, it has a great engine that will probably run for many more years. But, it had to have a new tranny with only 125k miles on it, and the van itself is simply falling apart and doesn't have 150k on it yet!
It already makes great vehicles, they just aren't making the vehicles people want. GM ignored car sales and was warned and ignored the warnings, now its been caught out with a line up loaded with trucks and few small cars. Chrysler is in even worse shape - it has no small cars.
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