GM Situation in US getting worse

[barbarian]

Japanese carmakers slash production by up to 50%

Japan's big three carmakers today reported a dramatic fall in production as the auto industry counts the cost of plummeting global demand.

Toyota, the world's biggest carmaker, said global production dropped 39.1% in January from a year earlier to 487,984 vehicles. Honda reported a fall of 33.5% worldwide to 226,551 vehicles and Nissan 54% to 145,286.

The global economic crisis has ravaged demand in major markets, forcing Japan's carmakers to slash production and lay off thousands of workers.

The figures come days after the Unite union leader Tony Woodley warned of the imminent closure of a UK car plant with the loss of as many as 6,000 jobs.

Peter Mandelson, the business secretary, dismissed the claim and major carmakers have all insisted they had no plans for factory closures in the UK.

But other job losses in the UK have been confirmed. Nissan, which is to slash 20,000 jobs worldwide over the coming year, will cut 1,200 jobs at its plant in Sunderland. Toyota is implementing pay freezes and voluntary redundancies that could affect 3,500 workers at its factory in Burnaston, near Derby, and 570 employees at an engine plant in Deeside, Flintshire.

The firm, whose output fell to its lowest level for more than 20 years, said production in Japan fell by 40% last month, and by 65% in the US. Its global exports fell 57%, while those to the US, traditionally its most lucrative market, fell 80%, it said in a statement.

Honda's total exports fell by 23.4% and Nissan by 31%.

Freefalling demand has sent shock waves throughout Japan's car industry, only months after Toyota ended General Motors' 77-year run as the world's biggest carmaker by sales.

Industry-wide sales fell at their fastest rate for 34 years in 2008, and Yoichi Amano, head of the country's automobile dealers association, said this week that domestic sales of vehicles could fall below 3m this year.

Last year car sales in Japan fell to a 34-year low of 3.21m vehicles, down from a peak of nearly 6m units in 1990, the association said.

The US car industry is expecting sales to reach a 27-year low of 10.5m vehicles this year, according to GM. In Britain, car production fell 58.7% in January from a year earlier, the Society of Motor Manufacturers and Traders said last week.

Honda, Japan's second-biggest car firm, suffered its biggest global sales slump since 1999, with exports to the key US market down 62% in January from a year earlier. The firm is also suspending production for 35 days in April and May at its plant in Swindon, in addition to stoppages announced for February and March.

The dismal figures come amid a backdrop of unrelenting bad news for Japanese exporters across the board.

Figures out today showed exports fell by a record 46% in January from a year earlier, leaving the country with a record trade deficit of ¥952.6bn (£6.8bn), the fourth deficit in as many months and the biggest since records began in 1979.

The world's second-biggest economy last week reported that GDP had contracted at by 3.3% in the last quarter of 2008, three times faster than the shrinkage seen in the US.

http://www.guardian.co.uk/business/2...ash-production

[Bossxr8]

Some of those numbers are truly staggering.

[Wally]

Originally Posted by Joe5619

Your comments where not a Ford only coment!! The original comment was "Ford is in a better postion than GM".. You said "no they are not!!". And that statement is just plan wrong no matter what you say, it is just wrong.. Now, that is not to say Ford is in a "good position",they are just not as bad as GM currently is

Well, not that it is of any importance, we shall what we shall see. And when I'm proved right you can be as equally dogged in congratulating me on my crystal balling. If, God forbid, I'm wrong you can bask in the glory of being a better forecaster than the US government. and Wally. LOL

I would much rather have an investement house that is not mortgaged, than one that is. Ford has mortgaged all their assets, GM is yet to do so. GM is also a much bigger concern than Ford, even if the market capitalisation indicates otherwise.

[Fordman1]

Originally Posted by Wally

Well, not that it is of any importance, we shall what we shall see. And when I'm proved right you can be as equally dogged in congratulating me on my crystal balling. If, God forbid, I'm wrong you can bask in the glory of being a better forecaster than the US government. and Wally. LOL

I would much rather have an investement house that is not mortgaged, than one that is. Ford has mortgaged all their assets, GM is yet to do so. GM is also a much bigger concern than Ford, even if the market capitalisation indicates otherwise.

WTF ??

Do you know what you're talking about ?

Atm GM assets are worth NOTHING !!!! Ford got a loan before the WFC. It's too late for GM now, that's why they are asking for Government handouts,

After this 'latest' US Government loan, GM will have three times as much debt as Ford, AND their market share will be similair.....

Who's better off ?

Hmmmmm ?

You do the Math mate. If you have basically no 'New Gen Products' coming up, and you're expecting the public to 'flock into showrooms' to bail you out, then you're in deep trouble.

Ford have a plan (including products), what do GM have ?

Prayers ?

[Elks]

Originally Posted by Wally

I would much rather have an investement house that is not mortgaged, than one that is. Ford has mortgaged all their assets, GM is yet to do so.

Here's the rub though. Find me a bank that will loan GM some cash and I'll give you a slab. Would you buy $10,000 in GM shares? I know I wouldn't. Fact is, GM's position is so dire that no one outside the US Government would loan GM money and they would only do so so save jobs not the company. Remember GM is (allegedly) down to about 8 weeks cash. That means without intervention of sorts in 8 weeks the whole shebang grinds to a holt.

It is my opinion that GM is is spinning off its bits, and Holden WILL become a part of this, to separate its assets form it's liabilities. Then sink some bits and somehow hang on to the balance.

[ivorya]

Originally Posted by myts

Here's the rub though. Find me a bank that will loan GM some cash and I'll give you a slab. Would you buy $10,000 in GM shares? I know I wouldn't. Fact is, GM's position is so dire that no one outside the US Government would loan GM money and they would only do so so save jobs not the company. Remember GM is (allegedly) down to about 8 weeks cash. That means without intervention of sorts in 8 weeks the whole shebang grinds to a holt.

It is my opinion that GM is is spinning off its bits, and Holden WILL become a part of this, to separate its assets form it's liabilities. Then sink some bits and somehow hang on to the balance.

I guess the question is, if they file for bankrupsy, could this be a turning pt for GM for the future? Receivers go in, and run it like it should have been run, or they sell bits and pieces to the asians.
Bad thing is loss of jobs, not just from the assembley pt of view but from all component mobs as well.

[Wally]

Originally Posted by Barraxr8

WTF ??

Do you know what you're talking about ?

Atm GM assets are worth NOTHING !!!! Ford got a loan before the WFC. It's too late for GM now, that's why they are asking for Government handouts,

After this 'latest' US Government loan, GM will have three times as much debt as Ford, AND their market share will be similair.....

Who's better off ?

Hmmmmm ?

You do the Math mate. If you have basically no 'New Gen Products' coming up, and you're expecting the public to 'flock into showrooms' to bail you out, then you're in deep trouble.

Ford have a plan (including products), what do GM have ?

Prayers ?

I guess they were rhetorical questions, but I''l give it a whirl.

Q1 Yes I do
Q2 I guess a zero interest loan is better than current leverage rates, but I really don't know who's better off... and I would hazzard a guess nor do you
Q3 Well I would guess as a business that has been around for a very long time, they have a plan too...especially seeing as the US treasury wouldn't give any money unless they presented one that satisfed their requirements. You think the US govt will just write off the billions they have loaned or keep GM a going concern?

How did I do?

[Fordman1]

Originally Posted by Wally

I guess they were rhetorical questions, but I''l give it a whirl.

Q1 Yes I do
Q2 I guess a zero interest loan is better than current leverage rates, but I really don't know who's better off... and I would hazzard a guess nor do you
Q3 Well I would guess as a business that has been around for a very long time, they have a plan too...especially seeing as the US treasury wouldn't give any money unless they presented one that satisfed their requirements. You think the US govt will just write of the billions they have loaned or keep GM a going concern?

How did I do?

Let's see.....

Q1. No you don't.

Q2. You haven't answered it. 'Business one' has approximately the same market share as 'business two', and has one third the dept.

Business two will probably go bankrupt unless it gets goverment loans fast !!! Infact if it didn't "get money" late last year we wouldn't be having this discussion :-)

Q3. You guess they have a plan ? Lets find out in another 4 weeks :-)
I think it'll mean off-loading everything and hoping that the 'Pres' helps out.

Keep trying !!

[Wally]

Originally Posted by myts

Here's the rub though. Find me a bank that will loan GM some cash and I'll give you a slab. Would you buy $10,000 in GM shares? I know I wouldn't. Fact is, GM's position is so dire that no one outside the US Government would loan GM money and they would only do so so save jobs not the company. Remember GM is (allegedly) down to about 8 weeks cash. That means without intervention of sorts in 8 weeks the whole shebang grinds to a holt.

It is my opinion that GM is is spinning off its bits, and Holden WILL become a part of this, to separate its assets form it's liabilities. Then sink some bits and somehow hang on to the balance.

Good reasoned response, without the hysteria.

No I sure as sh.... wouldn't buy any auto shares, especially GM. I've been busy buying Chinese infrastructure shares instead.

If their behaviour has been similar to the way they have behaved with Holden, I would say GM corp have been syphoning their subsidiaries for fees and profit to the point where those same SBUs have very little asset or cash at bank.

Australia makes some pretty decent cars IMO, and that includes the Falcon and the Commodore. Sure brand loyalty figures strongly in the diehard groups, but maybe we will see our Govt start putting the screws on and enforcing co operation between the Ford, Holden and Toyota in return for funding. Perhaps, just perhaps, Oz subsidiaries will perform strongly as cash cows and they will remain in their parent's portfolio.

[Paxton]

I have seen this suggested on other forums, but I'd like to gauge the opinions of those here.

What would be people's reaction to, instead of having Obama bail out GM and Chrysler, have Obama actually bail out the component suppliers (by offering them loans), which will help cushion the effect if (and when) GM and Chrysler fail. This gives Ford, Toyota, Honda, Mercedes and BMW the backup of components, and allows the US Government to say no, we don't believe you will ever service this debt. At least helping the suppliers allows a number of people to keep their jobs, people would would have lost them if GM and Chrysler went down.

Any opinions people?

[Wally]

Originally Posted by Barraxr8

Let's see.....

Q1. No you don't.

Q2. You haven't answered it. 'Business one' has approximately the same market share as 'business two', and has one third the dept.

Business two will probably go bankrupt unless it gets goverment loans fast !!! Infact if it didn't "get money" late last year we wouldn't be having this discussion :-)

Q3. You guess they have a plan ? Lets find out in another 4 weeks :-)
I think it'll mean off-loading everything and hoping that the 'Pres' helps out.

Keep trying !!

I think you are looking at this with rose coloured glasses. Both companies are rated junk shares. It's like championing chook manure over cow manure.

You think that swap traders are demanding 83% upfront and 5% interest for both GM and Ford bonds if there was a tangible difference in the state of the companies?

[Joe5619]

Originally Posted by Wally

Well, not that it is of any importance, we shall what we shall see. And when I'm proved right you can be as equally dogged in congratulating me on my crystal balling. If, God forbid, I'm wrong you can bask in the glory of being a better forecaster than the US government. and Wally. LOL

I would much rather have an investement house that is not mortgaged, than one that is. Ford has mortgaged all their assets, GM is yet to do so. GM is also a much bigger concern than Ford, even if the market capitalisation indicates otherwise.

The money GM is getting from the US government if not free money!! It needs to paid it back, so they are just as mortageged as Ford are.

[baboon]

Unfortunately theres going to be a lot of pain. Too much borrowing from the company. The US is in too much debt, I really dont know how they are going to repay the trillions of dollars. Its unfortunate they are printing money like no tomorrow.

Just heard on the radio that Warren Buffet has now bought a 10% share in a Chinese electric car company. Really not good for the US if big money is moving out of the country.

Good luck to them.

[EgoFG]

Originally Posted by Wally

Ford has mortgaged all their assets, GM is yet to do so. GM is also a much bigger concern than Ford, even if the market capitalisation indicates otherwise.

I am trying to put together an informed opinion of this very point.

GM has not yet prepared its 10-K full year position, so going back to the third quarter 10-Q for both companies

In Millions:

FORD
242,065 Total ASSETS
242,596 Total Liabilities
- 531 Net assets


GM
110,425 Total ASSETS
169,419 Total Liabilities
-58,994 Net assets


This is before the operating expenses of 4th Quarter
If I am interpreting the figures correctly Ford has lower losses, and the Assets net to an 'almost' positive number
If Ford were to close down the shareholders would have to find half a billion dollars, If GM were to close down the Shareholders would have to find 50 billion dollars


I will stand corrected of any of this, but that is the best I can do for now

GM's plight is 100 times worse than Ford's

[4Vman]

Stick a fork in them... GM look like they're nearly done.....
Ford look allot healthier that's for sure.

[Joe5619]

Originally Posted by EgoFG

I am trying to put together an informed opinion of this very point.

GM has not yet prepared its 10-K full year position, so going back to the third quarter 10-Q for both companies

In Millions:

FORD
242,065 Total ASSETS
242,596 Total Liabilities
- 531 Net assets


GM
110,425 Total ASSETS
169,419 Total Liabilities
-58,994 Net assets


This is before the operating expenses of 4th Quarter
If I am interpreting the figures correctly Ford has lower losses, and the Assets net to an 'almost' positive number
If Ford were to close down the shareholders would have to find half a billion dollars, If GM were to close down the Shareholders would have to find 50 billion dollars


I will stand corrected of any of this, but that is the best I can do for now

GM's plight is 100 times worse than Ford's

I'm glad someone looked at the numbers!! Any chance you can proivde the same numbers but just using the "current" assets & Liabilities. This would give a better picture of the short time liquidity of both companies.

[Wally]

Liquidity ratios:

Current ratio (assets/current liabilities):

GM 0.9
Ford 2.3

Quick ratio (assets-inventory/current liabilities)

GM 0.5
Ford 2.2

Cash Ratio (Marketable securities + cash/ current liabilities)

GM 0.38
Ford 0.66

[RSgerry]

Originally Posted by Paxton

I have seen this suggested on other forums, but I'd like to gauge the opinions of those here.

What would be people's reaction to, instead of having Obama bail out GM and Chrysler, have Obama actually bail out the component suppliers (by offering them loans), which will help cushion the effect if (and when) GM and Chrysler fail. This gives Ford, Toyota, Honda, Mercedes and BMW the backup of components, and allows the US Government to say no, we don't believe you will ever service this debt. At least helping the suppliers allows a number of people to keep their jobs, people would would have lost them if GM and Chrysler went down.

Any opinions people?

Interesting option. Main problem I would see is that should GM and Chrysler go under, demand would be greatly reduced anyway and the suppliers would have people on their payroll without having the work for them. Somethng needs to be done though, but you have to wonder if the US govt is throwing good money after bad trying to bail out GM and Chrysler and some lateral thouht is desperately needed.

[SSbaby]

Originally Posted by Joe5619

I'm glad someone looked at the numbers!! Any chance you can proivde the same numbers but just using the "current" assets & Liabilities. This would give a better picture of the short time liquidity of both companies.

I don't know where the above figures came from but the following might add some real perspective,

http://finance.yahoo.com/q/bs?s=GM
http://finance.yahoo.com/q/bs?s=F

[EgoFG]

Originally Posted by Joe5619

I'm glad someone looked at the numbers!! Any chance you can proivde the same numbers but just using the "current" assets & Liabilities. This would give a better picture of the short time liquidity of both companies.

I could not see it on the 10-Q

When I was searching I think they were call 'SEC filings'.
NYSE has a link to each company, then if the company built their page OK, it is easy to find them from there.

But Hey .... this may be easier .....

Ford
http://ccbn.10kwizard.com/cgi/conver...rl=0&dn=2&dn=3

GM
http://media.corporate-ir.net/media_...30/10Q1108.pdf

[EgoFG]

Originally Posted by SSbaby

I don't know where the above figures came from but the following might add some real perspective,

http://finance.yahoo.com/q/bs?s=GM
http://finance.yahoo.com/q/bs?s=F

I think I answered your Q above - but I quoted the legal doco files to the US Securities and Exchange Commission, I would say the small differences between the fiqures (1%-2%) may be because the yahoo site uses a different source of the data prepared for a different purpose

Both sources also agree that when you take into account shareholder equity GM is only 20 times worse off than Ford.

I left out the shareholders equity because these poor people get nothing back if the company goes to the wall. (Shareholders Equity is in effect "How much of the 'assets' figure was purchased with the owners investment in the company")

[Wally]

Originally Posted by EgoFG

I am trying to put together an informed opinion of this very point.

GM has not yet prepared its 10-K full year position, so going back to the third quarter 10-Q for both companies

If Ford were to close down the shareholders would have to find half a billion dollars, If GM were to close down the Shareholders would have to find 50 billion dollars


I will stand corrected of any of this, but that is the best I can do for now

GM's plight is 100 times worse than Ford's

Really. From the SEC Q10 I looked at for the September quarter:


Ford = US$156.793 billion debt

GM = US$160.631 billion debt



A liittle more than half a billion and hardly 100 times :- 161/157 = 1.03 times actually.

[geehaa]

Originally Posted by Wally

Really. From the SEC Q10 I looked at for the September quarter:


Ford = US$156.793 billion debt

GM = US$160.631 billion debt



A liittle more than half a billion and hardly 100 times :- 161/157 = 1.03 times actually.

Whats $4 Billion between friends??

[EgoFG]

Originally Posted by Wally

Really. From the SEC Q10 I looked at for the September quarter:


Ford = US$156.793 billion debt

GM = US$160.631 billion debt



A liittle more than half a billion and hardly 100 times :- 161/157 = 1.03 times actually.

As anyone with a house will tell you - Debt alone means nothing -
"Yes I have a 300,000 debt, but I have a 500,000 house, so I am worth 200,000"

- that is why I have said 'Net assets'

and the debt figure you mention is only one of the liabilities - there are another 3 figures to add together (which gives the figure I listed above)

If you do not include Shareholders Equity, the netted position of GM is 100 times worse that Ford's, if you do include shareholders equity GM is only 20 times worse off than Ford

[The Monty]

I know this has already been covered before, but I can not fully understand how the iminent Bankruptcy of GM and Chrysler will affect Ford as much as is being led on.

I know for instance that if the other two go belly up, parts suppliers will soon fall as well. But why?
If there are 10 tyre manufacturers who make a 234/45r17, and three go down, that means you only have a choice of 7. That 30% of the marketshare will now be split between the remaining 7.
So why wont this be the same for Ford? You have a choice of 3 rear wheel drive large car makers with performance models (V8's as is the case in America).
If Two go up, the person who was going to buy a Camaro, or a 300C, has only one choice. A Mustang.
I know this is a very generic soloution, but what are the other options? An M3, a Merc, not much else around anymore.
I can garauntee that they wont buy a corolla instead.

I can see how the falling of the other two manufacturers will see a fall in demand for small cars, as the options are greater, with Hyundai, Mitsi, Nissan, Toyota, practically every car company has a smaller capacity front wheel drive, which is good on economy.

But in relation to the rear wheel drive segment, and Pickup trucks, and especially any car with performance under $60 000, Ford would have the market at their feet.

I also understand that as there is no competition that means that prices will increase and quality will decrease, and RnD will also slow down.

I also dont want the other two manufacturers to fail, it would be a sad day in history, but IMO, which Im sure isnt correct to a lot of people, I dont think the future is that bad.

[Fordman1]

Originally Posted by Wally

Really. From the SEC Q10 I looked at for the September quarter:


Ford = US$156.793 billion debt

GM = US$160.631 billion debt



A liittle more than half a billion and hardly 100 times :- 161/157 = 1.03 times actually.

Seems you have forgotten to include assets in your post above.

Was that convenient ?

If I didn't know better, I'd say you are 'trolling'. But that would be wrong wouldn't it ?

[mrbaxr6t]

I will be amazed if GM is still operating and isn't owned by another auto manufacturer (for arguments sake toyota) I cannot see them lifting out of this without an injection of capital they can't sell shares cause they aren't worth squat they cant get a loan cause they have too much debt already and they cant rely on sales as there is no new model to "save" them. Face it they (GM) are on their backs kicking and screaming like a soiled baby. It was fun having them as a sparring partner to my Ford, but when the chips are down I am confident they will collapse. If Ford follows shortly after time will tell.

[Fordman1]

Originally Posted by The Monty

I know this has already been covered before, but I can not fully understand how the iminent Bankruptcy of GM and Chrysler will affect Ford as much as is being led on.

I know for instance that if the other two go belly up, parts suppliers will soon fall as well. But why?
If there are 10 tyre manufacturers who make a 234/45r17, and three go down, that means you only have a choice of 7. That 30% of the marketshare will now be split between the remaining 7.
So why wont this be the same for Ford? You have a choice of 3 rear wheel drive large car makers with performance models (V8's as is the case in America).
If Two go up, the person who was going to buy a Camaro, or a 300C, has only one choice. A Mustang.
I know this is a very generic soloution, but what are the other options? An M3, a Merc, not much else around anymore.
I can garauntee that they wont buy a corolla instead.

I can see how the falling of the other two manufacturers will see a fall in demand for small cars, as the options are greater, with Hyundai, Mitsi, Nissan, Toyota, practically every car company has a smaller capacity front wheel drive, which is good on economy.

But in relation to the rear wheel drive segment, and Pickup trucks, and especially any car with performance under $60 000, Ford would have the market at their feet.

I also understand that as there is no competition that means that prices will increase and quality will decrease, and RnD will also slow down.

I also dont want the other two manufacturers to fail, it would be a sad day in history, but IMO, which Im sure isnt correct to a lot of people, I dont think the future is that bad.

The big three share many suppliers.

If GM and Chrysler go under, the suppliers lose the volume to remain viable. Remember these suppliers are doing it tough and have also invested millions to produce the parts in the volumes projected in the carmakers' business plans.

If you take away that volume, the supplier no longer has a valid business model. Therefore they probably will also go under.

[The Monty]

But the volume would still be the same, same amount of cars being sold, but to a different manufacturer.
Or am I still missing something? lol.

[baboon]

lets say the debt of either ford or gm is $US160 billion. How do they pay this back? Well lets keep the printing presses hot and keep printing US dollars. Now when theres an oversupply of dollars in one country (ie Zimbabwe), it means the value of each dollar is less. Now they will continue to do this until the 160billion debt will equal nothing at all.

Lets say china come in after america is done inflating their money supply and say buy out GM's debt, and take over the car company. Chinas currency will be so strong against the US dollar that it will probably only cost them 100 Chinese Yuan to buy GM. At this point in time 1 US dollar = 6.84 Chinese Yuan.

Terrible I reckon.