auto bailout thought

[73ss454]

I think longer warranties would be a smart move for the domestics. GM's warranty is 5yrs/100k miles on the powertrain. Ford's is 60k/5yrs...these are transferable to the 2nd owner. Chrysler has unlimited miles/unlimited yrs to original owner.

So, did the lifetime warranty help Crapsler?

 

[73ss454]

I'd be inclined to agree, but the ripple effects on the economy might be pretty ugly. I am loathe to throw money down the automotive rathole (especially Crapler), but if these companies can make a credible case that they will be able to make it with a little help from Uncle Sam I suppose I would reluctantly come down on the side of helping them.

I think that the unions will never give up enough to make this work unless they are brought to their knees by some sort of bankruptcy.

 

[Independent]

so is the stang gonna be a classic or does it just become worthless first? what's a studebaker go for these days? maybe if i put it in self service storage for 20 years.

As they say, your price may vary. This is 2008 sales from RM Auctions. The 56-57 Golden Hawks originally sold for $2,000 - 3,000. That would give an IRR of about 6%, except that the restoration costs probably ate up most of that.

1960 Studebaker Champ Pickup $4,675 US
1939 Studebaker Champion $7,975 CDN
1952 Studebaker Champion SDN $3,630 US
1951 Studebaker Custom Project $28,600 US
1957 Studebaker Golden Hawk $41,800 US
1956 Studebaker Golden Hawk Two Door $55,000 US
1962 Studebaker GT Hawk $4,950 US
1948 Studebaker Land Cruiser 4D $5,500 US
1932 Studebaker President Brougham $110,000 US
1931 Studebaker President Four Seasons Roadster $188,100 US
1931 Studebaker President State Coupe $48,500 US
1928 Studebaker Series FB President State Victoria $52,800 US
1956 Studebaker Sky Hawk Coupe

 

[freebird5825]

so is the stang gonna be a classic or does it just become worthless first? what's a studebaker go for these days? maybe if i put it in self service storage for 20 years.

the Stang is classic enough to be released in 2005 in its popular 1969 body style with modern aerodynamic updates. this was one of the smartest moves Ford ever made. Even here in Nowhere NY, i see them all over the place. This is snow country, not the usual market for such a vehicle. Drivers are...ahem...upper middle aged and young also. Ford tapped into their retro loyalty market and created a new generation of Stang lovers.
did GM or Chrysler do anything similar? just curious...

 

[jazz4cash]

So, did the lifetime warranty help Crapsler?

I'm sure it did help somewhat, but surely not enough to save them. I don't think it's been in effect long enough to cost them anything.

 

[73ss454]

I'm sure it did help somewhat, but surely not enough to save them. I don't think it's been in effect long enough to cost them anything.

Yup, and I figure they knew they wouldn't be around long enough to have to fix anything.

 

[Nords]

the Stang is classic enough to be released in 2005 in its popular 1969 body style with modern aerodynamic updates. this was one of the smartest moves Ford ever made. Even here in Nowhere NY, i see them all over the place. This is snow country, not the usual market for such a vehicle. Drivers are...ahem...upper middle aged and young also. Ford tapped into their retro loyalty market and created a new generation of Stang lovers.

Every time I see a Mustang with an automatic transmission it makes me sad. It's like a racing bicycle with training wheels...

 

[clifp]

A couple of more thoughts after discussing this with my liberal friend, who started the conversation with how come we can give AIG 100 Billion and can't give the the big 3 35 billion or whatever today's price tag is. AIG doesn't make anything the Big 3 make cars.

I said good point and than went through a number of arguments.

The two that actually had worked were

1. Shortly after my warranty expired on my Accura I got mailers from 3rd party company offering extended warranty for my car like Warranty Direct. I didn't check the price but I don't think they are super expense a couple of thousand??

Why not have Uncle Sam provide a guarantee that they will honor a warranty of the Big 3 cars. That gets rid of the argument that consumers won't buy from a bankrupt car company and clearly there is a 3rd party industry that already handles this. Albeit not on GM's scale but it would certainly provide work for GM dealers. Say it cost $2K/car and the big 3 make 10 million cars while in bankruptcy the cost to Uncle Sam is only 20 billion, cheap by comparison.

The second argument which worked was this. A speculator can buy GM debt at roughly $.25 on the dollar, e.g an 8% GM bond for $250 meaning that they are collect 32% interest with the potential of a 4x return if the company is still in business 10 or 20 years from know.

As long as GM is out of bankruptcy the speculator collected their ridiculous interest rate at the taxpayers expense. Once bankruptcy happens no more interest payments to speculators (or other bondholders for that matter). Eventually the bankruptcy court sorts out who gets paid what and what percentage of new GM stock each bondholder, suppliers, banks etc own.

Uncle Sam providing the bankruptcy financing is also a reasonable compromise but the only way GM survives is it has to stop paying interest on its debt.

 

[FinanceDude]

So, did the lifetime warranty help Crapsler?

No, neither did the marriage with Daimler Benz........

 

[armor99]

Once again this is a situation that has gotten as bad as it has because of too much govt interferance... not less. For example... most people... even ones that have posted here, have said that the UAW is partially to blame for this. That the UAW was able to get for themselves unrealistic, and certianly unsustainable retirement packages and benefits. Hmm... so why do the Big three just not get rid of the unions to try to make themselves more profitable? Because that would be against the current laws! They by law cannot get rid of the UAW right now, or change the contracts without endless negotiations. If the Big three decided to try it, the UAW would sue them all the very next day... bankruptcy... or not.

When people are not able to negotiate their own personal situations to mutual benefit... it all falls apart.

 

[FinanceDude]

Once again this is a situation that has gotten as bad as it has because of too much govt interferance... not less. For example... most people... even ones that have posted here, have said that the UAW is partially to blame for this. That the UAW was able to get for themselves unrealistic, and certianly unsustainable retirement packages and benefits. Hmm... so why do the Big three just not get rid of the unions to try to make themselves more profitable? Because that would be against the current laws! They by law cannot get rid of the UAW right now, or change the contracts without endless negotiations. If the Big three decided to try it, the UAW would sue them all the very next day... bankruptcy... or not.

When people are not able to negotiate their own personal situations to mutual benefit... it all falls apart.

Bankruptcy is the only "legal way" to get rid of the UAW. I think the UAW will fight to the death to protect their benefits. The other part of the vicious circle is that if by some miracle GM and the others survive, they will have to downsize their labor by 50%, so instead of 400 retirees per 1 worker, you'll have 800 retirees to 1 worker, further putting them in an untenable position........

 

[samclem]

Why not have Uncle Sam provide a guarantee that they will honor a warranty of the Big 3 cars. That gets rid of the argument that consumers won't buy from a bankrupt car company and clearly there is a 3rd party industry that already handles this.

It would solve the "can I get this car fixed if they go under" sales resistance. It would not, however, give GM the incentive to build better cars--or give the consumer any confidence that they were doing so. When Hyundai guarantees to fix anything that goes wrong for 10 years at their expense it sends a strong message. But, you are right--such a guarantee at this point from GM would be meaningless.

As long as GM is out of bankruptcy the speculator collected their ridiculous interest rate at the taxpayers expense.

I'm not sure the interest rate is ridiculous--it's exactly what the market demands for this kind of risk

Uncle Sam providing the bankruptcy financing is also a reasonable compromise but the only way GM survives is it has to stop paying interest on its debt.

And re-negotiates its contracts so that the company is commercially viable. Once these re-negotiations happen, the market (investors) can best judge if GM has a workable business plan. If so, they'll buy the bonds at a reasonable price and government financing is not needed.

I don't think we need anyone in government, beholden to all the special interests who have a dog in this fight, deciding whether or not the automakers should get money. We have another system for that--the market.

Okay, okay--maybe a small govt loan to prime the pump after bankruptcy. But tie the govt money to private money--when investors judge the deal is good one and buy bonds (and any new issues of stock), the government might also buy some. To make it work, the private buyers would have to be in a higher position (if there is a default) than the govt.

 

[FinanceDude]

I monitored the Congressional meetings with the automakers yesterday. Here's my brief summation:

1)The UAW president seems smug and arrogant

2)Waggoner impressed me the most of all the CEOs

3)The Senators are in love with Dr. Zandy

4)Probably Pelosi and her cronies are going to slam through some sort of aid package.

5)GM will Still have FORTY models of vehicles after restructuring........

The MOST interesting thing that I heard over and over was Waggoner referring to the UAW as "THEM", not using the word "WE". Maybe its just me, but I found that statement very troubling. More than likely behind the scenes, the Gettelfinger and the CEOs are NOT friendly at all.........

 

[al_bundy]

Management probably blames the union for strong arming them into these contract via strikes and the threat of strikes. UAW blames managment for lying about promised benefits.

since the 1970's the policy of the UAW was to take as much revenue as they can in good times and don't give anything back in bad times. almost as bad as local government spending

 

[FinanceDude]

Management probably blames the union for strong arming them into these contract via strikes and the threat of strikes. UAW blames managment for lying about promised benefits.

since the 1970's the policy of the UAW was to take as much revenue as they can in good times and don't give anything back in bad times. almost as bad as local government spending

Agree, but their time seems to be coming, whether they believe it or not.

I saw Waggoner wants to keep Chevy and GMC, that has to be one of the dumbest ideas I have ever heard, they are the SAME DARN VEHICLE, except for different trim.........

 

[al_bundy]

i remember the Firebird/Camaro fanboys from my GM buying days

you do have to wonder at the logic of not only having 10 brands or more but having different price levels in each brand. Corvette is a special case, but i've seen Chevy's sell for $50,000 for some of the SUV models like the Suburban when it's supposed to be a low price brand

Toyota does something like this with a few trucks but their branding is better with an entry level and a luxury brand.

 

[Bestwifeever]

This was interesting about the CEOs' travel to this week's hearings (From the NY Daily News, but political spectra reported this).

So they've learned something since the last hearings!

The Big 3 have launched a massive campaign to repair their public image. In the latest automaker about-face, GM CEO Rich Wagoner arrived at the bailout hearings in a Chevy Malibu hybrid - jet not included. Both Ford CEO Alan Mulally and Chrysler CEO Bob Nardelli also drove - as in, no private jet - to the bailout hearings in hybrid cars made by their respective companies. Mulally said he'd accept a $1 yearly salary if Ford takes any bailout money. Ford also said it will sell five of its corporate jets.

 

[Independent]

As long as GM is out of bankruptcy the speculator collected their ridiculous interest rate at the taxpayers expense. Once bankruptcy happens no more interest payments to speculators (or other bondholders for that matter). Eventually the bankruptcy court sorts out who gets paid what and what percentage of new GM stock each bondholder, suppliers, banks etc own.

Uncle Sam providing the bankruptcy financing is also a reasonable compromise but the only way GM survives is it has to stop paying interest on its debt.

Right. I'm sure that today's price for both GM stocks and bonds has more to do with speculating on gov't actions than on any fundamentals of the company. That is a bad situation.

As a taxpayer, I'd be willing to have the gov't provide debtor-in-possession financing for a Ch 11 bankruptcy, IF we had a prior agreement on these points: The stockholders get wiped out; the long-term bondholders trade 100% of their debt for equity; the UAW workers get a contract equivalent to Toyota's cost; all retirees pay significantly more for their health insurance; white collar workers get something similar to Toyota; senior management works for $1 per year plus stock.

This satisfies the people who want to see GM in bankruptcy, it does as much as a bankruptcy judge could do to give them a chance to be profitable, and it demonstrates that everyone at GM is "sharing the cost".

They could add some window dressing about fuel efficiency - the Volt, hybrids, and better mileage internal combustion engines (I say "window dressing" because they are doing these things anyway). But, I wouldn't require anything about brands or models because I think they will cut as soon as they have bankruptcy protection without any requirements from Congress.

 

[FinanceDude]

i remember the Firebird/Camaro fanboys from my GM buying days

you do have to wonder at the logic of not only having 10 brands or more but having different price levels in each brand. Corvette is a special case, but i've seen Chevy's sell for $50,000 for some of the SUV models like the Suburban when it's supposed to be a low price brand

Toyota does something like this with a few trucks but their branding is better with an entry level and a luxury brand.

The original intent of the GM brands:

Chevy - first car, affordable, not many frills
Pontiac - sportier, a little nicer than Chevy
Oldsmobile - nicer, more luxurious
Buick - more upscale than Olds, more refined ride, etc.
Cadillac - ultimate luxury and the cream of the crop

What they ended up with was a mess. IMHO Waggoner is wrong, still way too many crossover divisions. Look at how clean the import lines are:

Toyota: Toyota, Lexus, Scion

Honda: Honda, Acura

Nissan: Nissan, Infiniti

 

[al_bundy]

and somewhere in there they made room for Saturn and GMC

 

[Zathras]

Full credit to this link to WesternSkies, but I thought this was very appropriate to this thread as well. detnews.com | Webvideo | Ford's most advanced assembly plant operates in rural Brazil

This is a great example of an efficient factory. This is the type of thing the 'big' three need to do here in this country.

If the UAW is indeed standing in the way of plants like this, Ford needs to revisit this idea now that it is more apparent how dire the situation is.

 

[FinanceDude]

Full credit to this link to WesternSkies, but I thought this was very appropriate to this thread as well. detnews.com | Webvideo | Ford's most advanced assembly plant operates in rural Brazil

This is a great example of an efficient factory. This is the type of thing the 'big' three need to do here in this country.

If the UAW is indeed standing in the way of plants like this, Ford needs to revisit this idea now that it is more apparent how dire the situation is.

WOW......that would make Honda and Toyota sit up and notice if something like that was built in the US.........

 

[Rustward]

This was interesting about the CEOs' travel to this week's hearings (From the NY Daily News, but political spectra reported this).

So they've learned something since the last hearings!

And ... Wagoner, Mulally, and Nardelli were much more cooperative with the Senate yesterday (Thursday) than they were two weeks ago. Gettelfinger (UAW guy) ... well I guess he was just being himself.

 

[FinanceDude]

And ... Wagoner, Mulally, and Nardelli were much more cooperative with the Senate yesterday (Thursday) than they were two weeks ago. Gettelfinger (UAW guy) ... well I guess he was just being himself.

I think the CEOs driving hybrids was part of the dog and pony show. Wonder what Gettelfinger drove? Probably a Lexus........

 

[FinanceDude]

i remember the Firebird/Camaro fanboys from my GM buying days

you do have to wonder at the logic of not only having 10 brands or more but having different price levels in each brand. Corvette is a special case, but i've seen Chevy's sell for $50,000 for some of the SUV models like the Suburban when it's supposed to be a low price brand

Toyota does something like this with a few trucks but their branding is better with an entry level and a luxury brand.

Chevy - entry level, lower priced cars and trucks

Buick - mid size, more goodies

Cadillac - loaded luxury (here's where the $50K Tahoes and stuff should be sold)

You could keep Corvette as a seperate division under Cadillac, offering luxury and performance.......