GM to Halt Savings-Plan Payments Amid Wider Slowdown

[dex]

Bloomberg.com: Worldwide

General Motors Corp., the largest U.S. automaker, is suspending matching payments to employee 401(k) savings plans as it makes more cuts to conserve cash amid slumping sales in the U.S. and Europe.
++++++++++++
People will not be buying new cars for awhile - to preserve their cash, cars last much longer, will buy used if they need to.

[ziggy29]

Seems like GM's doing all they can to get their employees to quit voluntarily...

[ERD50]

I'm surprised it took them this long.

If GM closes shop, the employees won't have the option of quitting voluntarily.

-ERD50

[cardude]

I'm a GM dealer (and Chrysler too ), and the current situation is spooking me big time. Our sales have fallen off the cliff, and if it was just that I could probably handle things by cutting expenses and just hunkering down. However, as I watch GM go into what looks like a possible death spiral I'm not sure if I should jump ship now and just close up shop or try to hang on to see what happens. My risk, the way I see it, is if GM does declare bankruptcy then I can't just walk away and have them take back my inventory. Then I would be stuck with over a million dollars worth of vehicles nobody wants to buy because they will think they won't be able to get parts or warranty service. That won’t be the case as GM would still operate under bankruptcy, but the stigma would be there nevertheless.

All the same worries apply to Chrysler and Cerebus also as they are desperately trying to find a buyer for Chrysler, but having a little trouble getting anyone to pony up with the money for some reason.

Any bankruptcy experts out there?

[dex]

I hate to say it but car mfg. are the last of the rust belt companies to hold on. It will look more like the current steel industry in the future - 10+ years? - small boutique companies. And, majority of parts imported and assembled here.

More cars will be imported from Mexico, China, & India - under the GM, Ford names.

If the unions go on strike today; the companies will just wait them out.

Detroit will be a ghost town.

I have a 2000 Dodge Dakota Quad cab 100K miles - runs great; not problems 17/20 mpg. I don't see needing another car for another 200K miles - 10 years?

[DangerMouse]

Quote:

Originally Posted by ziggy29 Seems like GM's doing all they can to get their employees to quit voluntarily...

But how many of their employees are likely to find a position paying as well as what they make at GM? Aren't their manufacturing plants in places that experience high unemployment?

It's the reality of the world, my former company ceased matching 401k contributions on 30 June this year and I'll bet many other companies are the same.

[FinanceDude]

Quote:

Originally Posted by cardude I'm a GM dealer (and Chrysler too ), and the current situation is spooking me big time. Our sales have fallen off the cliff, and if it was just that I could probably handle things by cutting expenses and just hunkering down. However, as I watch GM go into what looks like a possible death spiral I'm not sure if I should jump ship now and just close up shop or try to hang on to see what happens. My risk, the way I see it, is if GM does declare bankruptcy then I can't just walk away and have them take back my inventory. Then I would be stuck with over a million dollars worth of vehicles nobody wants to buy because they will think they won't be able to get parts or warranty service. That won’t be the case as GM would still operate under bankruptcy, but the stigma would be there nevertheless. All the same worries apply to Chrysler and Cerebus also as they are desperately trying to find a buyer for Chrysler, but having a little trouble getting anyone to pony up with the money for some reason. Any bankruptcy experts out there?

I'd keep your Chrysler inventory as low as they will let you. Chrysler is going to be chopped up in pieces and then the vultures can pick the bones clean.

GM will survive, but a lot smaller than they have been. They have a HUGE amount of excess capacity now, and that won't change. I think Ford and GM will survive in a smaller form, but Chrysler is toast.........

I read that up to 1200 dealerships will close in the US next year. ANYONE with a single point store is probably toast. Having two points may save you. However, the days of a Ford and a Chevy dealer in every small town in America are gone........

Limit your new car inventory, load up on used cars, and keep your head low for cannon fire.........

[73ss454]

Cardude, I spent 35 years in the car biz as a F&I guy. I have many friends that own Ford and GM stores, or should I say used to. If you own the property and can rent it for a good # I'd pack up and leave town and tell Chrysler and GM to come and pick up their cars. If you own the property and don't see a good rental situation, well then you have to run as lean as possible and see where it goes. Now, if you're paying a note on the property and it's now worth less than what you owe, I say close it all up and send the bank the keys.

If you rent I'd be out of there today.

On LI in NY we had 20 Ford L&M dealers in about a 10 square mile area. All from the 40's and 50's when they ruled the world. My boss closed up (ford) after 54 years in business and most of the dealers either went dual (ford and L&M) or just closed up.

When you can get rent and stop the bleeding, what's the point.

Best of luck to ya.

[Walt34]

cardude, the good news is that in 2003 I bought a Buick for my wife and a GMC pickup for me, both brand new. The bad news is that we planned at the outset to keep them 20 years. At $30k a pop for one of those trucks I just can't afford to do that very often.

[dlhanson]

Thank you Ford, GM, and Chrysler:

1. For selling junk cars (I used to buy American Car company products but after a junk Ford Bronco I purchased in '87 - that was it no more American car company products for our family. We drive a Volvo, a Subaru, a BMW and a Honda today. My parents drive a Honda and my mother-in-law's last car was a VW).

2. For not learning how to make a profit selling small quality cars after the 1970's energy crisis.

3. For overpaying your workers.

4. For coming to us taxpayers with your hat in hand to bail you out all because of your stupid management.

And thank you car dealers from keeping us from doing our entire car purchase online. We should be able to purchase direct from the car manufacturer with no money sucking dealer in between.

[Urchina]

I got a "courtesy call" yesterday from our local Honda dealer, where we purchased both our cars. She wanted to know if we were happy with the purchases (we are) and if we were thinking about "trading up" or getting a new car. I honestly told her we bought Hondas because we plan on driving them for the next 15-20 years, and that if things go according to plan she won't see us darken her doorway until 2022 or so, when we might buy a recent used Honda for DD and DS to drive.

She sounded quite surprised, but in a pleasant sort of way.

So CarDude, it's not just american marques that are getting hammered. We have NEVER received a call from our dealership prior to this; they must be hurting.

[Gearhead Jim]

Quote:

Originally Posted by cardude I'm a GM dealer (and Chrysler too )... My risk, the way I see it, is if GM does declare bankruptcy then I can't just walk away and have them take back my inventory. Then I would be stuck with over a million dollars worth of vehicles nobody wants to buy because they will think they won't be able to get parts or warranty service. That won’t be the case as GM would still operate under bankruptcy, but the stigma would be there nevertheless. ...

I used to work for United Airlines, and the prediction was that passengers would be afraid to fly on a bankrupt airline because of safety or reliability concerns. When virtually all the airlines went bankrupt, the public seemed to quit worrying.
Chrysler vehicles may end up like Chrysler stock, but GM will survive in some form, just like you said. IF IF IF GM can keep the parts and warranty system working properly, people will relax and start buying. Unfortunately, I can't give you a timetable...

[jIMOh]

I have worked for Ford before, and my college degree bears GMs name. It was a matter of time before their own culture and economics caught up with them.

Honda and Toyota build good cars AND they have their costs under control. GM and Ford have process issues throughout the company, and most good ideas get dumbed down by management too much before they reach customers.

Honda and Toyota have around a 36 month cycle time to go from designing car to seeing it come off assembly line.

GM and Ford had 60+ month cycle times when I worked there.

Add to this that Honda and Toyota completely redo their assembly lines every 2-3 years and do a ground up design on their cars every 2-3 years. This allows them to improve their processes and correct requirements to improve quality.

It is important to know from an enginneering stand point that design is around 30-40% of the cost of the car- but the design locks in around 90% of the cost of the car. Improvements in designing the car can improve manufacturing processes (and lower costs), can improve environmental costs (recylcing parts or removing parts from service) and the list goes on and on.

GM and Ford did not have a culture which embraces this when I was in the rust belt.

I could go on... but will digress for now (is it time to go home yet?).

[Own2Feet]

Cardude,
I live in an atypical, very high-employment, low-poverty area; our local Ford dealership continues to look like a gold mine. When we take our Focus in for service, the parking lot, service bays, and customer areas are always mobbed. Maybe it is just the repair and service side of the business that is booming, though. Are you in a position to re-focus your car store more on repairs and service?

.

Ironically, I think American cars have been better buys than foreign for some years now.

[plex]

<-------- GMI (kettering) grad too

I don't believe the Employer 401k bonus is a big deal, at least for GM's survivability. GM should make it in the long run in some form since it has a decent future lineup it has been working on for awhile. Chrysler will likely not, their lineup is very heavy on the SUVs/Trucks and they have shown little to no inclincation to use any of the newer fueling systems (and they certainly aren't in a position to upgright the ship now). They don't attempt to encourage or even advertise any of their engineering improvements. Chrysler seems like it will be going about "buisness as usual" into its grave.

[NW-Bound]

Ceasing company-matching in 401k is nothing new. One of my past employers did that when it ran into hard times. Same with my brother's employer, another megacorp. They only gave employee matching fund the year they had some profits. As long as the CEO and top management do not walk off with sacks of cash, I do not see this as a problem. What would you think if you were a shareholder, the ultimate owner of the joint?

[Dog]

I live in WA state and near a Boeing plant. Currently the machinists are on strike and I wonder if they are paying attention to the GM situation. Boeing manufactures products for an ailing airline industry. Yes, they have a backlog of orders today, but that doesn't guarantee work tomorrow. They moved the HQ out of WA, it is just a matter of time before they relocate manufacturing!

[Texarkandy]

Quote:

Originally Posted by dex I hate to say it but car mfg. are the last of the rust belt companies to hold on. It will look more like the current steel industry in the future - 10+ years? - small boutique companies. And, majority of parts imported and assembled here. More cars will be imported from Mexico, China, & India - under the GM, Ford names. If the unions go on strike today; the companies will just wait them out. Detroit will be a ghost town. I have a 2000 Dodge Dakota Quad cab 100K miles - runs great; not problems 17/20 mpg. I don't see needing another car for another 200K miles - 10 years?

Auto workers & auto companies of America Unite!!! Vote Obama/Biden - yeaaaaaaaa!
(Pssst ...... think: "tarriffs")

[BunsGettingFirm]

GM has $19 billion in cash and $1 billion in marketable securities. Their total cash flow for the 6 months prior to June 30, 2008 is -$5.2 billion. I think GM will be around for another couple of years.

[haha]

Quote:

Originally Posted by DangerMouse But how many of their employees are likely to find a position paying as well as what they make at GM? Aren't their manufacturing plants in places that experience high unemployment?

That is the understatement of the week. These companies have to find a way to pay their workers in line with what their foreign competition pays, or find some way to get rid of them and make much larger use of robotics.

CarDude-

If you walk away now, what position are you in? What would happen to your balance sheet? What happened when American Motors disappeared?

Ha