General Motors CEO - Rick Wagoner Resigns..

[goof2]

Originally Posted by Homeslice

Maybe, but 2 years ago those same models were making bank. I know Ford used to make $18K after manufacturing costs on every Navigator.

Maybe that is why Ford wants nothing to do with the government bailout. While GM might have been doing as well on Escalades they are now essentially paying people to remove them from the lots.

It reminds me of a story I heard about Aston Martin, but the veracity of it I do not know. At some point during one of the company's less successful periods the friend of one of the owners asked, since they were buddies, if he could purchase an Aston at cost. The answer was "Sure!" and the price was raised by a few thousand pounds.

[bmblebee]

perhaps an understanding of cost accounting is needed. If an airline sends a plane on a flight, where every seat but one is full, they can claim they lost money on the flight. It has nothing to do with revenue vs expenses.

If you accept the rebate, or zero percent financing when you purchase a car they finance in house, the manufacturer claims a loss on the sale

[goof2]

Originally Posted by bmblebee

perhaps an understanding of cost accounting is needed. If an airline sends a plane on a flight, where every seat but one is full, they can claim they lost money on the flight. It has nothing to do with revenue vs expenses.

If you accept the rebate, or zero percent financing when you purchase a car they finance in house, the manufacturer claims a loss on the sale

That is fine for a discussion of individual cars, but doesn't tell the story of GM as a whole. GM's EBIT for 2008 was negative $30 billion. That has everything to do with revenue vs. expenses. With GM selling just under 8.5 million cars worldwide in 08 it also tells me, by loosing around $3,500 per car sold, it isn't just claimed losses.

[Homeslice]

Originally Posted by goof2

Maybe that is why Ford wants nothing to do with the government bailout. While GM might have been doing as well on Escalades they are now essentially paying people to remove them from the lots.
.

No matter how much of a rebate they give, I still bet they make money on them. Remember, all an Escalade is is a Chevy truck with an enclosed body and fancy trim. Same as a Navigator is just an F150. That's a hell of a cost efficiency. Now, most of their passenger cars I'm sure they're losing money on.

[101lifts2]

It costs GM about 15-18K to produce most of its vehicles...A 40K Cad. Escalade is around the 18k figure, so they could discount it 20 grand and still make coin.

The problem is selling Cobalts where they loose on every one.

[goof2]

Originally Posted by Homeslice

No matter how much of a rebate they give, I still bet they make money on them. Remember, all an Escalade is is a Chevy truck with an enclosed body and fancy trim. Same as a Navigator is just an F150. That's a hell of a cost efficiency. Now, most of their passenger cars I'm sure they're losing money on.

Originally Posted by 101lifts2

It costs GM about 15-18K to produce most of its vehicles...A 40K Cad. Escalade is around the 18k figure, so they could discount it 20 grand and still make coin.

The problem is selling Cobalts where they loose on every one.

The other problem is while Escalades, Silverados, Rams, etc. may theoretically be profitable, they have to be sold first. They could cost a dollar each to build but they don't have a positive impact on the company when they are sitting in lots by the tens of thousands not being sold.

Even if they are profitable though, it only strengthens my original point. The government doesn't want GM building cars that can apparently still be profitable. They want GM building cars that have historically lost money. GM certainly did plenty to bring this on themselves. Management placed the company in a position where they are dependent on government aid for their survival.

When Chrysler was given government aid in 1979 in the form of $1.5 billion in loan guarantees (over $4 billion today) the government didn't tell them what they should be building. Even without the now indispensable hand of government, Chrysler was able to repay the loans in 4 years. That apparently isn't the case as far as the current administration is concerned.

This brings me back to my original point. The government is trying to force these companies to build historically unprofitable cars, essentially guaranteeing the failure of these companies. The executives now have to work for stock, which will be worthless once the companies fail. Under these conditions how are GM and Chrysler supposed to attract any talent at all?

[pauldun170]

The problem is that we assume that in order for GM to survive they need to sell more cars and make a profit on each one.

Unfortunately this is not the 20+ years ago. The market is diverse and increased sales will not fix GM's problem. Even if GM could pull off a "hot" volume seller and increase sales they would still be in hot water.

They need to shrink.
They need an old fashion "regroup".

They have crappy obligations throughout from labor to vendors (vendors them selves have the same issue of crappy labor contracts and vendors).

They have an OBSCENE amount of redundancy in the portfolio.

[Destitute]

Originally Posted by goof2

The question is, who would want to be an executive in the auto industry where your compensation is directly tied to profits, but you are either discouraged or ordered to build unprofitable vehicles. Is it a good idea to work for stock in a company where the government is essentially guaranteeing the demise of the company?

Hasn't it already died, and the government is giving it a second chance at life? If it wasn't for taxpayer money, GM would already be in bankruptcy.

I didn't realize the government was making product decisions, rather than just financial/organizational ones.

[Corey]

Originally Posted by Destitute

Hasn't it already died, and the government is giving it a second chance at life? If it wasn't for taxpayer money, GM would already be in bankruptcy.

I didn't realize the government was making product decisions, rather than just financial/organizational ones.

What qualifies the government to make financial decisions related to the auto industries? Right now it's sounding like they are pushing for bankruptcy for GM and Chrysler. They're trying to push Chrysler into a merger with Fiat. They're pushing moves on an industry that is in rough waters around the globe without anything that qualifies them to make any proper decisions except being able to rape tax payers to back their mistakes. Everything about this whole auto fiasco gets worse with each passing month. None of this bodes well for GM or Chrysler.

[pauldun170]

http://news.yahoo.com/s/nm/20090401/...utos_report_sb