GM Headed For Bankruptcy (Again)????

[dales]

http://www.forbes.com/sites/louiswoodhi ... tcy-again/

Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company. It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $20.21/share on Tuesday. This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion.



Leadership, Not Another Bailout, Will Fix GM (And No, It Is Not Going Bankrupt) Joann MullerForbes Staff



Right now, the government’s GM stock is worth about 39% less than it was on November 17, 2010, when the company went public at $33.00/share. However, during the intervening time, the Dow Jones Industrial Average has risen by almost 20%, so GM shares have lost 49% of their value relative to the Dow.

It’s doubtful that the Obama administration would attempt to sell off the government’s massive position in GM while the stock price is falling. It would be too embarrassing politically. Accordingly, if GM shares continue to decline, it is likely that Obama would ride the stock down to zero.

GM is unlikely to hit the wall before the election, but, given current trends, the company could easily do so again before the end of a second Obama term.

In the 1960s, GM averaged a 48.3% share of the U.S. car and truck market. For the first 7 months of 2012, their market share was 18.0%, down from 20.0% for the same period in 2011. With a loss of market share comes a loss of relative cost-competitiveness. There is only so much market share that GM can lose before it would no longer have the resources to attempt to recover.

To help understand why GM keeps losing market share, let’s look at the saga of the Chevy Malibu.

The Malibu is GM’s entry in the automobile market’s “D-Segment”. The D-Segment comprises mid-size, popularly priced, family sedans, like the Toyota Camry and the Honda Accord. The D-Segment accounted for 14.7% of the total U.S. vehicle market in 2011, and 21.3% during the first 7 months of 2012.

Because the D-Segment is the highest volume single vehicle class in the U.S., and the U.S. is GM’s home market, it is difficult to imagine how GM could survive long term unless it can profitably develop, manufacture, and market a vehicle that can hold its own in the D-Segment. This is true not only because of the revenue potential of the D-Segment, but also because of what an also-ran Malibu would say about GM’s ability to execute at this time in its history.

GM is in the process of introducing a totally redesigned 2013 Chevy Malibu. It will compete in the D-Segment with, among others, the following: the Ford Fusion (totally redesigned for 2013); the Honda Accord (totally redesigned for 2013); the Hyundai Sonata (totally redesigned for 2011); the Nissan Altima (totally redesigned for 2013); the Toyota Camry (refreshed for 2013); and the Volkswagen Passat (totally redesigned for 2012).

Automobile technology is progressing so fast that the best vehicle in a given segment is usually just the newest design in that segment. Accordingly, if a car company comes out with a new, completely redesigned vehicle, it had better be superior to the older models being offered by its competitors. If it is not, the company will spend the next five years (the usual time between major redesigns in this segment) losing market share and/or offering costly “incentives” to “move the metal”.

for the rest, click on the universal resouce locator

[Econoline]

BTW, Volkswagen--the winner of the Car & Driver comparo referenced in that Forbes article--is built by union labor in Germany. The problem isn't unions, it's management.

[dales]

Volkswagen in America is buit in non-union employess in TN.

[Econoline]

So are VW's German-made vehicles inferior in quality to their US-made vehicles? I think not. Again: the problem isn't unions, it's management.



P.S.

Volkswagen in America is buit in non-union employess in TN.

*INSIDE* the employees????? Well, that's a problem right there: of course the output produced inside the human body is excrement!

[dales]

Whatever.

Read and learn a little.

http://www.volkswagengroupamerica.com/c ... index.html

From TTAC:

A while ago, the UAW started passing out signature cards at Volkswagen’s factory in Chattanooga, TN. It looks like most landed in the garbage can.

The UAW needs signatures from at least 30 percent of the workers before a representation election can go ahead. There is no information on how many (or how few) signatures the UAW received. However, Gary Casteel, director of the UAW’s District 8 says now that the UAW wasn’t serious. Casteel told The Tennessean:


“We have not started an official organizing campaign. What got some people up in arms is that we passed out some cards, but they were never about setting up an election. The cards were just gauging the level of support.”

The paper sees older workers at the Volkswagen plant as more supportive of the union than younger employees are. Says the Chattanooga paper:


“Some younger workers fear they could lose some of their current benefits if the union negotiates a contract with Volkswagen.”

Chances are pretty rotten for a union if workers fear that they get less after they sign. The workforce appeared pretty youthful when we had visited the plant last year.

The comments to the article in the Tennessean reflect the cautious mood in Chattanooga. “The UAW will only protect the drunks, drug addicted, lazy, thieves and those who are chronically absent,” says a Dennis Tucker. “Don’t do it. The UAW is a bunch of self-serving thugs and will be bad for the employees,” a Ron Brown asks.

[Gob]

Car maker Holden has posted an $89.7 million after-tax profit for 2011 with the result impacted by a softening large car market and a shortage of some imported vehicles.

GM Holden on Monday said its revenue was $4.3 billion for 2011, down from $4.4 billion in 2010.

Its profit result compared to the $112 million net profit the company reported in 2010.

Holden chief financial officer George Kapitelli said the company's second consecutive year of profit was driven by the success of the Australian-built Cruze small car and a leaner cost structure.

"Local car makers face tough economic conditions with the high Australian dollar, higher prices and disruption in the local supply base and increasing competition and segmentation in the market," Mr Kapitelli said.

"After the financial crisis, we reshaped our business to improve structural cost, reduce our reliance on exports and bring the Cruze into local production so we could continue to make cars in Australia.

"Now, around 60 per cent of our Australian sales are Australian-made cars. This is a great result."

Holden said local vehicle production was up 36.8 per cent in 2011, with 90,424 cars built at its assembly plant in South Australia, compared to 66,061 in 2010.

Engine production in Melbourne rose 2.9 per cent to 101,019.

Vehicle exports increased 54.3 per cent last year with Holden shipping 12,068 cars to the Middle East, New Zealand, North America, Brazil and South Africa while engine exports rose 14 per cent to 57,792 units.

In Australia, Holden sold 126,095 vehicles in 2011, a 5.1 per cent dip compared to 2010, making it the second most popular brand behind Toyota.

[dales]

The dammed steering wheel is on the wrong forkin' side!

[Gob]

I blame the Unions.

[Econoline]

[rubato]

So are VW's German-made vehicles inferior in quality to their US-made vehicles? I think not. ... "

Actually some of them are. Audi for example has a stink-o reliability rating and a few GM cars have got close to the top.

But you're right. Quality is solely a function of good management; this point is made in all the six-sigma and TQL training sessions.

yrs,
rubato