User 169775

Is One Automaker Default Almost a Sure Thing?

Just how does the Big Three spending their $19 Billion / year of R&D money? What do they have to show for it?

To put it in perspective, the Apollo program cost the U.S. government $20 billion over a period of 10 years, and it put men on the moon and spurred revolutionary technologies such as integrated circuit miniaturization and fly-by-wire controls.

Even after adjusting for inflation, $19 billion per year for 10 years from the Big Three would have been equal to the the expenditure of the Apollo program. What does the Big Three have to show for it for the past 10 years (1998-2008)?

Auto Sales Are Cause for Optimism

I think people didn't overbuy cars like they did houses because people know cars are not an investment-- The car starts depreciating in value the moment you drive it off the dealer's lot. Houses on the other hand were seen as investments and expected to appreciate in value over time.

Still, what people DID overbuy when it comes to cars is size.. Look at how so many are frantically looking to unload their superhuge gas-guzzling SUVs right now. :-)

How GM Plans to Muddle Through

DRich:

Unfortunately, EMD is no longer part of GM. It got sold off in 2005. In its last years under GM management, EMD seems to be heading downhill too-- They were getting their butts kicked by General Electric's Dash-9s, AC4400CWs and the Gevos.

John Smyth:

Keep in mind in 2010 Toyota will be releasing its plug-in 3rd-generation Prius with the same Lithium Ion technology as the GM Volt, also with a 40-mile pure-electric range. AND, the 3rd-gen PHEV Prius will be selling for about $30,000 compared to $40,000 for the Volt. Things don't look good.

I'm not buying an GM stock until I see it becomes positive-equity (i.e. it owes less than what the stock float is worth), and it gets 2 consecutive profitable quarters.

Jim Cramer's Mad Money In-Depth Stock Picks, 8/9/07

THEY KNOW NOTHING!! :-)

How Is GM Still Alive?

stockguy456:

Not mocking legit hydrogen fuel-cell cars like the Honda FCX Clarity, but just how do you propose to fuel them? Not until most gas stations in the U.S. has a hydrogen-dispensing pump will FC vehicles become practical.

And how long would that take? 10 years? 15 years? Not fast enough to save GM's bacon, I'm afraid.

How Is GM Still Alive?

Discord: If you believe those "run your car on water" scams actually work, I got a bridge in Brooklyn and beachfront property in Arizona I'd like to sell you.

How Is GM Still Alive?

Fuel cells ain't going to do diddly-squat for GM.

GM can build the most advanced fuel cell vehicle, but nobody will buy one because you can't get hydrogen to fuel them.

Not until most gas stations in this country has a pump that dispenses hydrogen will an FC vehicle become practical.

Likelihood of that happening? Slim to none.

Credit Cards Are Feeling the Crunch

The Beijing Olympics start in a week. Visa is getting HUGE exposure in Chinese media because of it, and they are on an intense drive to sign up new cardholders there right now. In a country of 1.3 billion people, 50% of whom live in cities.

Now THERE is a growth opportunity if there ever is one!

That's why I'm long on Visa ever since I got in at $56 / share.

They need to hold an Olympic games in India! (another billion people there!)

Earnings Preview: JP Morgan Chase

I thought JPMorgan wasn't on the hook for Bear Stearn's debts...?

Wasn't one of the conditions for the JPM takeover that the Fed guarantee the $30 billion of Bear Stearn debt?

Big Three Automakers: Recapitalization or Bankruptcy?

The UAW at the end of 2007 has 464,910 members according to this article: www.detnews.com/apps/p...

Not sure how that would affect the middle class, considering that UAW members isn't even half a percent of the entire U.S. workforce.

General Motors: General Malaise

Right now American consumers don't care if a GM car gets JD Powers awards for quality coming out of the wazoo. Right now they care about fuel economy, and that's where the Japanese cars are trouncing GM.

Chevy's commercials say they have a line up with more cars that get 30mpg than other makers, but that's misleading. 30mpg HIGHWAY only. If you factor in city mileage, even the Chevy Aveo (which is made by Daewoo in Korea by the way, not here in the U.S.) gets only 25mpg.

Meanwhile, Toyota has Yarises and Corollas that can get 30mpg COMBINED, ditto Honda with their Civics and Fits.

Why should the American consumer keep buying GM cars if they can't match the fuel economy of foreign cars to prop them up so GM has no incentive to change? That's corporate socialism at its very worst.

Valuing GM: $28 One Day, $7 the Next?

The problem with GM is not lead-time-- It's the fact that they had NO fuel-efficient lineup to fall back on.

Even though Toyota's sales are down because they lost their bet on SUVs by introducing gas-guzzlers like the Tundra at such an inopportune time, they still have a fuel-efficient lineup to fall back on. Ramping up production of their existing 30mpg+ lineup is just a matter of increasing capacity rather than having to design everything from the ground up.

GM had NO foresight to have "plan B" to fall back on unlike Toyota. And the "blow your socks off at mpg" Volt is merely an attempt at catch-up, seeing as how Toyota will be to market AT THE SAME TIME with its comparable plug-in Prius (2010).

Now GM are facing negative equity where they will owe more money than the value of the stock, which means the shareholders WILL be the first ones to be left without a chair to sit on when the music stops. Personally I think it's a foolhardy time to be playing musical chairs by buying GM stock.

Valuing GM: $28 One Day, $7 the Next?

Inflation will make GM and Ford cars MORE EXPENSIVE in its biggest markets (the domestic market), not cheaper. It will make exports cheaper for other countries to buy, but GM and Ford largely produce their cars for overseas sales in those regions, not in the U.S..

What GM and Ford need to do to make their cars competitive in the U.S. market is to make them MORE FUEL EFFICIENT. They are ALREADY price-competitve, seeing how there are $7000 worth of incentives for GM gas guzzlers like the Suburban, but sales for these gas guzzlers are still down.

Fuel efficiency is the key.

Is There Any Hope for the Big Three Auto Makers?

I think the 1980s Federal bailout of Chrysler created a bit of moral hazard here. It's a bad thing to have GM and F think that Uncle Sam is always going to be there to clean up their mess no matter how badly they misbehave.

Considering how the Fed handled the Bear Stearns crisis (arranged for JPMorgan Chase to buy them out), I think more likely Uncle Sam would probably try to arrange for some private equity firm to take over F or GM if they should fail, though I have a feeling a lot of private equity firms have looked at Cerberus's experience with Chrysler and would probably politely refuse. :-P

F does have a takeover candidate lined up though-- Kirk Kerkorian's Tracinda Corp. Uncle Sam would probably guarantee a loan for Kirk to take on the unsavory job of salvaging Ford's collapse if that does come to pass.

Don't know about GM..

Valuing GM: $28 One Day, $7 the Next?

ValueBuyGM:

I have to disagree. The Caddy CTS, Malibu and Corvette might be nice cars, but GM is NOT going to be able to survive with a lineup like that, not in this day and age of $4 / gallon gasoline (heading up to $5 / gallon pretty soon).

The CTS and Corvette gets 20mpg combined highway/city. The Malibu gets 25mpg combined.

Meanwhile, Toyota has a lineup of cars that can get 30mpg combined or better (Corolla, Yaris, low-end Camry, Prius).

What GM needs to survive is put out a full lineup of cars that can get 30+ mpg COMBINED (not just highway), and we aren't seeing that. Hate to say it, but a Chapter 11 for GM seems more likely as each day passes.