Americans Will Get Their Money Back with GM IPO

[JB3]

I'm glad the companies received their bridge loans and eventually they'll be paid off. It will take a while but they will. The spiraling downward economy of 2 to 3 years ago while Bush was in office almost killed off the auto industry, and we need a viable industry for national security purposes also.

Chrysler and GM's bankruptcies were not a product of the bad economy. They were the product of bad management. (which built up for decades in GM's case) Things have not been right with either company since before Bush even took office.

In the case of Chrysler, things were so bad that Daimler-Benz essentially stripped the company to a bare carcass, taking what they could from it, and contributing even less back. Their products were absolutely awful. Sure, they had a hit in the 300, but they failed to do anything substantive to follow up that success. When Cerberus bought them (more like, was given them with a $1 billion dowry), everyone that had been following what happened saw the writing on the wall. Cerberus could not fund, and was not able to fund, the changes necessary to fix the company. What they did was stop development on most new products, and even modest refreshes. They put the company into money conservation mode waiting for the type of opportunity the government presented for them. Chrysler was never viable, and it still isn't. When it was 'bought' by (more like given to) Fiat, the company was worth less than $200 million dollars. For a major manufacturing operation, that's nothing.

GM's problems were more systemic, and still pervasively affect how the company is run. These problems have existed since the 1970s, and the bankruptcy has not fixed any of them. Nothing is done to produce the best products. What's done is the thing that produces the lowest costs and saves the most money. In the auto industry, such a strategy results (and for GM, DID result) in catastrophic failure. Their products haven't been competitive since the Japanese invasion. They're still not competitive. Sure, they're getting better, but sit in any modern GM vehicle and the areas where they cut costs become glaringly apparent. This is true of even GM's newest products that were supposedly the product of a 'new type of thinking' within the company. GM, like Chrysler, was not a viable company pre-bailout, and they're even LESS viable post-bailout.

Anyone that claims that

The spiraling downward economy of 2 to 3 years ago while Bush was in office almost killed off the auto industry

doesn't know what they're talking about. Chrysler and GM were doing a pretty good job of killing themselves without the help of the bad economy.

 

[JB3]

Chrysler was raped and pillaged, first by Daimler and secondly by Cerberus Capital Management. They were a highly successful wealthy small company in the 1990's when they were taken over by larger ailing Daimler-Benz. Daimler grabbed as much of their cash as they could, then the remains were stolen by Cerberus. At the shareholders meetings, product wasn't even mentioned as they tried to wring out the last few dollars off Chrysler's carcass. Their dying corpse is supposed to be brought back to life with the Fiat merger and there are signs it will as long as the economy improves.

Don't kid yourself about Chrysler being 'revived' by Fiat. Chrysler as we know it is dead. Fiat wanted the remains as a foothold for north american distribution of Alfa Romeos, perhaps Lancias, and most definitely Fiat products of some sort. They didn't care about saving an American icon; what they cared about was a cheap means to an end. Specifically, a pre-existing dealer network through which the company could expand their reach. Soon you will see domestically-designed Dodge and Chrysler products replaced with rebadged Fiats and Lancias. Eventually, we may even see brands like Dodge disappear completely.

 

[Kulindahr]

Eventually, we may even see brands like Dodge disappear completely.

Not completely; Dodge builds a pretty darned good pickup. Their cars.... yeah, let them go extinct.

 

[JB3]

Not completely; Dodge builds a pretty darned good pickup. Their cars.... yeah, let them go extinct.

Well yeah. That's why Fiat created the Ram brand.

 

[Kulindahr]

Well yeah. That's why Fiat created the Ram brand.

You're claiming Fiat has owned Dodge since 1981?

 

[CowboyBob]

Don't kid yourself about Chrysler being 'revived' by Fiat. Chrysler as we know it is dead. Fiat wanted the remains as a foothold for north american distribution of Alfa Romeos, perhaps Lancias, and most definitely Fiat products of some sort. They didn't care about saving an American icon; what they cared about was a cheap means to an end. Specifically, a pre-existing dealer network through which the company could expand their reach. Soon you will see domestically-designed Dodge and Chrysler products replaced with rebadged Fiats and Lancias. Eventually, we may even see brands like Dodge disappear completely.

Look back to my post when I said The Chrysler merger with Fiat has it's pros and cons. It was advantageous for both companies. Fiat got an instant dealer network and distribution system with the merger but it also realizes the Alfa and Fiat brands will only be niche market vehicles. Both companies will share platforms designed by both companies. The crown jewel is Jeep which Fiat plans to market in Europe more aggressively, and Fiat wants Chrysler's large car technology for Lancia and other cars as Fiat wants to revive that brand.

Fiat's merger wasn't a "mission of mercy" for Chrysler and no one said that. Both companies will benefit and suffer from the merger. This wasn't a take over like it was with the so-called Daimler merger. They were after Chrysler's fluid cash in the 1990's which they chewed up, and spit out the pulp.

You comment: "Soon you will see domestically-designed Dodge and Chrysler products replaced with rebadged Fiats and Lancias.". Where did you get your information? Yes, there will be a few badged-engineered vehicles in the near future as it takes 3-4 years for an all-new vehicle to get from the drawing board to the showroom (and that's if it's on fast track), but Chrysler's bread and butter vehicles will be Chrysler designed and engineered.... minivans, trucks and large cars. The small vehicles will come from Fiat designs.

Don't get your information from Motor Trend, Car & Driver, or internet blogs. They're never right, they're gossip.

 

[MoltenRock III]

And we're still inundated with toxic mortgages, which was the proximate cause of this whole disaster. Home foreclosures are still at near record levels. Wasn't TARP supposed to address that issue?

Absolutely not. Why are you confused with what TARP was meant to accomplish?

TARP had nothing to do with foreclosures. It was meant to keep banks solvent as assets depreciated, stocks plummeted, and buoy liquidity.

 

[JB3]

You're claiming Fiat has owned Dodge since 1981?

No. Fiat created the Ram brand, which is now a separate brand from Dodge, as the place for the (formerly) Dodge Trucks. They'll be branded as Ram from now on.

 

[MoltenRock III]

Ford is now on par with Toyota in most aspects. They went from having seven brands that required funding to now having just two. They've been smart with manufacturing, to the point that most of their plants rival Toyota in efficiency and quality. Yes, they have debt, but they're paying it off, and being very proactive about keeping that debt in focus without letting it affect product.

Ford has a massive debt load unfortunately. Depending on how long the economic downturn lasts, will be the telling tale on if Ford too will find itself in bankruptcy or retire its debt without impacting operations, R&D, and products.

But you are correct they are building some really nice products. I've rented a few Fords in the past 18 months or so, when traveling and renting cars.

 

[JB3]

Look back to my post when I said The Chrysler merger with Fiat has it's pros and cons. It was advantageous for both companies. Fiat got an instant dealer network and distribution system with the merger but it also realizes the Alfa and Fiat brands will only be niche market vehicles. Both companies will share platforms designed by both companies. The crown jewel is Jeep which Fiat plans to market in Europe more aggressively, and Fiat wants Chrysler's large car technology for Lancia and other cars as Fiat wants to revive that brand.

Fiat's merger wasn't a "mission of mercy" for Chrysler and no one said that. Both companies will benefit and suffer from the merger. This wasn't a take over like it was with the so-called Daimler merger. They were after Chrysler's fluid cash in the 1990's which they chewed up, and spit out the pulp.

How will Fiat, a company that paid nothing for Chrysler and isn't paying anything to revive it thanks to the US government, suffer from the merger? Explain that to me, since you seem to know so much about the american automotive industry.

You comment: "Soon you will see domestically-designed Dodge and Chrysler products replaced with rebadged Fiats and Lancias.". Where did you get your information? Yes, there will be a few badged-engineered vehicles in the near future as it takes 3-4 years for an all-new vehicle to get from the drawing board to the showroom (and that's if it's on fast track), but Chrysler's bread and butter vehicles will be Chrysler designed and engineered.... minivans, trucks and large cars. The small vehicles will come from Fiat designs.

Don't get your information from Motor Trend, Car & Driver, or internet blogs. They're never right, they're gossip.

I don't. I get it from people that live and work in the auto industry in Detroit and have extensive contact with Chrysler, GM, and Ford.

 

[JB3]

Ford has a massive debt load unfortunately. Depending on how long the economic downturn lasts, will be the telling tale on if Ford too will find itself in bankruptcy or retire its debt without impacting operations, R&D, and products.

But you are correct they are building some really nice products. I've rented a few Fords in the past 18 months or so, when traveling and renting cars.

They're already starting to. In the second quarter of this year Ford paid down $7 billion worth of debt. While there are a ton of factors that go into that, Ford is intent to bring their debt to more manageable levels.

 

[MoltenRock III]

When I was assigned to our Prague office for 3 months I had a Lancia Delta, which is a mid-sized hatchback, with a diesel. That car was awesome! It had around 200 hp and was very quick around town. What made it even better was the 40 mpg I got.

 

[Kulindahr]

No. Fiat created the Ram brand, which is now a separate brand from Dodge, as the place for the (formerly) Dodge Trucks. They'll be branded as Ram from now on.

So what happened to the Dakotas and such? Those were also good trucks -- will they be "Ram Dakota"?

 

[CowboyBob]

So what happened to the Dakotas and such? Those were also good trucks -- will they be "Ram Dakota"?

They still have the Dodge badge on them. The Ram brand will transition from the Dodge name over a few years. SUV's will all be Dodges.

 

[JB3]

So what happened to the Dakotas and such? Those were also good trucks -- will they be "Ram Dakota"?

Yes. There may also be new models, though it isn't clear if SUVs will be among them.

 

[Kulindahr]

I think oil is the real specter around the corner.

When there is significant recovery expect to have outrageous oil prices yet again. It may be so bad that America will not see significant growth without a dramatic increase in energy efficiency.

I think we are seeing this already. We dumped i forget how many hundreds of thousands of old polluting vehicles in the cash-for-clunkers program, hybrids are affordable, and new average home size is decreasing dramatically.

I can't figure out why the stimulus didn't include a massive program to build "anything-to-oil" plants. We could be turning our trash into oil by this time next year, in vast amounts, if plants had started building within six months of the stimulus bill. If there's a second round of stimulus, that should definitely be included: one of the hardest hit sections of the economy is construction, so there are workers out there in abundance to do the work. In addition, the plants would provide permanent jobs, and the oil would mean money staying in the U.S. instead of flowing overseas.

We have enough trash sitting around to feed to such plants to keep us in oil for decades. All the plastics in our landfills could be dug out and tossed in; all the plastics that can't be or don't get recycled could feed our need. Basically all the trash from fast food restaurants could feed the plants as well -- plastic, food scraps, paper, all can serve as feed stock. All old clothing qualifies as input material; cloth, plastic, rubber, and leather work fine. Anything made of petroleum, anything with a high fat content, most things organic, and even raw sewage can go in if the plant is designed for it. A great portion, if not the majority, of our waste stream would be turned into a resource.

Since the plants can be tuned to put out diesel, all sorts of plants proposed for biofuels could be fed straight in. Here in the PacNW, we have a pest plant, scotch broom, that has a high oil content anyway; our pest could become a resource (we could pull the stuff from the ground for the next twenty years and still not get rid of it).

Tuning should also be of interest to the auto companies: since the output can be adjusted, oils perfectly suited for turning into plastics and polymers for cars could be provided -- no noxious distilleries required.

And speaking of distilleries, building a large number of anything-to-oil plants would take pressure off the ones we have, helping stabilize fuel prices -- something everyone could be happy about.

 

[Kulindahr]

They still have the Dodge badge on them. The Ram brand will transition from the Dodge name over a few years. SUV's will all be Dodges.

Dodge has used a ram as a badge since the '20s, IIRC.

 

[CowboyBob]

Kulindahr, I could talk cars all night long. It's my favorite subject.

Since the Dodge brothers started building their vehicles in 1914 and ole' Walter Chrysler bought the company as an addition to his Chrysler line, the company has has a storied history. The Dodge brand has been a quiet success for decades, and frankly I'm surprised that Chrysler / Fiat are distancing themselves from the Dodge brand by introducing the Ram as a separate brand. I think it's a mistake, but the ones-in-the-know insist that Dodge means performance, and Ram means toughness. I'm predicting they will try this for a few years..... make the dealerships buy Ram signage, try to build a distinct character for their trucks ala GMC, but they'll come back eventually to the Dodge nameplate for the trucks. If they're only having pickup trucks as Rams it's an expensive experiment. Too many brands never work.

 

[JB3]

Kulindahr, I could talk cars all night long. It's my favorite subject.

Since the Dodge brothers started building their vehicles in 1914 and ole' Walter Chrysler bought the company as an addition to his Chrysler line, the company has has a storied history. The Dodge brand has been a quiet success for decades, and frankly I'm surprised that Chrysler / Fiat are distancing themselves from the Dodge brand by introducing the Ram as a separate brand. I think it's a mistake, but the ones-in-the-know insist that Dodge means performance, and Ram means toughness. I'm predicting they will try this for a few years..... make the dealerships buy Ram signage, try to build a distinct character for their trucks ala GMC, but they'll come back eventually to the Dodge nameplate for the trucks. If they're only having pickup trucks as Rams it's an expensive experiment. Too many brands never work.

I think some of the more recent Dodges damaged their reputation severely.

 

[CowboyBob]

I think some of the more recent Dodges damaged their reputation severely.

Yes, but most American car companies have. Look at the Dodge showrooms now. Their product was heavily influenced by the Daimler bean counters. Chargers / 300's with an obsolete Mercedes E-Class platform. The frightful cost-cutting decontented interiors. Look at the dreadful Dodge Journey interior. Unfortunately they're stuck with that until a complete redesign. The concept was successful, but the reality was awful. The "crossover" (and I HATE that Motor Trend coined moniker) will be the new standard since the truck-like SUV is slowly falling out of favor. Well-fed Americans love their big vehicles.

That's slowly improving. Redesigning and upgrading interior materials can be done quickly, but platforms take years and millions of $$. That will come in time.

Quality has also suffered, but Ford has pulled ahead. If I were buying a new car now, I would buy a Ford, not a Toyota. Ford is the new Toyota. Also, Ford is shaking off their still-profitable-but-obsolete-cars like the Crown Victoria, and the entire Mercury line (which I'm sad to see go but since they let it languish it may as well exit) and they'll be successful if the economy doesn't take a turn for the worse.

The auto industry has been boring for a long time, but life is starting to return.