GM reports $1.1 billion loss as sales sink, costs rise

[Ronstang]

Originally posted by: sohcrates
on the other side, when you think about why GM is even still in business, i'd like to see gm / pontiac sales by state....it seems as soon as i get to rural areas (central PA, etc) i am all of a sudden surrounded by grand ams and the like...whereas nearer to cities i see a lot more hondas and luxury cars....so i guess what i'm saying is that there is clearly, although its hard to believe, a portion of the public that is still buying these cars, even though they are not exactly attractive. i think a lot of people just don't care about looks or performance.

also, i think GM may solely be held afloat by the rental car companies!

Like I have said for years regarding GM, if it wasn't for all the white trash people in this country there would be almost noone to buy there cars. I realize that not everyone who buys a GM vehicle is white trash but they make up an overwhelming majority in my part of the country. I live in an affluent neighborhood that is mostly white and middle-upper middle class and you see almost no GM vehicles except trucks and SUVs but get a little bit out in the woods and near the trailer parks and most of the vehicles are GM crap of some sort.

 

[dullard]

Originally posted by: CorporateRecreation
I cannot present facts or figures to back the claims, but every American made car I've ever owned has been horribly unreliable and broken all the time whereas my foreign counterparts have lasted way longer with less problems.

That sums up my experiences exactly. An AMC Concorde that leaked oil from the day it was purchased (new), windows and doors wouldn't open, every part rusting off and breaking all the time, engine would start and run without the key in the ignition. A Pontiac Grand Prix that had parts fall off the bottom anytime that we went on the highway, constant recall notices about the breaks, many unrelated break repairs, the key would spark and smoke come out whenever it was started, etc. Then nearly flawless Toyota Tercel and Honda Civic.

Originally posted by: MrBond

i think a lot of people just don't care about looks or performance.

Why do you think the Civic sells so well?

Exactly. After the Grand Prix disaster I sold it to buy a Civic. I couldn't have been happier. I couldn't care less about looks or performance. I wanted a car that got me where I was going at (1) a low cost, (2) high safety ratings, (3) good gas mileage, and (4) without worry about repairs. The Civic is absolutely perfect for me. I can close my eyes and pretend I have a car that "looks" cool. But I can't close my eyes and have an American car that can get me to work without breaking down.

 

[Armitage]

Originally posted by: CorporateRecreation
I cannot present facts or figures to back the claims, but every American made car I've ever owned has been horribly unreliable and broken all the time whereas my foreign counterparts have lasted way longer with less problems.

Ex:

Volvo 760 Turbo, from 1989 with 300,000k miles on it, never had a major problem except a bad 02 sensor. Leather that was over 12 years old with no signs of wear

Ford Explorer 1995: Firestone Death tires, new transmission, new 4WD diff gear box, new alternator (3 times), interior falling apart even when babied, rear gate not closing, broken door handles in the interior of both back seats even though they were used probably 1/8th of the time the front two doors were used, broken automatic window, interior rearview mirror fell off multiple times, broken A/C, random check engine lights (that two different ford dealers/two different private shops shook their heads at), windsheild wiper fluid system broken, broken cruise control/OD, leather on seats cracked/broken, console as well. The list honestly goes on and on, I forget half the sh!t that went wrong with this car, and this was in 7 years of ownership brand new from the factory.

Tell me it surprises you that my newest car purchase was Japanese and I'll never ever go back to that bullsh!it. ^

Yep - agree. My family (dad, uncles, cousin) all have GM trucks (suburbans, vans, PU). And they all try to bail out of em by 80K to 100K miles because everything starts going to hell at that point like clockwork. They joke about it Christmas - how they need to get out soon before it goes to hell on em. But they keep going back I asked why at one point, and they just said, "well, their all the same". Whatever.

I owned 1 GM car - 1977 camaro, started with about 80K miles on it. IIRC, I went through 1 tranny, 3 alternators, 1 water pump, some kind of ignition component, driveshaft universals, 1 exhaust system, lots of bondo and it ate a quart of oil in about 400 miles and had a nasty knock in the engine by the time I sold it 6 years later with about 115K on it. And the interior looked like sh|t - door panels falling off, torn seats, cracked dash, worn through carpets, crumbling window seals, etc.

My dad thinks I'm nuts for buying a Land Cruiser with 104K miles on it, but I keep telling him that he'll probably go through at least 2 more suburbans before I retire the cruiser (he ussually buys em used with 30K to 40K on em). He thought I was nuts to hold onto my Civic @ 150K miles on it despite only have one maintenance issue in that time (distributer shaft bearing). In his mind, 100K miles is the expected lifetime of a vehicle.

 

[MikeMike]

weve had the exact opposite on GM vehicles here at my house.

Avalanche, going on 60K, no problems at all, nothing wrong.

Jimmy, going on 90K, alt went bad, but thats from me putting a 1100 watt amp (RMS) on it.

previous venture: no problems, unknown mileage.

previous chevy trucks, 100K or so, no problems.

Rav4 (new model): 80K, no real issues, noisy inside. something went wrong with the back gate, but i forget what.

MIKE

 

[arcas]

Originally posted by: iamwiz82
The reason that they continue to build big SUVs is because they have no choice now. It's not like 3 years ago when these designs were being created someone said "Gas is going to be at $2.50 a gallon!" No, they assumed that it would hover slightly above what it was at the time, around $1.40. You can't just change a production run when you are talking about vehicles like this. A commitment is made and it is pretty much binding.

Right. That's exactly what I was saying. It would seem that nobody in the company with any influence put forth the possibility that gas prices weren't always going to hover around $1.25/gallon or whatever they were when the current models were still in the design phase. The fact that Toyota's truck division saw a modest sales increase suggests that people are still buying trucks. GM's double-digit decline just suggests that those consumers are looking to buy something other than a 6000lb 12mpg monster.

Not only that, GM is forced to create vehicles that are in the same price-range as Japanese counterparts, but they can't put the same quality into it because of overhead, as described above.

Valid point.

And if you think GM was the only one not to predict rising gas prices, you are wrong. Everyone is releasing bigger vehicles designed around forecasts made a few years ago because they are too far along to stop now.

Oh, I'm not suggesting they were the only one to not predict higher oil prices (though you have to admit that higher oil prices were inevitable as China's industrialization comes online). What I am suggesting that GM didn't hedge its bet. Their bread and butter is in high-margin trucks and SUVs and those are precisely the vehicles that consumers shift away from as the economy falters (I'm ignoring fleet truck sales since those are often negotiated down to razor thin margins).

There are a lot of parallels with Wall Street. In 2000/2001 a lot of investors lost their shirts because they were heavily invested in dot-coms with crazy P/E ratios even though most people agreed that the bubble was going to burst sometime (their mistake was in the belief that when it happens, they'd be able to jump ship in time). Those folks lot a lot more money than people who were more conservative and had more balanced portfolios.

 

[PingSpike]

Originally posted by: Armitage

My dad thinks I'm nuts for buying a Land Cruiser with 104K miles on it, but I keep telling him that he'll probably go through at least 2 more suburbans before I retire the cruiser (he ussually buys em used with 30K to 40K on em). He thought I was nuts to hold onto my Civic @ 150K miles on it despite only have one maintenance issue in that time (distributer shaft bearing). In his mind, 100K miles is the expected lifetime of a vehicle.

Thats part of the problem I think. A lot of American consumers just don't think its possible to get more than that, so they don't demand it. Even when the see it first hand. My mom won't buy a Toyota or Honda "too expensive" she says. They buy a new car every 7 years (they hardly drive the car, since their business it adjacent to their home) now every 5 years. Meanwhile my aunt patty just got rid of her old Honda Civic like two years ago...The car had like 250k miles on it and she drove the sh|t out of that thing. They're not that much more expensive.

 

[alent1234]

Originally posted by: arcas

Originally posted by: iamwiz82
The reason that they continue to build big SUVs is because they have no choice now. It's not like 3 years ago when these designs were being created someone said "Gas is going to be at $2.50 a gallon!" No, they assumed that it would hover slightly above what it was at the time, around $1.40. You can't just change a production run when you are talking about vehicles like this. A commitment is made and it is pretty much binding.

Right. That's exactly what I was saying. It would seem that nobody in the company with any influence put forth the possibility that gas prices weren't always going to hover around $1.25/gallon or whatever they were when the current models were still in the design phase. The fact that Toyota's truck division saw a modest sales increase suggests that people are still buying trucks. GM's double-digit decline just suggests that those consumers are looking to buy something other than a 6000lb 12mpg monster.

Not only that, GM is forced to create vehicles that are in the same price-range as Japanese counterparts, but they can't put the same quality into it because of overhead, as described above.

Valid point.

And if you think GM was the only one not to predict rising gas prices, you are wrong. Everyone is releasing bigger vehicles designed around forecasts made a few years ago because they are too far along to stop now.

Oh, I'm not suggesting they were the only one to not predict higher oil prices (though you have to admit that higher oil prices were inevitable as China's industrialization comes online). What I am suggesting that GM didn't hedge its bet. Their bread and butter is in high-margin trucks and SUVs and those are precisely the vehicles that consumers shift away from as the economy falters (I'm ignoring fleet truck sales since those are often negotiated down to razor thin margins).

There are a lot of parallels with Wall Street. In 2000/2001 a lot of investors lost their shirts because they were heavily invested in dot-coms with crazy P/E ratios even though most people agreed that the bubble was going to burst sometime (their mistake was in the belief that when it happens, they'd be able to jump ship in time). Those folks lot a lot more money than people who were more conservative and had more balanced portfolios.

GM had no choice but to make SUV's. They lose money on smaller cars because of their benefits costs.

 

[SeaSerpent]

GM for the most part makes crap, it has nothing to do with Unions.

 

[iamwiz82]

Originally posted by: alent1234

Originally posted by: arcas

Originally posted by: iamwiz82
The reason that they continue to build big SUVs is because they have no choice now. It's not like 3 years ago when these designs were being created someone said "Gas is going to be at $2.50 a gallon!" No, they assumed that it would hover slightly above what it was at the time, around $1.40. You can't just change a production run when you are talking about vehicles like this. A commitment is made and it is pretty much binding.

Right. That's exactly what I was saying. It would seem that nobody in the company with any influence put forth the possibility that gas prices weren't always going to hover around $1.25/gallon or whatever they were when the current models were still in the design phase. The fact that Toyota's truck division saw a modest sales increase suggests that people are still buying trucks. GM's double-digit decline just suggests that those consumers are looking to buy something other than a 6000lb 12mpg monster.

Not only that, GM is forced to create vehicles that are in the same price-range as Japanese counterparts, but they can't put the same quality into it because of overhead, as described above.

Valid point.

And if you think GM was the only one not to predict rising gas prices, you are wrong. Everyone is releasing bigger vehicles designed around forecasts made a few years ago because they are too far along to stop now.

Oh, I'm not suggesting they were the only one to not predict higher oil prices (though you have to admit that higher oil prices were inevitable as China's industrialization comes online). What I am suggesting that GM didn't hedge its bet. Their bread and butter is in high-margin trucks and SUVs and those are precisely the vehicles that consumers shift away from as the economy falters (I'm ignoring fleet truck sales since those are often negotiated down to razor thin margins).

There are a lot of parallels with Wall Street. In 2000/2001 a lot of investors lost their shirts because they were heavily invested in dot-coms with crazy P/E ratios even though most people agreed that the bubble was going to burst sometime (their mistake was in the belief that when it happens, they'd be able to jump ship in time). Those folks lot a lot more money than people who were more conservative and had more balanced portfolios.

GM had no choice but to make SUV's. They lose money on smaller cars because of their benefits costs.

The profit margin on an SUV is extremely large. DCX used to make something like $10k on each loaded Grand Cherokee it sold. Think about it, all they did was add some leather to a platform that was basically the same as the Cherokee, all of which shared many parts with the Wrangler. All the front axles from these vehicles are interchangable, transfer cases are all interchangable, the 4.0L engine was interchangable. That was the beauty of an SUV, they could charge huges amounts for vehicles that didn't costs much to build.

 

[alent1234]

Originally posted by: SeaSerpent
GM for the most part makes crap, it has nothing to do with Unions.

union benefits cost GM $1600 per car. Toyot, Honda and Nissan are at about $400 per car for their benefit packages. UAW forces GM to support it's retirees and this is what costs a lot of money.

 

[alent1234]

On another note this morning Kirk Kerkorian, a billionare announced he wants to buy 5% of GM. $31 a share vesrsus the $27.70 closing price yesterday. The stock skyrocketed this morning.

I'm thinking of jumping into this. Either he is going to use his voting power to turn GM around or he did the math and figured out that a lot of GM's workers will soon reach 65 and become the government's problem. This will increase earnings.

 

[MrBond]

Reuters article for the stock purchase:

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=8386710