Ideology says, 'let the market kill off the failed US auto industry'

[Craig234]

I don't think you understand my position well.

I consider almost all republican ideas bad ones, but i also consider their existence as a fact of life in a 2 party system.

While i do applaud the progressives for attempting to get it passed, the watered down garbage they actually passed isn't going to do anything to bring down costs.

They had a real chance to get landmark legislation passed, and they squandered the once in a lifetime opportunity on bickering over little shit and earmarks.

We're making a little progress, but not much.

You still don't blame Republicans for pretty much all opposing it. Instead of criticizing them - other than not liking their ideas - you just say 'they're there'.

Well, ya, they're there - and they deserve most of your opposition. Do they get it? Or do they get some non-criticism like they're there? So far, that's all they get.

And then you almost compliment the people who support it, the progressive caucus of Democrats - but in the same sentence you lump them with Democrats who oppose it.

Suddenly the progressives who are for it are 'they' who did not pass it - the Democrats overall.

If it were only up to the Democrats, a majority would pass it, it seems, and progressives would strongly pass it.

So, do you distinguish Democrats who oppose it and criticize them while supporting progressives who are for it? No, you don't - you lump them as 'they'.

Let's try this again:

Support the people who support it (primarily the progressive Democrats).

Oppose the people who oppose it (some Democrats, nearly all (or all) Republicans).

So what we need is a majority in Congress of progressive Democrats. The progressives didn't fail to pass it - they are for it. There aren't enough elected. Get it?

Support the people who support it (primarily the progressive Democrats).

Oppose the people who oppose it (some Democrats, nearly all (or all) Republicans).

 

[Craig234]

imo blatant lies and game playing like that should be enough for us to take a stand. Make an example out of one politician, and see how that effects everyone.

I agree. Problem is, how do you get that done? Fox sure won't say it about a Republican, and the mainstream press seems to have decided it's 'partisan' to tell the truth on it.

 

[1prophet]

At the time, the big 3's profit-per-vehicle was less than $100 on many models, and they were losing money on small cars. In large part this was due to the uncompetitive labor structure, and the benefits (blame it on anyone you like). The bankruptcy allowed GM and Chrysler to renegotiate, and later Ford followed suit without needed the bankruptcy to do so. Of course Ford has always had a far better Union relationship than the other two: that didn't hurt.

The question nobody asks is how were they possibly making money if they were only making $100 or less on many models?

So sorry, reality is they were making up to 20,000 dollars per SUV and trucks and additional money from financing until the housing market crash tightened up the credit markets and the gas crunch killed many sales.

The big 3 business model before the crash was based on SUV's and trucks not on cars.

http://www.forbes.com/2003/10/06/cx_dl_1006feat.html

Most premium American SUVs gross between $5,000 and $15,000 per vehicle. Some are even more profitable. The Lincoln Navigator makes around $20,000 per vehicle even though it isn't much more expensive to build than a lower-priced Ford Explorer or F-Series pickup, and doesn't have much more content. That's what brand, in this case Lincoln, is all about: adding value to something that has a limited amount of real value.

These days rejuvenated luxury brand Cadillac makes money on pretty much every vehicle, and its Escalade sport utility is GM's most profitable vehicle line (and the bigger, higher-priced Escalade ESV is likely even more profitable, as it doesn't cost much more to build).

But options are where the carmakers really make their profits. The reason is that options carry an average markup of 100% per item, and buyers looking for more upmarket cars are going to be more likely to splash out on such goodies as navigation systems, leather seats and limited-edition hubcaps. SUVs and pickup trucks, most of which are sold "fully loaded," make a lot of money for their options. Hummer makes an average of $1,300 on accessories per vehicle. The Chevrolet Silverado pickup--one of GM's most profitable vehicles--has a base price of $18,936, but the average transaction price skyrockets to between $37,000 and $40,000 because of its options.

Unfortunately for Detroit, its small cars have the opposite relationship between sticker and transaction prices. The outgoing Chevrolet Malibu, for example, has an MSRP of about $18,000--but dealers are selling it for $13,000. Cars like the Chevrolet Cavalier and Dodge Neon tend not to make money for Detroit. The small trucks and cars are commodities with fierce overseas competition, so pricing pressure is heavy

Unless the big 3 can come up with a way to make thousands of dollars profit per vehicle plus financing and sell them in quantity all the bailout did was delay their inevitable demise from what they once were.

And all that depends not just on the automakers or government bailouts along with fancy financing tricks, but on consumers with the ability to afford the type of vehicles that can make the big 3 a decent profit.

 

[ProfJohn]

The dirty little secret is that the big three only make the small cars because the government forces them to via CAFE.

If we had a true free market they would stop making the Neons and Malibu and let the Japanese and Koreans make those cars with cheaper labor or make them in places like Mexico and import them.

The problems with the big 3 is yet another example of over regulation killing businesses.

 

[Craig234]

The question nobody asks is how were they possibly making money if they were only making $100 or less on many models?

So sorry, reality is they were making up to 20,000 dollars per SUV and trucks and additional money from financing until the housing market crash tightened up the credit markets and the gas crunch killed many sales.

The big 3 business model before the crash was based on SUV's and trucks not on cars.

http://www.forbes.com/2003/10/06/cx_dl_1006feat.html

Unless the big 3 can come up with a way to make thousands of dollars profit per vehicle plus financing and sell them in quantity all the bailout did was delay their inevitable demise from what they once were.

And all that depends not just on the automakers or government bailouts along with fancy financing tricks, but on consumers with the ability to afford the type of vehicles that can make the big 3 a decent profit.

I've read for a decade that a lot of new cars are break-even, and all the money they make is from service. Haven't looked at it much, but that fits.

 

[Craig234]

The dirty little secret is that the big three only make the small cars because the government forces them to via CAFE.

If we had a true free market they would stop making the Neons and Malibu and let the Japanese and Koreans make those cars with cheaper labor or make them in places like Mexico and import them.

The problems with the big 3 is yet another example of over regulation killing businesses.

Nice links for your ideology spewing. Funny how they're doing quite well now. A lot better than the auto industry would be doing bankrupt if Republicans had their way.

 

[ElFenix]

Nice links for your ideology spewing. Funny how they're doing quite well now. A lot better than the auto industry would be doing bankrupt if Republicans had their way.

it was well known in the industry that they lost money on the small cars. the real issue with projo blaming CAFE for the small cars is that the makers could have just paid the CAFE tax like mercedes and BMW always have.

GM and chrysler went bankrupt anyway. if the republican position is 'let them go bankrupt' and that's exactly what happened, what did the bailout accomplish? staving that off a few months? the bankruptcy is what has made GM and chrysler better off by getting rid of a lot of the costs weighing them down.

 

[cubby1223]

Nice links for your ideology spewing. Funny how they're doing quite well now. A lot better than the auto industry would be doing bankrupt if Republicans had their way.

They did go bankrupt. Or does your "ideology" still tell you Hugo Chavez should be in charge of the U.S. Auto Industry?

While "Democrats" had their way, Chrysler was sold off to a foreign company.

 

[Craig234]

it was well known in the industry that they lost money on the small cars. the real issue with projo blaming CAFE for the small cars is that the makers could have just paid the CAFE tax like mercedes and BMW always have.

GM and chrysler went bankrupt anyway. if the republican position is 'let them go bankrupt' and that's exactly what happened, what did the bailout accomplish? staving that off a few months? the bankruptcy is what has made GM and chrysler better off by getting rid of a lot of the costs weighing them down.

OK, let's be clearer. They had a financial crisis and could not stay in business without assistance.

The Democratic plan was to inject cash and make some changes that would help them return to profitability, keep them from going out of business.

Republicans said it wouldn't work, and seeing a chance to oppose Obama, please the foreign makers largely in red states, and strike a blow against big union companies since unions usually donate to Democrats, they opposed the plan and favored the US auto industry shutting down.

Turns out, the plan worked, proving Republicans wrong, and is great for the economy.

 

[EagleKeeper]

The other way - to let some other white knight come in instead of the US government was never tried.

Once the debt was shed; they had a chance. But the US government (for the Unions' sake?) manipulated the bankruptcy so there was never a chance for another white knight; just the US as a black knight.

They controlled the proceedings so as to protect the unions and provide the needed funds to get back into the saddle. It also allowed some behind the scenes manipulation of punishing political enemies.

 

[ProfJohn]

Let's not forget the fact that they ignored the rule of law by placing unsecured debtors above secured debtors such as bond holders and then used the threat of the government to force their decision upon everyone.

 

[ProfJohn]

And let's not ignore the thousands of jobs Chrysler lost when it closed 789 dealers.

Some how Joe Biden skipped over that part when talked about some plant adding a third shift.

 

[Steeplerot]

Let's not forget the fact that they ignored the rule of law by placing unsecured debtors above secured debtors such as bond holders and then used the threat of the government to force their decision upon everyone.

A tough decision but it worked. And seeing the bullshiters try to spin while having a face full of egg is solid gold.

 

[ProfJohn]

The more you dig the worse it gets.

The truth behind Chrysler’s fake auto bailout pay back

Read more at the Washington Examiner: http://washingtonexaminer.com/blogs...er-s-fake-auto-bailout-pay-back#ixzz1NlOkcPrZ

It is not every day that the White House and Democratic National Committee celebrate a supposedly private company’s debt restructuring plan, but such is the marriage of big government and big business under the Obama administration. The New York Times reports: “Chrysler said Tuesday that it had paid back $7.6 billion in loans from the American and Canadian governments, marking another significant step in the revival of the company, the smallest of the Detroit automakers.”

But as The Truth About Cars reports, the loan pay back is just another Obama con job:

Back in November of 2009, when GM announced that it would repay its government loans, it didn’t take much investigation to realize that The General was simply shuffling government money from one pocket to the other and that true “payback” was still a ways off. … And now that our government finds itself “contemplating a runaway deficit and getting rid of its 8 percent of Chrysler’s equity,” would you believe that a similar federal money-shuffle is under way? Believe it.

American taxpayers have already spent more than $13 billion bailing out Chrysler. The Obama administration already forgave more than $4 billion of that debt when the company filed for bankruptcy in 2009. Taxpayers are never getting that money back. But how is Chrysler now paying off the rest of the $7.6 billion they owe the Treasury Department?

The Obama administration’s bailout agreement with Fiat gave the Italian car company a “Incremental Call Option” that allows it to buy up to 16% of Chrysler stock at a reduced price. But in order to exercise the option, Fiat had to first pay back at least $3.5 billion of its loan to the Treasury Department. But Fiat was having trouble getting private banks to lend it the money. Enter Obama Energy Secretary Steven Chu who has signaled that he will approve a fuel-efficient vehicle loan to Chrysler for … wait for it … $3.5 billion. TTAC comments:

Now, technically the DOE loan program is supposed to be used for specific, qualifying retooling projects, so Fiat can’t literally take the DOE money and use it to pay back the government loans. But freeing up $3.5b in capital that would otherwise be spent on retooling with low-cost loans will make it infinitely easier for Chrysler to secure the $3.5b in debt refinancing it needs. And, in light of the GAO’s pointed criticisms of the DOE loan program’s fairness and transparency, it’s hard to overlook the coincidental nature of Chrysler’s need for $3.5b and the government’s allocation of extra funds to apparently guarantee a low cost loan to Chrysler for precisely the same amount. After all, we’ve seen this movie before..

So, to recap, the Obama Energy Department is loaning a foreign car company $3.5 billion so that it can pay the Treasury Department $7.6 billion even though American taxpayers spent $13 billion to save an American car company that is currently only worth $5 billion.



Read more at the Washington Examiner: http://washingtonexaminer.com/blogs...er-s-fake-auto-bailout-pay-back#ixzz1NlOtzwEu

If you don't like the source then click on it and there are lots and lots of links in the article that point to other sources.

 

[ProfJohn]

Oh look... more goodness...
http://money.cnn.com/2009/05/05/news/companies/chrysler_loans/

Chrysler LLC will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing.

 

[ProfJohn]

So the truth seems that this was just another 'fake' payoff similar to the GM payoff.

Chrysler has not made $7.5 billion since it went bankrupt instead they are just borrowing money from other sources to pay off the government loan.

And this Wall Street Journal piece pretty much explains why. Fiat wanted to expand its control over Chrysler, but couldn't until the loan is paid off and TADA! the loan is now paid off. Amazing how that works.
http://online.wsj.com/article/SB10001424052702304520804576345360220431254.html?mod=googlenews_wsj

TURIN, Italy—Fiat SpA will consolidate Chrysler Group LLC next week as it prepares to raise its stake in the U.S. partner to 51% ahead of an eventual market listing, the head of the Italian car maker said Wednesday.

"[It will happen] as of June 1," Chief Executive Sergio Marchionne told reporters on the sidelines of a presentation of a new version of the Ypsilon hatchback under Fiat's Lancia brand.

Fiat has become Chrysler's largest shareholder by increasing its stake to 46% from 30% with a $1.3 billion investment after the U.S. partner repaid $7.6 billion in government loans obtained during its 2009 bankruptcy proceedings.

Mr. Marchionne, who is also chief executive of Chrysler, hosted a ceremony in the U.S. Tuesday to celebrate the repayment. He masterminded the partnership between the two car makers to improve their chances of surviving in the highly competitive industry by creating more scale.

By consolidating Chrysler's financials, Fiat and Chrysler for the first time will report second-quarter results as one company rather than two separate entities. The move brings Mr. Marchionne one step closer to his goal of merging Fiat and Chrysler into a single company, run by one set of managers and headquartered in one place.

Fiat is expected to gain an additional 5% stake in Chrysler before the end of the year, when the U.S. partner is scheduled to start producing a car that gets 40 miles on a gallon of gasoline.

The additional stake will bring Fiat's ownership to 51%, and Mr. Marchionne is considering increasing it further by having Fiat buy all or some of the remaining 6.6% stake held by the U.S. Treasury and some of the 45.7% stake held by the UAW health trust, according to people familiar with the matter.

Mr. Marchionne acknowledged Fiat had the option to buy more shares, but declined to elaborate.

"It would be unwise for me to tell you if and when we will actually exercise it," he said at the Ypsilon event in Turin.

There is no definitive timetable on when Mr. Marchionne could move on a buyback of the U.S. Treasury shares.

As for Chrysler's eventual initial public offering, Mr. Marchionne said it was more important for the UAW health trust than Fiat because it needed to monetize its stake.

"When and how [the IPO] will be done will depend on market conditions," he told reporters.

In light of the consolidation of the two car makers, Mr. Marchionne said the next challenge was the integration of their management structures.

This integration has raised fears in Italy that it will lead to Fiat moving its headquarters to Detroit. Given the controversy surrounding the issue, Mr. Marchionne so far has remained vague about it.

But he said taxes and access to capital markets would be two conditions to be considered in deciding where the head offices of the merged company is to be located.

"We need to be completely indifferent as to where we do things," he said. "We need to be truly geographically neutral."

Asked whether lower corporate taxes would be an incentive, he replied: "That also helps."

 

[The-Noid]

The market doesn't kill off anything anymore, didn't you get the memo?

Too big too fail, too big to succeed.

 

[Zebo]

The market doesn't kill off anything anymore, didn't you get the memo?

Too big too fail, too big to succeed.

I don't know about that. Pfizer ceo made 175 million last year. Many hedge fund managers made billion each. Investment banks bonused out 1% of GDP to 4000 individuals, and so on.

 

[The-Noid]

I don't know about that. Pfizer ceo made 175 million last year. Many hedge fund managers made billion each. Investment banks bonused out 1% of GDP to 4000 individuals, and so on.

On a corporate level many companies have become too big to succeed. They will continue to pay out money on a individual level.

I question the 143B to 4000 people as well that's $35MM a person. I would need to see that in writing.

 

[Zebo]

http://online.wsj.com/article/SB125547830510183749.html

 

[The-Noid]

How is that 4000 people?

You just validated my point.