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Discussion Starter · #1 ·
General Motors said Wednesday that it will lose $855 million in the first quarter and will earn as little as $600 million for the whole year in 2005. That news prompted Wall Street analysts to initiate sell orders on GM stock, driving shares down almost 14 percent to $29.06, a new 52-week low and a level it hasn't seen in 13 years.

GM is beset with further losses at the North American automotive operation, and a market-share decline that is proving resistant to higher incentives, new models, or marketing gimmicks. GM's market share was down more than two points, compared with the same period a year ago, through February to 24.9 percent - its lowest level since a strike shut the company down in 1998. Making matters worse is the fact that about one-third of that share is to rental-car companies and "program" vehicles to employees, retirees, suppliers, and family members of all three groups - sales that bring in little if any real profit. Each one-percent drop in market share is worth about $1 billion in lost profit.

GM said it now sees full-year earnings of about $1.00 to $2.00 per share, excluding special items, down from its previous target of $4.00 to $5.00 a share.

"GM North America is, simply put, our 800-pound gorilla, and today's announcement shows how important it is that we get this business right," chairman and chief executive Rick Wagoner told analysts and reporters on a conference call.

GM executives said it will have negative cash flow of about $2 billion this year (versus the projected positive $2 billion), putting a dent in its nearly $24 billion cash hoard. Morgan Stanley analyst Steve Girsky says, though, that GM has been padding that cash number by paying its bills later than in the past. GM has $24 billion in accounts payable, with an average payment term of 60 days, which is three times longer than Ford's payment schedule. Those delays, says the analyst, has boosted GM's reported cash position by $6 billion over the past three years.

To cope with the worse-than-expected problems (which also include an expected $500 million loss in GM Europe and a $1.5 billion write-down for GM's payoff to Fiat, so the Italian automaker doesn't exercise its put option that would force GM to buy Fiat Auto), GM is reportedly looking for another $2 billion of fixed costs to cut this year. That could come in the form of workforce reductions and plant idlings or outright closings, with a corresponding one-time charge that it would incur to pay off workers.

The crux of GM's problems: too many workers churning out too many vehicles because of the United Auto Workers' stranglehold on GM, namely the inability to close factories and eliminate workers to better match GM's natural market share; the refusal of the union to pay some of its own healthcare premiums; too many brands under the GM roof demanding capital investment in new vehicles and marketing costs. While GM has been improving quality, its poor brand images do not allow it to charge the prices that Toyota, Nissan, and Honda can with their better images.

"We continue to believe GM's products are overpriced (relative to the Japanese brands) by 10 percent to 15 percent due to weak resale values," says Ronald Tadross of Bank of America, who has a "sell" rating on the stock, and lowered his price target on the company to $23 from $27.

As for its new-product turnaround, most of the models designed to attract new customers - the Chevy Cobalt, Pontiac G6, Buick LaCrosse, and GM's new minivans - aren't attracting much attention even with beefy sales incentives. Meantime, GM is suffering from comparisons with Chrysler, which is reaping huge profits from being able to sell a hot Chrysler 300C sedan and Dodge Magnum wagon virtually without incentives.

Meanwhile, Ford said Tuesday that it is reaffirming its guidance for 2005 in the wake of GM's announcement. Ford expects full-year operating cash flow in the range of $1.2-$1.5 billion with a corresponding EPS in 2005 in the range of $1.75-$1.95, with first quarter EPS in the range of $0.25-$0.35.

Aside from tepid sales of new models, GM is also hurt by the falloff in sales of big SUVs, which have supported the otherwise losing proposition of selling passenger cars in North America. "We continue to believe GM is in a precarious position given lower GM North America production volumes, especially related to its highest-profit platform, GMT800 (full-size trucks); the challenging pricing environment; and less profitable mix (more cars/less trucks)," said Joseph Amaturo, analyst for Caylon Securities. "We do not expect modest improvements from automotive operations outside North America to offset these domestic headwinds. Amaturo added, "We remain confident that possible credit rating downgrades and a dividend cut are in the company's near-term future and will only add insult to injury."

GM CEO Rick Wagoner said in January that he is not looking to eliminate another sales division after closing Oldsmobile. Analysts, though, say that GM could eliminate Buick or Saturn and probably Saab, and have a more profitable 20-percent market share, which is the share level that seems to fit the trajectory of the company these days. Wagoner is reluctant to sacrifice the "shelf space" of those brands in the marketplace, nor does he necessarily want to be remembered as the CEO who shrunk GM. That level of share would require the UAW to face the reality that the days of $90,000-plus a year for line workers and paying no healthcare premiums are over. But don't count on any of that without a big fight if GM tries to push any significant reform before the next union contract is negotiated. -Jim Burt

TCC
 

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Discussion Starter · #2 ·
General Motors revised its first-quarter and calendar-year "earnings guidance" to reflect expected "lower North American sales and production volumes, a tougher pricing environment, and a more car-based sales mix."

GM slashed its forecast for first-quarter and full-year earnings, and forecast “negative cash flow” of $2 billion for the year not including costs related to a recent settlement with Fiat SpA and restructuring costs in Europe.

In a news release, GM Chairman and Chief Executive Officer Rick Wagoner said, "Clearly we have significant challenges in North America."

GM's North American automotive unit, which accounts for the bulk of its revenue and worldwide vehicle sales, has seen its market share dip to about 25% for the first two months of the year despite the launch of several new models recently. This is down from 27.5% for 2004 and well below the company's prior target of 29%.

"The competitive environment that we face in North America means we must continue to find ways to reduce our costs and grow revenue," said GM Vice Chairman and Chief Financial Officer John Devine.

The news caused GM's stock to fall to 52-week low of $28.96

c&d
 

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i don't think gm will ever go out of business.for now at least.
they have too many brands to not make some money.
but if the japanese and europeans start kicking ass some more i'm sure the'll discontinue theis weakest brands like saturn.
 

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You know as much as we loathe or downright hate gm vehicles they do serve a purpose as far as creating jobs for workers here. with that being said let the bashing begin. it's there own fault their product line is pretty weak as far as i can see it and they really only have a couple of cool cars to show as far as their inventory goes. gm needs to get back on the ball and get back to making cars that'll sell cuz the bottome line is well.. the bottom line.
 

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i dunno whats up with american car companies. how hard is it to tell hat a car looks like ass. have u seen the new ford focus? it looks like it should be from one generation back. i think if the americans make a car they can actually sell, they dare not change the look of it, aka explorer. japanese cars and european cars always get dramatically restyled and sell better than ever. has anyone seen the new impala? what kind of shit is that? it looks like a car from the early 90s. the one with the skyline rear was actually sexy.
 

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ziggyziggy said:
i dunno whats up with american car companies. how hard is it to tell hat a car looks like ass. have u seen the new ford focus? it looks like it should be from one generation back. i think if the americans make a car they can actually sell, they dare not change the look of it, aka explorer. japanese cars and european cars always get dramatically restyled and sell better than ever. has anyone seen the new impala? what kind of shit is that? it looks like a car from the early 90s. the one with the skyline rear was actually sexy.
the impala is actually one of the best selling cars. :bh

american car companies have made leaps and bounds of improvements over the past 15 years. the problem is that companies like honda and toyota started out in the US with an already better product and continue to improve too. so the big three just keep playing catch up. honda and toyota make cars that pretty much sell themselves. seems like all GM is doing is making cars so joe schmoe can feed his family - which is great and all but look where they are now. business is still business. build a geniunely good product and market it smartly and the product will sell itself - ie toyota. we all say toyota is bland and boring but as a business they're quite the success story.
 

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DDR2 said:
the impala is actually one of the best selling cars. :bh

american car companies have made leaps and bounds of improvements over the past 15 years. the problem is that companies like honda and toyota started out in the US with an already better product and continue to improve too. so the big three just keep playing catch up. honda and toyota make cars that pretty much sell themselves. seems like all GM is doing is making cars so joe schmoe can feed his family - which is great and all but look where they are now. business is still business. build a geniunely good product and market it smartly and the product will sell itself - ie toyota. we all say toyota is bland and boring but as a business they're quite the success story.
The impala your are talking about, and the one he called sexy are the same one. The impala you don't mention, which is the new one, is the one he calls ugly. Which it is indeed.

I hontestly don't see how toyotas sells. I mean, they don't break, so whats the use in buying another one? The same for Honda. Well, I guess after dependability it all boils down to looks (believe me, the peformance niche(sp?) is small). Honda, Toyota, and Nissan have all had better looking cars than Americans since the 80's. I do realize this is opinion though.

I say:

*drop buick
*let saturn go through its restyling phase.

that probably won't do shit, but it will make me happy.

p.s.

flying toster.... its because society tells you its what you "need" to do. Don't forget, next its grad school.
 

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daloyal1 said:
i don't think gm will ever go out of business.for now at least.
they have too many brands to not make some money.
but if the japanese and europeans start kicking ass some more i'm sure the'll discontinue theis weakest brands like saturn.
looks like somebody didn't pay attention in econ 101. of course they have enough brands to make money, but if their NOPAT (net operating profit after taxes, basically what they take home to the bank) is less than what they bring in in actual revenue...thats a simple equation to bankrupcy. you can post 10 billion in sales every year, but if it takes you 12 billion a year to make that 10 billion in revenue...you're doing VERY bad as a business
 

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Moon Ill said:
The impala your are talking about, and the one he called sexy are the same one. The impala you don't mention, which is the new one, is the one he calls ugly. Which it is indeed.

I hontestly don't see how toyotas sells. I mean, they don't break, so whats the use in buying another one? The same for Honda. Well, I guess after dependability it all boils down to looks (believe me, the peformance niche(sp?) is small). Honda, Toyota, and Nissan have all had better looking cars than Americans since the 80's. I do realize this is opinion though.

I say:

*drop buick
*let saturn go through its restyling phase.

that probably won't do shit, but it will make me happy.

p.s.

flying toster.... its because society tells you its what you "need" to do. Don't forget, next its grad school.
the person who buys your car after you get rid of it will appreciate and pay more for a dependable car, which is precisely why hondas and toyotas hold their value so well. that's where the honda/toyota reliability really pays off is in secondhand use. brand new cars are all generally reliable for the initial years but for people who buy secondhand cars, reliability plays a bigger role in their decision-making process.
 

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flyingtoaster said:
I think they should bring more Holden cars from Australia and sell them as Buicks.

If GM assembly workers make $90,000 a year with free benefits, why am I in college?
The UAW screws over all the domestics. I HATE unions personally. I think unions are one of the worst things to ever grace the business world. The local MB plant is not unionized because they treat their employees very well. I think the domestics could be that way, but they'll never get a chance to try.
 

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Discussion Starter · #13 ·
spray004 said:
The UAW screws over all the domestics. I HATE unions personally. I think unions are one of the worst things to ever grace the business world. The local MB plant is not unionized because they treat their employees very well. I think the domestics could be that way, but they'll never get a chance to try.
they should learn from walmart. if you feel like the union is trying to start in your area, shut it down. :lol
well its too late for the big three, they cant even go out of business even if they wanted it to. hahaha now thats a shame. haha
 

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flyingtoaster said:
I think they should bring more Holden cars from Australia and sell them as Buicks.

If GM assembly workers make $90,000 a year with free benefits, why am I in college?
what???? u sure work in factory got $90,000 a year?? with benefit too?? dang son i ll sign up to tomolow forget college
 

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spray004 said:
The UAW screws over all the domestics. I HATE unions personally. I think unions are one of the worst things to ever grace the business world. The local MB plant is not unionized because they treat their employees very well. I think the domestics could be that way, but they'll never get a chance to try.

For once, we are in total agreement :eek :D

Unions were a good idea 60+ years ago when the average worker was treated no better than a dog. However, these days UAW is just running the big 3 (especially GM) into the ground. Hell, last year GM paid out $4.3 BILLION in healthcare and pension cost and they are estimating it to be upwards of $5.3 billion this year. Something has to give soon.




Maybe in 10 years if nothing at GM changes, Toyota could buy them out, restructure the entire operation and they would be back on to again :D
 

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05 tC said:
For once, we are in total agreement :eek :D

Unions were a good idea 60+ years ago when the average worker was treated no better than a dog. However, these days UAW is just running the big 3 (especially GM) into the ground. Hell, last year GM paid out $4.3 BILLION in healthcare and pension cost and they are estimating it to be upwards of $5.3 billion this year. Something has to give soon.




Maybe in 10 years if nothing at GM changes, Toyota could buy them out, restructure the entire operation and they would be back on to again :D

Us agreeing on something? Shocker huh? :D

If Toyota bought out any of the domestics, they would have to deal with the union too. They would never get rid of the union because they would strike and cry like babies.

It'll take a big move to get rid of the union. Lawmakers won't do it because the unions have tons of lobbying power. BUT if somehow Ford,GM, Chrysler can ditch the union, you'll see all three companies to a complete 180. Healthcare costs are screwing the big 3 over majorly. They can't push the cost on to their employees because of the union.
 

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05 tC said:
For once, we are in total agreement :eek :D

Unions were a good idea 60+ years ago when the average worker was treated no better than a dog. However, these days UAW is just running the big 3 (especially GM) into the ground. Hell, last year GM paid out $4.3 BILLION in healthcare and pension cost and they are estimating it to be upwards of $5.3 billion this year. Something has to give soon.
Yeah, they were a good idea ages ago, but they got too greedy and now the US cant compete with imports - besides the fact that domestics make inferior cars (styling/reliability). I did the patriotic thing and bought an intrepid years ago, cause the styling was nice and I heard domestics were much better in quality than in the 80's. I will never do that again! I cant believe the $ I lost in repairs and resale value. Im so glad I have a honda now.

GM needs a boost in design. Dodge is probably the worse on the detroit 3, as far as reliablility, but they have pulled them selves up from near bankrupcy and gained so much market share just because of the superior design (styling) of thier cars. And this started even before mercedes bought them.
 
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