Things are looking bad for GM (and F*rd in danger too)

[TurboTR]

12:49pm 05/05/05
S&P cuts GM ratings to junk status, outlook negative (GM) By Carolyn Pritchard
SAN FRANCISCO (MarketWatch)-- Standard & Poor's Ratings Services on Thursday cut its long- and short-term corporate credit ratings on General Motors Corp. (GM) , General Motors Acceptance Corp., and all related entities by two notches to "BB/B-1," or junk status, from "BBB-/A-3". The rating outlook is negative. S&P said the move reflects its conclusion that management's strategies may be ineffective in addressing GM's competitive disadvantages, though it notes that GM shouldn't have any difficulty accommodating its near-term cash requirements. The bid by Kirk Kerkorian's Tracinda Corp. to increase its ownership stake in GM represents an additional uncertainty, S&P said, but said this was not a factor at all in the current rating action.

TurboTR

 

[John Larkin]

Although both are suffering erosion of market share, it really means that they cannot borrow money as cheaply as before. That and it can easily have spillover effects into the current junk bond pool that only certain investors can buy from. However, heads are going to roll, probably starting at the top.

The trick is going to be:

* keep the accountants from taking over and producing high profit boring cars which are not going to compete with Toyota or Chrysler.
* getting their personnel costs + benefits in line. Yes, union folks too. It's put up or shut up time now, posturing is over.
*stop bribing people to buy your cars with overblown incentives on overpriced vehicles. Price them to reality and be taken seriously.

 

[chevyII]

Or.... just end NAFTA. What a great concept that was

 

[vicious6]

The beginning of the end guys. Just think of how wonderful it will be when Toyota buys out a bankrupt Corvette plant, and all we have are asian cars to choose from.

 

[bishir]

Onstar Help!

t's hard to say styling is the problem because Toyota and Honda excell at Bland Styling.... Toyota is almost the #1 automaker anyways....

It's hard to say unions and healthcare because Dodge/Chrystler have the same thing going on and they are doing well...

That leaves the problem to management... I find it hard to accept the fact the CEOs make millions while their companies nosedive... GM is in trouble and I'm thinking the only way out for them is a government bailout like what happened with Dodge in the 80s. Maybe they should start pushing the On-Star button!

Onstar: Hello...

GM: Help we make sucky vehicles and no one wants 50-60k Escalades anymore...

Onstar: We're sending help...

GM: Thanks Onstar

OnStar: Did it arrive yet?

GM: I think I see it.... What is that?!?!?

OnStar: The 2007 Buick Grand National... Get-R-Dun!

GM: Thanks Onstar

Onstar: We're here when you need us!

 

[TurboTR]

Lol

It is very sad. The management has been about as good as Sears the last few decades I'd say...

TurboTR

 

[6APPEAL]

Part of GM's problem is their dealer network. I been on lots over the past year looking at trucks. Damn, trucks are priced just as bad as any GTO or Vette. The dealers don't want to come off sticker or they have a "Dealer adjusted price", 5 - 10k over sticker. They all say the same thing, "These 'insert car/truck name here' are real popular and won't be on the lot very long, so you better buy it now." Two of the local dealers still have 2004 GTO's on the lot, still priced 10k over sticker. And when GM puts out a new performance car it's priced well beyond the means of the folks who want to buy them or priced much more than the compentition. The F body was a prime example when compared to a Mustang, 16k for an entry level Stang or 22k for the same F body. The new Shelby Mustang is going to be priced around 40k and the competition, a Z07 Vette will be 70k+.
GM/Ford has lived on the price bloat of the SUV so long they are now having a hard time selling them. The dealers are overloaded with SUV's on both the new and used lots. Maybe they'll catch on, if not .

 

[Welby]

Originally posted by John Larkin
*stop bribing people to buy your cars with overblown incentives on overpriced vehicles. Price them to reality and be taken seriously.

Good point...

I've been looking at small cars to replace my DD Jetta. Narrowed it down to a Mazda3 and a Chevy Cobalt. For about $16,750 you can get a really well optioned Mazda 3, with a great interior, sharp exterior syling, and 160 hp. The base Cobalt is a few thousand cheaper, but it shows in every way. If you get a Cobalt that is optioned nicely, it has a sticker near $18,000. I've seen a few Cobalts on the lot with stickers over $21,000 (and I'm not talking about the supercharged one) .
They're out of their minds...

 

[1QWIK6]

I find it hard to accept the fact the CEOs make millions while their companies nosedive

Thank you!

 

[Black Box]

Originally posted by 6APPEAL
"Dealer adjusted price", 5 - 10k over sticker....Two of the local dealers still have 2004 GTO's on the lot, still priced 10k over sticker.

This is what kills me the most. They come out with a car that's completely new to the American market (GTO). You'd think they'd want to sell 'em like hotcakes, but what do dealers do? Jack the price up over sticker. "Market Value Adjustment" ROTFL. C'mon. How do you expect to sell new product when you're gouging the hell out of people? Then, right before the '05 LS2 GTO came out, I saw some '04s on the lot for $25K. Brilliant. The factory should put a cap on the price. From what I heard, Nissan did it with the 350Z, and actually wanted to know if dealers were gouging. I see an awful lot of those around....a lot more than GTO's (even though I'd still take the LS2 Goat, given the choice).

As for CEO's getting paid millions in salary, and bonuses for cutting costs when workers are getting laid off....that's just disgusting. People losing their jobs, and the guy at the top profits from it. In a world where you hear about a killing every night, I am actually shocked that some blue collar Joe that lost his job due to cuts hasn't snapped and off'ed a hi-dollar CEO yet.

Steve

 

[chevyII]

From what Ive heard there completely geared toward SUV's and now there not selling and they cant retool fast enough. As far as the argument of the stang VS the F body you get what you pay for. The new 05 mustang is the highest lemon law car on the market and multiple class action law suits are being drawn.