General Motors & Ford-It?s the cars ?Stupid? part I
Copyright 2006 Richard Stoyeck
When Bill Clinton ran for the Presidency in 1992, his platform was basically, it's the economy "Stupid". When we look at the state of the American automobile industry, we believe both companies are on the wrong track. General Motors stock bottomed at $17 per share, and is now trading in the $30's. Everybody is excited about chopping employees, closing plants, and potentially hooking up with Renault's formidable Carlos Ghosn. This is all financial engineering, which is great for what it is, but it's not what car manufacturing is all about.
It's all about cars, does anybody remember that GM, and Ford make cars.
What gets you into trouble is what has to get you out of trouble. The 25 year problem with American car companies, is that we manufacture cars that are less than desirable. Is anybody listening out there? If you look at sales patterns on the East coast, and West coast of the United States, you will see that Japanese manufacturers dominate both coasts in sales. The car companies are selling to long-time loyal Americans that buy American in the Midwest and Southeast. They are not selling on the basis of quality, and bang for the buck.
They can't compete on that level.
The problem comes down to this. The Japanese companies have mastered zero defect manufacturing. This means the car comes off the assembly line perfect. There are no (zero) problems to be fixed at the dealer level. When a person takes delivery from the showroom, he rides out with a car that doesn't have to come back until the first major service.
The reason why so many Japanese companies have instituted free oil changes on their vehicles is because the cars run like toasters. They run for tens of thousands of miles with nothing going wrong. People were not even changing their oil, so if most cars were leased, the companies had to make sure that at least the oil got changed. Cars are designed for the first buyer, to have zero problems, and the Japanese have mastered this.
Contrast this management decision with Detroit's way of thinking. The cars go into the showrooms with defects.
Detroit has made a conscious decision to fix these problems after the customer takes delivery. The customer will then bring the car back with a list of problems, and fix it at the dealer level. There is no comparison between consumer satisfaction with domestic cars, versus Japanese cars.
The Chairman of General Motors is a throwback to an age that no longer exists. Einstein said, "We can't solve problems by using the same kind of thinking we used when we created them." This is what we are experiencing at GM, and Ford. William Clay Ford Junior, the current Chairman of Ford has done restructuring after restructuring to no avail.
Ford is still losing market share. What about market share, Bill?
Every time GM loses a point of market share, they create for themselves an additional $1.4 billion in pretax losses. Our work shows that the automobile industry may be sliding into recession in 2007, and then where is this industry going to find itself?
Let's take a look.
Last year in 2005 if you look at GM's automobile operations as a standalone business, they went through almost $7 billion dollars. This year aside from restructuring costs, we think they burn another $4 billion, plus $4.5 billion in 2007. The announced restructuring only amounts to $4.5 billion in savings.
They are still bleeding, they are still losing market share. Over the next couple of years, you have to add upwards of $900 per car for raw materials, and costs imposed by Washington regulators, and GM isn't alone. Ford will burn through $4 billion this year, and almost $4.5 billion next year in 2007. How do these guys keep their jobs?
For GM we can't see where what they save from restructurings which is $4.5 billion in cash can offset the cash burn rate they have created. They are still hemorrhaging cash while LOSING MARKET SHARE.
Do you have any idea how tough it is to turn around a gigantic company like either of these companies while they are still losing market share. It would be tough to do it in a fabulous economic environment.
Let's look at two points here. The first is when you break down the automobile companies by divisions; GM and Ford make a lot of money from selling light trucks. GM by itself made almost $1.5 billion income last year from this division. The year before that, they made twice as much.
We see this division taking a real hit next year for both GM and Ford. Gas prices are going to wreak havoc with the sales of these vehicles, and housing starts will be down. Look at the homebuilding stocks and their declining prices (more like an avalanche), and you will see where housing is going next year. Huge numbers of these trucks are sold to people in the construction industry. Figure it out for yourself.
What's going to happen is this.
Quickly, GM and Ford are going to have to start selling passenger cars, and what you call crossover vehicles. They are going to get clobbered. The Japanese get between $900 and $3800 more per passenger car than the guys in Detroit. This means the Japanese care are loaded down with extras that we just can't put in our American built cars. This segment includes SUV's.
We are looking for 16.8 million cars to be sold in the United States this year 2006.
Contrary to what GM and Ford believe, we think next year is down a couple of hundred thousand cars, and neither of these companies is budgeting for that experience. Housing prices in this country are sideways to down. People will not be extracting cash from their houses in the form of home equity loans to be buying cars next year. They will not be feeling good about the price of their house, and therefore consumer sentiment will suffer. The first hint as to whether we are right will be if there is a Democratic watershed coming in the Congressional elections this November.
If the Democrats take control of either chamber of the Congress, it will be prelude to a down automotive cycle in 07. That will be your indicator. Watch for it.
Goodbye and good luck
Richard C. Stoyeck
August 1, 2006
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Sports Cars
Stylish, sexy, sleek, streamlined, spirited and speed demon are all words used to describe sports cars, which are essentially two-door automobiles that are designed for high speeds, great power and smashing good looks. The manufacture of the modern-day sports car began only after 1945, when the economy started booming, technology developed dramatically and better roads were being built. They came in various shapes like convertibles, roadsters, coupes, grand tourers and sedans. Sports-car lovers are either devoted to timeless classics that have been souped up for current times, or are trendsetters looking for the latest kind of exotic car.
From powerful purring beauties like the Mercedes Benz SLK 350 to thundering thrillers like the Ford Mustang V-8, you can choose a sports car that matches your personality.
In fact, sports cars are as much about personality as they are about performance ? smooth aerodynamic bodies of carbon fiber, chrome pipes and fittings, rich...
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Hawaiian Discount Car Rentals Now Offering Rental Cars from Alamo and National Rent-A-Cars
Maui, HI (ContentDesk) July 23, 2006 -- Hawaiian Discount Car Rentals, a leading rental car provider for the Hawaiian islands, enters into an agreement with Vanguard Car Rental, Inc., the parent company of Alamo and National Rent-A-Cars to provide rental cars from the respective fleets at corporate discounted rates.With this new agreement, Hawaiian Discount Car Rentals (http://www.hawaiidrive-o.com) can effectively rent Alamo's fleet in Hawaii at discounted rates. For example, a current model Jeep Wrangler will rent for $217/week. National Rent-A-Car will also provide their Hawaiian fleet at discounted rates, but with the member perks included as well, such as quick checkouts for the cars.Visit us to instantly compare rental rates from 6 different national rental car companies such as Avis, Budget and Thrifty. We serve all the major islands of Hawaii..
Hawaiian Discount Car Rentals Now Offering Rental Cars from Alamo and National Rent-A-Cars
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Popular Electric Cars Drive To Europe
With more and more vehicles roaming and zooming through the streets and roads, it is not very likely that one day we will find ourselves waking up to a foggy environment. Smog would surely fill the air and children would no longer remember what it was like to live in a place where the breeze was fresh and air was very clean.
This has been one of the great concerns of the auto industry. Despite being the culprit behind creating vehicles that would bring about dirt and smoke to the environment, auto manufacturers are now concerned about the welfare of the environment as well as of the people. That is most certainly they have created the Zero Air Pollution which they believe would be one of the best ways to reduce pollution.
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Used cars > Popular Electric Cars Drive To Europe
The tempting old cars marts
Only those with discerning eyes may venture into them
They are used and reused and then used again. Cars in India do not die early enough. We hardly hear of any car junk yards in the country. The not-so-old ones as the cheap Indian used cars move from the first-class cities to the second class ones and then onwards.
Their journeys really take them to places.
Buying and selling is a favourite pastime of both rich and those who are sliding up on the economic ladder of their lives. Auto dealers and quite a few of them are in business for the lucre they earn while others make their living from the crooked ways the trade pliers are infamous for.
If you happen to be in an old car mart where only second-hand or several-hands down the line cars are on sale you will find a fish market many times more descent enough to have a stroll through.
I am sure if there are any car...
Used cars > The tempting old cars marts
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Cellular phones are used by millions of people in the United States and around the world. They are such a great device! With a cell phone, you can talk to anyone on the planet from just about anywhere! These days, cell phones provide an incredible array of functions. One of the most interesting things about a cell phone is that it is actually an extremely sophisticated radio. Cellular phones are more popular in European and Asian countries than they are in the United States -- more than ninety...
razr phone General Motors & Ford-It?s the cars ?Stupid? part I Are Cellular Phones Just a Fashion Accessory? Used cars
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General Motors & Ford-It?s the cars ?Stupid? part I credit repair
Veritas Party Demands explanation from Electoral Commission for omitting VERITAS from aboutmyvote.co.uk
Veritas Officials will be demanding a public apoligy and explanation from the boss of the Electoral Commission after discovering today that the Commission's new website: "aboutmyvote.co.uk" mentions all the other major and minor political parties contesting the General Election but fails to list VERITAS. When one inputs a postcode from anywhere in the country, one is connected to the page: " Parties and candidates." Every other political party is listed, in alphabetical order, but not VERITAS...
Veritas Party Demands explanation from Electoral Commission for omitting VERITAS from aboutmyvote.co.uk General Motors & Ford-It?s the cars ?Stupid? part I party
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