R.I.P. General Motors (1931-2006)

Tucker

http://www.hfmgv.org/exhibits/showroom/1948/tucker.html

Blair

 

Did you factor in the fact that ~25 - 30% of domestic vehicles are
sold to fleet purchasers at deep, deep discounts? Accountants like
them because they are cheap and generally they don't have to drive
them. Then they sell them in three years which is one reason that the
resale value of your GM car sucks.

Among people buying cars for their own personal use, import brands
have been taking market share away form the Big 3 for decades now.
You keep including Chrysler in the Big 3 but they aren't really a US
company anymore and Toyota will likely pass them in US sales this
year. There really are only two domestic companies now and both are
in a world of hurt.

 

Because they make less money on fleet sales because they are
discounted. I don't know the franchise laws but I do know that all of
the news sources seem to agree that fleet sales are less profitable to
the manufacturers than individual buyers"

http://www.detnews.com/apps/pbcs.dll/article?AID=/20060329/AUTO01/603290375/1148/BIZ

Headline: Fleets mask Big 3 woes
Growing reliance on low-margin sales drains profits
Bryce G. Hoffman / The Detroit News

"Faced with eroding market share, both General Motors Corp. and Ford
Motor Co. are using fleet sales to keep volumes up and factories
running at the expense of profits and brand image. In fact, all of
the recent market share gains at DaimlerChrysler AG's Chrysler Group
can be attributed to higher sales to government agencies, commercial
fleets and daily rental agencies rather than retail sales to
customers."

"Because the volumes are big, the margins are low. That not only
results in lower profits for automakers, but also reduces the resale
value, known as residual, of their cars and trucks."

"You've basically sold the cars at a substantial discount, and then
they come back to the market in large chunks," said Art Spinella,
president of CNW Marketing Research Inc. in Bandon, Ore. "Residual
values get slammed."

http://news.ft.com/cms/s/9b29fcf6-d653-11da-8b3a-0000779e2340.html

"However, he admitted that Chrysler, the US division, needed to cut
stocks of unsold cars and lower its reliance on low-margin fleet
sales, which hit a new record in the quarter."

http://www.chicagotribune.com/business/chi-0604140166apr14,1,3475398.story?coll=chi-business-hed

"Gagnon's marketing tool of offering low-cost financing to high-risk
consumers and boosting discount sales to fleets backfired. Instead of
increasing sales, it spawned loan defaults and sharply lower residual
values on trade-ins to help create the mess Mitsubishi is in."

 

Fellas, laws are enacted by governments. There may be rules that
dealerships agree to adhere to in order to represent a manufacturer;
likewise, the manufacturer may, in such a contract, make certain
promises to entice the dealership to do business with them. If a dealer
has signed a contract and reneges on the promise therein, he's broken a
civil law. Similarly, the manufacturer can be held to statements they
have agreed to in a contract, because the contract has the force of law.

There's no such thing as 'franchise law', in any of the fifty states.

I know this is usenet, and I certainly acknowledge everyone's right to
do whatever you want, but I ask again that you quit trying to argue with
this Mike guy. Surely you can see by now that it's not useful...


RFT!!!
Dave Kelsen

 

This is incorrect. I apologize. In many cases, laws labeled 'franchise
laws' in individual states are not particularly relevant to franchise
operations, but in many others, they are. I was simply wrong. And
somewhat ashamed to be an American. I consider such *laws* to be
illegal - specifically, unconstitutional. But they *do* exist. Mea culpa.

This still applies...


RFT!!!
Dave Kelsen
--
"Rightful liberty is unobstructed action according to our will within
limits drawn around us by the equal rights of others. I do not add
"within the limits of the law," because law is often but the tyrant's
will, and always so when it violates the rights of the individual." --
Thomas Jefferson

 

....or whether they are enjoyable to operate or how they will hold up
after 3 - 5 years.

If you read the recent news stories, it is clear that the automakers
have considerable control over the number of fleet sales they make.
The most logical way to do this is by adjusting the discount.

Yes, imports do have some fleet sales. For Toyota it is 7%. The Big
3 have been running about 34% so far this year.

Fleet sales are a relief valve that allows the automaker to dump
excess production at little profit or even a loss.The pressure relief
valve is wide open at the Big 3 and their market share is still
dropping.

Ignoring fleet sales, GM and Ford combined sell about as many vehicles
as Toyota, Honda and Nissan.

 

That is interesting since GM shares are trading for less now than
they were in 1962. Even including dividends the rate of return since
then has been less than 6%, barely better than inflation.

http://finance.yahoo.com/q/bc?s=GM&t=my

 

What about the years when it dropped by 50%? Years like, oh I don't
know, 2005?

I don't know about Studebaker (you might own DC stock now) but if you
had invested $1000 in both GM and Toyota 13 years ago, your GM stock
would be worth $1169 (with dividend reinvestment) and your Toyota
stock would be worth $4979. Invested in Honda it would be worth
$6098.

Good for you. That should offset the GM turd in your portfolio.

 

In other words, we can buy whatever we want, as long as it is what
they let us buy.

And even with a Class A license, it can only be operated on certain
roads and/or under certain conditions.

 

I'm not sure even that is true, but clearly we are not talking about
your right to buy a golf cart and drive it around on your own
property. We are talking about what you can operate on the public
roads.

In other words, you can drive whatever they let you drive. A vehicle
twice as wide as a Hummer could not be operated on any road without
special permits. There is a maximum permitted width for vehicles
which varies with the particular road on which you intend to operate
it. Setting that limit is a matter of public policy reflecting the
physical realities of road configurations and the safety margins which
are deemed appropriate. There is nothing stopping State or local
government from passing a law limiting the use of residential roads to
vehicles of a width one inch narrower than a Hummer. There has to be
some limit and where does it say in the Constitution that the limit
has to be wider than a Hummer, or even an Explorer?

How many Hummers would they sell if you couldn't drive it within three
blocks of your house?

 

http://tinyurl.com/nakrq

The $21,999 vehicle is a 2 wheel drive SUV in base trim. The Accord
EX lists higher but the invoice is lower and the "True Market Value"
is about the same. If you want 4WD, it will cost you about $1000 more
than the Accord according to Edmunds. Of course, you can also get a
Value Edition Accord for about $17,700. That is $4000 less than the
cheapest XL-7.

 

They wouldn't need the money if they hadn't bought that monster truck
LOL.

 

But just because the automakers have to use the dealers as an outlet
does not mean they cannot dictate cheaper prices for fleet sales --
which they do. Automakers use fleet sales as a way to get rid of
excess cars -- GM and Ford have had a very large problem with too
many cars for years.

....and to Mike's point that all car manufacturers do this, to an
extent he's correct. however, GM and Ford are increasing their
sales through fleet sales to a much, much larger extent than anybody
else.

 

I guess that kinda clearly shows what the better investment is.

 

Not quite, IMHO.
It isn't consumer greed, but CORPORATE greed that is doing it. Outsourcing
is the buzzword right now. Dump your employees, avoid the frustration, have
slave labor in Asia make the product, anb then sell the crap in the USA..

Why do you think the middle class has all but disappeared. There are now
37,000,000 living below the defined poverty level.

People buy at WalMart because that is the cheapest place in town (to the
eye of the public) and most people have to count their pennies.

This concept has been lauded by Republicans as free trade, and free trade
equals 'democracy', doncha know?

The Democrats are too disordered to laud anything.

 

...... and who are corporations made up of? People! That includes
stockholders

I find it interesting that you say people buy at Wal-Mart because
the need to save money but when talking about Corporations you don't
acknowledge that they need to save money too -- to be competitive or
go out of business. So, why is it OK for consumers to be concerned
about their bottom line but it's not OK for corporations (and the
PEOPLE that run them and the PEOPLE that own stock in them) to also
worry about saving money? Corporate officers have a responsibility
to their shareholders to stay competitive. I don't disagree that
they've not been successful all the time but you are ignoring the
need for corporate competitiveness and fiscal responsibility (i.e.,
the bottom line) while complaining about the need for similar traits
in 'people'.

Fairly wide, sweeping generalizations don't you think?

 

Jeff,
You are probably correct. Only time will tell.
If I had stock in GM, I would sell it ASAP.
Jason

 

You may not be aware of the fact that most all foreign car companies
(including Honda and Toyota) assembly thousands of vehicles in America. I
believe that all car companies (including GM and Ford) have many of the
car parts made in foreign countries. They do this since they would have to
pay American workers twice as much to make those same products. They
assembly cars in America so they won't have to pay to ship the cars to
America or pay import fees.
Jason

 

It's my guess that Ford and GM make less money per vehicle than Toyota,
Honda and Nissan. The exception would be the full sized pickups made by
Ford and GM since they have very little competition in regard to full
sized pickups.
Jason

 

May be a great time to buy! time will tell.