mustang84

GM posts $3.3 billion Q1 loss

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More at link: http://www.msnbc.msn.com/id/24383373/

DETROIT - General Motors Corp. struggled to a $3.3 billion first-quarter loss, due in part to a weak U.S. market, a strike at a major parts supplier and plummeting sales of sport utility vehicles and pickups.

The nation’s biggest automaker also cut its industrywide U.S. sales outlook for the year. The company disclosed earlier this week it was cutting production of some of its slow-selling trucks and SUVs.

GM’s loss reported Wednesday for the January-March period amounted to $5.74 per share and also reflected one-time charges. It compares with a profit of $62 million, or 11 cents per share, in the first quarter of 2007.

The company said a two-month strike at American Axle and Manufacturing Holdings Inc. has cost it $800 million and 100,000 vehicles. The strike has affected 30 GM plants.

In light of the results, GM revised its U.S. sales outlook for the year. The Detroit automaker now expects total U.S. sales in the high 15-million range, down from the low 16-million range at the beginning of this year.

“We want to run our business conservatively. We want to be realistic,” said Ray Young, GM’s executive vice president and chief financial officer.

Young said GM expects the second quarter to be a tough one for the industry. He said GM continues to predict a recovery in the second half of the year, although it will not be as robust as the company believed at the beginning of this year.

GM’s loss included a $1.45 billion charge to reflect a change in the value of GM’s interest in GMAC Financial Services and $731 million to increase GM’s liability in Delphi Corp.’s ongoing bankruptcy.

Excluding the one-time items, GM lost $350 million, or 62 cents per share, beating Wall Street’s expectations. Analysts surveyed by Thomson Financial had expected a loss of $1.60 per share.

GM’s total revenue for the quarter was $42.7 billion, down from $43.4 billion a year ago. GM said revenues were up 20 percent outside North America thanks to strong growth in China, Russia, Brazil and India. Total revenue was hurt by the slowdown in North America and losses at GMAC.

The good news is that most of the loss was due to one-time charges with GMAC and Delphi. GM stock is actually up right now. Automotive operations only lost $350 million.

Edited by mustang84
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There seems to be a lot of "one-time charges" lately.

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How did Ford make money & GM loose?

Ford is a lame duck!

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How did Ford make money & GM loose?

Ford is a lame duck!

Ford also sold a couple of its brands. Could that be it?

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Ford also sold a couple of its brands. Could that be it?

Sale of Jag/LR this month, so it'll be a 2Q event.

Problem with GM 1 time write-downs and events is that they've become a regular part of business. GM has also sold off about $10 billion in stuff in the past year (GMAC, Allison), so it's difficult to say where they'd be without those 'events'.

It's going to be an interesting year, to say the least.

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Interesting how the stock market has reacted to these losses, though. I guess WallStreet is not expecting any good news this year from very many companies. I read today that Berkshire is on a junk food binge, buying up stocks in Wrigley to go with Mr. Buffett's stakes in Coca Cola, Dairy Queen and Kraft. I guess the richest man in the world is betting that we North Americans are going to stay home in 2008 and get fat.

Hmm, perhaps I should invest in Jenny Craig in anticipation of a diet explosion in 2009?

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GM North America lost $611 million, thats with an $800 million hit to North America from the UAW strike against American Axle , so it looks like North America may have made money IF it wasn't for American Axle and the UAW.

Edited by Toyota.vs.GM
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Regardless of recent accounting entries such as deferred tax write-offs and a number of extraordinary items exacerbating the loss, there still remains a core operating loss. This is very disappointing news, and will hopefully prompt GM to be a good deal more shrewd and proactive in the North American market in particular. The Malibu and Aura are fine cars and importing the Astra was a very wise move considering the quality of the C-segment competition which now exists in the States. However, in the face of soaring fuel prices it needs to get ahead of the game with a range of smaller, fuel-efficient cars for North American punters, otherwise it will continue to be viewed as a retroactive player behind the Japanese.

Edited by aatbloke
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You know, jogging around Memorial Park (in the heart of one of the more affluent parts of town) in Houston tonight, I was actually thinking about GM and what a lot of their problems are. I can't help but wonder - why in the world did they let so much of their business go to their competitors - for so many years - without doing anything about it? It's really quite insane - no matter what industry you follow - whether it be cars - like us - or disc drives, or tv sets, or whatever, GM is truly one of the best case studies of short sightedness and mismanagement I can think of.

Keep in mind, I'm in the 4th largest city in the country, where there's tons of money, and the economy is actually not doing too bad because of how tied we are to the oil industry here, and I hate to break this to everyone - but I hardly see any new GM cars on the streets - most of the new cars on the streets are imports. The only new GM vehicles I see in any respectable numbers are their trucks and SUVs - but I hardly see any new GM cars. I see a fair number of late model Impalas (fleet??), and I see some of the newer Lambda SUV's, but as far as most of their cars go - let's just say I don't hold my breath waiting for one to pop up. I see a new Malibu about once every couple of days - but I see new Accords all over the place, every day. The 2008 CTS - well, I've seen a few (and I test drove one for $h!s and giggles), but I hardly see them at all. But on the flip side, I see newer IS models almost daily - and tons of them. I think this city is indicative of most places outside the Midwest where GM is going to have a lot of problems trying to convince Joe Consumer that their products a are really good now.

If GM is this truly tied to trucks and SUV's for survival, then it'll be real interesting to see how they get themselves out of this mess they worked so hard to create.

I think they'll be ok, the cars I do see from GM out on the streets do look good, but getting people to even put a new Malibu on their shopping list is going to be insanely tough in places like Houston - where there's few ties to Detroit, and most people's neighbors have given up on GM years ago. But markets like this are important - as are LA, Phoenix, Atlanta, etc, etc...I just don't know how they're going to do it without so much as coming out on TV and doing 80s Lee Iacocoa TV commercials (try our cars now, they're better, honest, don't give your money to foreign companies, etc, etc). Maybe that's extreme, but I don't see any other way short of giving the cars away for half price.

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I'm starting to hate these one time things....seems like like GM always has one...

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I'm starting to hate these one time things....seems like like GM always has one...

Kind of an end-of-quarter tradition.

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I'm starting to hate these one time things....seems like like GM always has one...

Companies of this girth almost always have some kind of extraordinary item which is required to be disclosed.

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Regardless of recent accounting entries such as deferred tax write-offs and a number of extraordinary items exacerbating the loss, there still remains a core operating loss. This is very disappointing news, and will hopefully prompt GM to be a good deal more shrewd and proactive in the North American market in particular.

Disappointing is the word: again GM posts negative operating cash flow (minus $3.6bn), again NA market share is down (21.7% Q1 2008 versus 22.5% Q1 2007), and the only reporting region where GM posts market share gains in Q1 2008 is LAAM.

The way macro factors are working right now, GM needs DeltaII and Gamma (assuming they'll be offered in NA) products to be very successful in NA, or else things can get really ugly.

Edited by ZL-1
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Sale of Jag/LR this month, so it'll be a 2Q event.

Problem with GM 1 time write-downs and events is that they've become a regular part of business. GM has also sold off about $10 billion in stuff in the past year (GMAC, Allison), so it's difficult to say where they'd be without those 'events'.

It's going to be an interesting year, to say the least.

Feel free to be as pessimistic as you want with this one. I'm not going to disagree. :smilewide:

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I think they'll be ok, the cars I do see from GM out on the streets do look good, but getting people to even put a new Malibu on their shopping list is going to be insanely tough in places like Houston - where there's few ties to Detroit, and most people's neighbors have given up on GM years ago. But markets like this are important - as are LA, Phoenix, Atlanta, etc, etc...I just don't know how they're going to do it without so much as coming out on TV and doing 80s Lee Iacocoa TV commercials (try our cars now, they're better, honest, don't give your money to foreign companies, etc, etc). Maybe that's extreme, but I don't see any other way short of giving the cars away for half price.

It's a phenomenon that has been discussed many times over on this site (many times by me.) When looking at the fate of the domestic automakers, you really need to look FAR outside of the midwestern states to see the true trends that are defining this industry. The Big3 TRULY is operating within a clueless vacuum.

Southern California is probably the biggest example.....and the east coast cities rival that. But it's really the sweeping changes in consumer preference (towards imports) that is taking place in regions like Houston, Atlanta, Florida, Arizona, Colorado, ANY paciific northwest city.....I could go on-and-on.

Employees of the Big3 living in those midwestern states are strangely clueless to the automobile market revolution taking place around the country. It's scary....and mildy humorous at the same time. Oh they hear in the news about the sales numbers and the market share.....but they still really don't think anything's wrong. There's tons of GM cars in Detroit, Cleveland, and Indianapolis. How could things be bad? ALL those people buying imports are "sheeples." "California" isn't the "real" world, so why pay attention to the auto market there? <UGH>

I'm not saying "you" are a fool for being a "GM fan".....what I'm saying is.....is that the domestic automobile industry is fading into more-and-more irrelevance....and the Big3 are clueless as to how to stop the slide. NOW, it's not JUST product. It's perception, image, and appeal. You can have the best product in the world (CTS? G8? Corvette? GMT-900s? Lambda?)

.....but if you don't fix the perception, image, and appeal problems......you will fail miseably.

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It's a phenomenon that has been discussed many times over on this site (many times by me.) When looking at the fate of the domestic automakers, you really need to look FAR outside of the midwestern states to see the true trends that are defining this industry. The Big3 TRULY is operating within a clueless vacuum.

Southern California is probably the biggest example.....and the east coast cities rival that. But it's really the sweeping changes in consumer preference (towards imports) that is taking place in regions like Houston, Atlanta, Florida, Arizona, Colorado, ANY paciific northwest city.....I could go on-and-on.

Employees of the Big3 living in those midwestern states are strangely clueless to the automobile market revolution taking place around the country. It's scary....and mildy humorous at the same time. Oh they hear in the news about the sales numbers and the market share.....but they still really don't think anything's wrong. There's tons of GM cars in Detroit, Cleveland, and Indianapolis. How could things be bad? ALL those people buying imports are "sheeples." "California" isn't the "real" world, so why pay attention to the auto market there? <UGH>

I'm not saying "you" are a fool for being a "GM fan".....what I'm saying is.....is that the domestic automobile industry is fading into more-and-more irrelevance....and the Big3 are clueless as to how to stop the slide. NOW, it's not JUST product. It's perception, image, and appeal. You can have the best product in the world (CTS? G8? Corvette? GMT-900s? Lambda?)

.....but if you don't fix the perception, image, and appeal problems......you will fail miseably.

All sadly true.

April's sales figures lead me to the conclusion that they're losing the battle in Indy, Detroit and Cleveland too.

There's simply no GM car product that is a default choice for those abandoning Trucks.

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Interesting how the stock market has reacted to these losses, though. I guess WallStreet is not expecting any good news this year from very many companies. I read today that Berkshire is on a junk food binge, buying up stocks in Wrigley to go with Mr. Buffett's stakes in Coca Cola, Dairy Queen and Kraft. I guess the richest man in the world is betting that we North Americans are going to stay home in 2008 and get fat.

Hmm, perhaps I should invest in Jenny Craig in anticipation of a diet explosion in 2009?

People are too lazy for the Jenny Craig thing. Let's face it, the human race isn't making much progress, not moral progress, not progrss on alternative fuels, not progress on North Americans loosing wieght, not progress on the population problem.

Seems like we are really out to screw ourselves.

Chris

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All sadly true.

April's sales figures lead me to the conclusion that they're losing the battle in Indy, Detroit and Cleveland too.

There's simply no GM car product that is a default choice for those abandoning Trucks.

We are very domestic here in Columbus Ohio, but I used to live in Atlanta. I would regularly go through like 10 stoplights without seeing a domestic car (domestic trucks, yes, butnot domestic cars).

Chris

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Yeah, it's really amazing how many import cars vs. domestic cars I see here. It's almost as if the Big 3 don't even sell vehicles in the United States (outside of SUV's and trucks of course) when I drive around Houston - especially the real affluent neighborhoods. Granted, I do see a sprinkling of newer Big 3 cars, but compared to the Japanese, it's not even funny. I probably see 5 Avalons to every Lucerne, maybe 10. I see a Camry pretty much every time I take a breath. I see way more 3 Series and IS350's than I do CTS's. The one car I do see a lot of from GM though is the newer Impalas. I don't know why really. Perhaps because they're sold to so many different fleets? I don't know. I actually like the IMpala, and would personally choose it over a Camry because I think it's better looking.

I get it though - I really do. So many Joe Consumers who don't follow the auto industry just want (what they think or perceive or was told) is good reliable transportation. The Camry does deliver on that - and let's face reality people, Honda and Toyota do build pretty solid cars, it's hard to argue that. It's that (finally) GM does too (after many years of just focusing on trucks) and they have to figure out a way to get people's asses in those seats. Cars are expensive - and I think before someone takes out a huge loan on a Malibu, they need to know that thing is going to give them a smile every time they get behind the wheel. I think for Joe Consumer, the Accord and Camry do it, and they do it pretty well, so the next time they go to buy, all they remember or think about is "well, I like my Toyota, I remember my Dad bitching about his 94 Bonneville all the time, yeah, f@#k it, I'll get another Toyota". or something like that.

I will say that I'm seeing more and more new Ford products - like the Escape and the Fusion - which is actually kind of surprising. For some reason, I think Ford may have a better reputation than Chevy for their cars.

My friend from Seattle just bought a new Escape - love it - didn't think he would get another Ford, but he did. And this guy fits a demographic that would probably not consider a Big 3 product normally (IT manager). Well, actually, a lot of my IT friends drive American. Who knows?

I think we're all just freaking out right now because the economy is tanking. Let's see what happens later this year. All those Tahoe and Silverado drivers that are happy may just be convinced that a small GM car or SUV is the way to go the next time they buy (and gas is $4.50 a gallon).

Edited by gmcbob
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It's a phenomenon that has been discussed many times over on this site (many times by me.) When looking at the fate of the domestic automakers, you really need to look FAR outside of the midwestern states to see the true trends that are defining this industry. The Big3 TRULY is operating within a clueless vacuum.

Southern California is probably the biggest example.....and the east coast cities rival that. But it's really the sweeping changes in consumer preference (towards imports) that is taking place in regions like Houston, Atlanta, Florida, Arizona, Colorado, ANY paciific northwest city.....I could go on-and-on.

Employees of the Big3 living in those midwestern states are strangely clueless to the automobile market revolution taking place around the country. It's scary....and mildy humorous at the same time. Oh they hear in the news about the sales numbers and the market share.....but they still really don't think anything's wrong. There's tons of GM cars in Detroit, Cleveland, and Indianapolis. How could things be bad? ALL those people buying imports are "sheeples." "California" isn't the "real" world, so why pay attention to the auto market there? <UGH>

I'm not saying "you" are a fool for being a "GM fan".....what I'm saying is.....is that the domestic automobile industry is fading into more-and-more irrelevance....and the Big3 are clueless as to how to stop the slide. NOW, it's not JUST product. It's perception, image, and appeal. You can have the best product in the world (CTS? G8? Corvette? GMT-900s? Lambda?)

.....but if you don't fix the perception, image, and appeal problems......you will fail miseably.

Detroit is already become quickly crushed by the imports....I see this more and more every day.

The three Toyota dealerships around me sell more cars more than half the GM dealerships in the Metro Detroit area....

My local Chevy dealerships sells maybe 10-20 cars a week....My local Toyota dealership can push almost 20 Corollas A DAY. Even after seeing the sales stats....I didn't really believe it until I saw the number of 09 Rolla's around here...I see as many of them as I do the Ford Focus...

I watch TV- the Honda and Toyota Dealerships have twice the number of ads the big 3 have...

They are undercutting (and maybe losing a few bucks) everyone here...199 a month for a Camry? 169 a month for a Corolla? And these are not huge downpayment deals either.....

It's happening-sooner than you think....

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How did Ford make money & GM loose?

Ford is a lame duck!

Ford also remembers how to market a product.....

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All sadly true.

April's sales figures lead me to the conclusion that they're losing the battle in Indy, Detroit and Cleveland too.

There's simply no GM car product that is a default choice for those abandoning Trucks.

Kinda true.

It's also about the money.....

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I had a chat with a broker yesterday when he dropped by. This gentleman moves about 35 vehicles a month. He figures about 75% of his sales are Honda and Toyota. His comments, however, were quite illuminating: "I don't make any money selling the imports." A direct quote. He could offer no explanation, other than to say he is 'forced' to move Toyotas (and Hondas in particular) for $400-$450 'gross.' He said he prefers selling GM because at least he can make some money.

I've heard these comments before. A 3 year salesguy at a dealer I used to work at went to sell Honda. He hated it. Firstly, he thought the product would sell itself, but he quickly found that the people drawn to those products quibbled over everything. Secondly, as a result, there were no 'grosses' in the product. Thirdly, the amount of bashing of the domestics at that dealer made him sick, so he quit and went back to another GM store.

So, Honda's sales are up 30% YTD over 2007 in Canada. It makes me wonder how they are acheiving those sales. The strike is certainly hurting us. There are no Silverados around, but more significantly, because there are no Silverados around, GM is not pushing them. Right now, a Ford or Dodge pickup is about $9k cheaper than a comparable Silverado. It is easy to say the Silverado is a better truck (which it is), but even as a die-hard GM guy, I am finding it hard to justify $9k. I am lamely quoting a customer today on a Silvy. I doubt I will get the deal. The customer has already declared Ford dropped $9k off the price without hesitation. I can't even come close.

The Cobalt/G5 are now outselling the Mazda 3 in Canada. Great. Too bad there aren't any around. I suspect this is more the dealers fault around here, but it is great to have a hotselling product (like the Cobalt and Malibu), but not so great if we can't get them.

The declining market share of trucks is going to hurt GM, to be sure. Ford, too. Personally, it won't affect the market I sell in. Trailblazers, Tahoes, Silverados don't sell in Toronto. It's the small cars. I am more excited about the revamped Aveo than I am by the Traverse. :duck:

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"I had a chat with a broker yesterday when he dropped by. This gentleman moves about 35 vehicles a month. He figures about 75% of his sales are Honda and Toyota. His comments, however, were quite illuminating: "I don't make any money selling the imports." A direct quote. He could offer no explanation, other than to say he is 'forced' to move Toyotas (and Hondas in particular) for $400-$450 'gross.' He said he prefers selling GM because at least he can make some money.

I've heard these comments before. A 3 year salesguy at a dealer I used to work at went to sell Honda. He hated it. Firstly, he thought the product would sell itself, but he quickly found that the people drawn to those products quibbled over everything. Secondly, as a result, there were no 'grosses' in the product. Thirdly, the amount of bashing of the domestics at that dealer made him sick, so he quit and went back to another GM store."

GM as a manufacturer still made an operating loss for the quarter, and it isn't the first either. If dealers are still making decent money selling their products, then either there are excessive subsidies to dealers to fund sales incentives which are causing the problem for the manufacturer, or the dealer itself is making an abnormally high overall mark-up on particular vehicles, or the salesman is simply pretty clever with his patter. The "offering no explanation" immediately draws me to suspect it's the latter.

Edited by aatbloke
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