HarleyEarl

BMW: worst crisis in history

39 posts in this topic

http://www.autocar.co.uk/News/NewsArticle.aspx?AR=236253

From Autocar(UK):

Car makers that had seemed in a strong position to weather the global economic storm have publicly admitted a 'crisis' as sales continue to slow down.

BMW's boss Norbert Reithofer yesterday described the situation to Germany's Spiegel magazine as "the worst crisis BMW has faced in its history".

Despite the slow sales, it is the German giant's reliance on leasing that has put it in a very vulnerable position.

Meanwhile Daimler boss Deiter Zetsche assessed the current conditions as "the worst crisis since World War II".

Martin Winterkorn, boss of Volkswagen, told reporters: "We have never before seen this kind of crisis" adding that "difficult cuts" maybe unavoidable.

But it's not just the German's who are talking openly about serious problems.

Previously stable Japanese giant manufacturers like Honda and Toyota are also publicly airing grave concerns.

Toyota's vice president Mitsuo Kino$h!a described the situations as "an emergency of a magnitude we have never seen before".

Honda has also admitted that it will be "very difficult" to meets its full-year profit forecast and is scaling back production by some 40,000 units in Japan.

Industry experts say the most flexible car makers, which can adjust quickly to falling demand, will be best placed in the months to come

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So really, globally, what has changed? Are people stricken in such a manner that they no longer want to engage in gainful labors? Did the need for shelter and sustenance suddenly evaporate?

What has become so off-kilter that demand for every consumer item has fallen into the abyss? Why are so many fearful of the economy falling into a Depression, a concept that only those over the age of 70 and up may be acquainted with?

So many questions and a dearth of answers.

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So really, globally, what has changed? Are people stricken in such a manner that they no longer want to engage in gainful labors? Did the need for shelter and sustenance suddenly evaporate?

What has become so off-kilter that demand for every consumer item has fallen into the abyss? Why are so many fearful of the economy falling into a Depression, a concept that only those over the age of 70 and up may be acquainted with?

So many questions and a dearth of answers.

All good questions.

Is it the drying up of credit? When even Toyota is getting worried, something is amiss.

Locally, you wouldn't know anything had changed. Still seems to be many new vehicles on the street, most in the premium category.

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All good questions.

Is it the drying up of credit? When even Toyota is getting worried, something is amiss.

Locally, you wouldn't know anything had changed. Still seems to be many new vehicles on the street, most in the premium category.

I think it's mass coercion via fear. There was an urgency present in the upward spiral of energy costs which peaked in mid-July that didn't square with the ongoing collapse in the Real Estate Markets.

We're re-setting the value of everything tangible and intangible and it isn't pleasant to weather a contraction especially one having the heft and scope of this one.

It's got much to do with a levelling of the global playing field. Heaven help us if Chinese peasants, existing on the equivalent of $1 US funds per day, ever demand wage parity. Their government would likely squash any uprising but the kettle is near the boiling-point. In India as well, largest Democracy on the planet.

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Very well said. You obviously keep informed. You are quite right: 'mass coercion via fear'.

Here in Canada, for some reason we've not been as affected as much as other countries. One reason, it is thought, that our banking system tends to be quite conservative, and regulations are such that financial institutions are in pretty good shape. Car sales in Canada have stayed quite stable and even some increases.

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Canadian society has always seemed more grounded in the practical and the real to me. Contrasted with The United States of America where we're all given to believe that we are so mighty and special. The last remaining 'StuporPower'. Indeed we're all that and a bag of trans-fat laden chips.

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>>"Despite the slow sales, it is the German giant's reliance on leasing that has put it in a very vulnerable position."<<

Undoubtedly it is also the reliance on fleet sales that has them in their pickle.

Edited by balthazar
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>>"Despite the slow sales, it is the German giant's reliance on leasing that has put it in a very vulnerable position."<<

Undoubtedly it is also the reliance on fleet sales that has them in their pickle.

The BMW commercial which may still be running in some markets and had been running for the past three months bluntly stated that their vehicles were the subject of automotive lore. Legend no less. So even legends can be vulnerable and subject to dilution through the over-selling of a dream.

Cars may just be relegated to being transportation for a while. The aspirational lust applied to what is basically an appliance is non-sensical. We may actually learn that lesson too. I hope everyone has at least one good memory of their favorite automobile as it may have to suffice for a while.

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I still believe in car lust and don't see them as mere appliances.

I don't want to be reduced to driving drab, socialist, state designed transportation devices.

Beautiful objects will always have a market.

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BMW has been able to stay independent throught the good times. Now the hard times are here it may force them to take a dance partner to make it. With the cost of development of cars and with less money coming in new products will be slower in coming to market.

Other than the Mini BMW has little to support them in a maket where many will cust their spending.

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I've often thought that tighter relations between GM and BMW would be an interesting tieup.

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I still believe in car lust and don't see them as mere appliances.

I don't want to be reduced to driving drab, socialist, state designed transportation devices.

Beautiful objects will always have a market.

I'm age 52 and have gone up the ladder as it were with vehicles through the years. I was projecting my own views as it pertains to the concept of the vehicle-as-appliance.

I had one brief moment recently where I'd actually conceived of no longer driving, then the moment passed as I realized the degree of self-reliance I derived from hauling my own self around. But I know that I'm not the gad-about on wheels as I once was. My girlfriend/fiance handles about 30% of the driving on our joint trips afield in her CTS (very nice vehicle btw). I'm becoming more of a homebody as retirement draws closer. So, there's no call from me to assert an Al Gore-like Puritanism across the board on the public-at-large. I believe strongly that folks should be able to drive what they want.

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Hey, there's another side to my car lust....at times, my pragmatic side emerges and want a simple vehicle like the early VW Beetle. The earlier Jeeps. Pure and elemental. Maybe the Smart car is the new Beetle? I'm more on guard with the Toyota Priuses of the world...just does nothing for me. I gag just a bit.

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The Smart is an exceptionally poor and dated design - it will not be the future.

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The Beetle and Jeep weren't stellar designs either.

But they had that 'thing'.

And I believe the Smart does have a future.

It's sales worldwide are beyond projections.

Here in Canada they have sold exceptionally well.

And Toyota is poised to introduce a similar vehicle soon.

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Hey, there's another side to my car lust....at times, my pragmatic side emerges and want a simple vehicle like the early VW Beetle. The earlier Jeeps. Pure and elemental. Maybe the Smart car is the new Beetle? I'm more on guard with the Toyota Priuses of the world...just does nothing for me. I gag just a bit.

Mine did run the gamut as well. I can admire a nice looking ride most of the time. Even once I'd seen a beaten up '93 Z-71 GMC Sierra Extended Cab/Short-bed that still looked fit, fine and solid as though machined from billet-stock. Opinions vary with the day and the weather.

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The Beetle and Jeep weren't stellar designs either.

But they had that 'thing'.

And I believe the Smart does have a future.

It's sales worldwide are beyond projections.

Here in Canada they have sold exceptionally well.

And Toyota is poised to introduce a similar vehicle soon.

It is bombing here in the US, and there are many other tiny cars that are far superior waiting in the wings.

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Fair enough, haven't heard what's happening with it there.

The city I live in is jam-packed with premium, hi-end cars and suvs....and many Smart cars, very popular here...and this in the oil capital of Canada.

They seem to appeal to all genders and ages and income levels, much like the Beetle did. The Mini is like that too.

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So really, globally, what has changed? Are people stricken in such a manner that they no longer want to engage in gainful labors? Did the need for shelter and sustenance suddenly evaporate?

What has become so off-kilter that demand for every consumer item has fallen into the abyss? Why are so many fearful of the economy falling into a Depression, a concept that only those over the age of 70 and up may be acquainted with?

So many questions and a dearth of answers.

It is the collapse in credit, as credit fuels the economy.

The only reason we're not in a 1930's type of Depression is because public authorities were much quicker to move with regard to liquidity and because real interest rates adjusted much more quickly than during the Great Depression. Until the real estate market balances itself and people with negative home equity get out of trouble it will be hard to see any major consumption-based economic expansion.

Even in China there may be trouble: they were very aggresive in moving with a big fiscal package and interest rate cuts...

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I think we just narrowly averted another depression.

And it's not over yet.

I don't think most people realize how serious

this all is.

Edited by HarleyEarl
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Very well said. You obviously keep informed. You are quite right: 'mass coercion via fear'.

Here in Canada, for some reason we've not been as affected as much as other countries. One reason, it is thought, that our banking system tends to be quite conservative, and regulations are such that financial institutions are in pretty good shape. Car sales in Canada have stayed quite stable and even some increases.

That is going to change very rapidly. November's numbers will be ugly in Canada. Don't forget, our economy usually follows at least one quarter behind the States. Our recession is just starting. Manufacturing companies are closing up shop left and right, here in Ontario. Real estate prices are sure to follow. Our banking system is only safe for investments made in Canada, but CIBC and others have made poor investments south of the border, which they are only now starting to pay for. Commodity prices are going to slam BC and Alberta before long. A whole heaping pile of Not Good.

We need look no further than the stalled leveraged buyout of BCE by the Teacher's unions and various banks. They were talking about a $52b leveraged buyout. That means they were borrowing much of the money. That is the disease that has paralyzed the financial markets in the past few months. All the major banks are finally having to admit that many of their loans were totally BS and most of the collateral is gone - if there ever was any collateral.

Also, without GM and Chrysler to kick around in the leasing department, leases have skyrocketed up here. Hell, I can sell someone a loaded Cobalt for the same payment as a 48 month lease on a crappy Versa. And a lot of leasing companies are still smarting from the dollar being at par for a year. The falling buybacks on BMWs, Lexus, etc. is very ugly. This is all shaping up to be a perfect storm that will hit the high end marques in the beginning of '09.

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All the major banks are finally having to admit that many of their loans were totally BS and most of the collateral is gone - if there ever was any collateral.

Collateral damage.

Hang in there Canada.

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I think we just narrowly averted another depression.

And it's not over yet.

I don't think most people realize how serious

this all is.

+1

Chris

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Bu...But... I thought it was only Detroit that "Put themselves in this situation."

Speaking of a tighter tie up between GM and BMW, why not sell Pontiac to BMW as an entry level division? :smilewide:

:scratchchin:

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Bu...But... I thought it was only Detroit that "Put themselves in this situation."

Speaking of a tighter tie up between GM and BMW, why not sell Pontiac to BMW as an entry level division? :smilewide:

Mini is BMW's entry level brand...

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