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"A Going Concern" - The Global Auto Industry

14 posts in this topic

to read the preamble and analysis click here. http://www.christonium.com/automotive/ItemID=12363409028356

to get right to the point, just read the following.

I continue to believe consolidation is necessary to improve the viability of the industry and that includes the terminations of brands and companies. It is time for governments to coordinate a restructuring of the business model prior to recapitalizing the industry. For example does it really make sense for the US government to aid both GM and Chrysler and end up with three weak companies including Ford or for France to bailout both Renault and PSA? Does the market need both Opel and VW or BMW and Mercedes-Benz? Is there really a demand in the market for 10 Japanese manufacturers competing in the same markets? Is there really that much of a real difference to the consumer between a midsized Toyota Camry, Hyundai Sonota, Nissan Altima, Honda Accord, and the seven or eight vehicles offered by the US manufacturers in that segment? For the most part the functionality is identical as far as the consumer is concerned.

Competition and free markets of course are valid arguments but not when industry operating margins in a good year are historically 3% to 5%. The entire industry with few exceptions was running on fumes prior to the collapse and in an environment with little room for error. This environment also reduced innovation and risk taking because good intentions could quickly lead to sharp losses. For these reasons the time is now ripe to dynamite and rebuild the global automotive landscape. The automotive industry is a capital intensive business with high opportuinity costs and will become more so as governments demand more environmentally friendly but expensive vehicles and the economics of scales will not be the same in a much smaller global market.

I will finish with this. How many commercial aircraft manufacturers are out there?

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Where there is money to be made and capitalism means anyone can attempt to have a piece of the pie, the consumers dictate who will prosper; this, whether the company's efficiency or product itself is any good or not. The pie slices aren't getting any larger with, IMHO the decline in personal disposable/discretionary income to afford the 'extras' or the 'must-have-goodies'. For this, we have a few possible outcomes:

1) Offerings and options decline for more basic models and low-buck transportation.

2) Everyday versatility and practicality become more important than status-symbol-gotta-have - it's a stretch, but goodbye SUVs, High-Po station wagon models and track-burning grampa-movers... hello Minivan and the opposite of what I mentioned above.

3) Free-market involvement means risk, which means attrition will decide from there. If you want to play the game, accept there will be losers. If this is the case, accept your losses and move on instead of prolonging the agony and disappointing the consumers.

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to read the preamble and analysis click here. http://www.christonium.com/automotive/ItemID=12363409028356

to get right to the point, just read the following.

http://detnews.com/apps/pbcs.dll/article?A.../903070386/1148

The federal auto task force that arrives in Detroit on Monday has spent the past two weeks meeting with a range of industry players, pushing its work beyond the automakers' immediate cash crisis and strongly hinting at a longer term goal.

Accounts of the task force's discussions with Detroit Three executives, industry trade groups and analysts suggest the advisers to the Obama administration's cabinet-level committee have gathered plenty of the basic financial information necessary to assess the need for immediate aid. But the group's focus appears to extend far beyond the balance sheet, looking more deeply into the question of what a successful U.S. auto industry would look like in the long run.

http://www.autonews.com/article/20090307/A.../903079993/1193

Too many pleas

Economy Minister Karl-Theodor zu Guttenberg said in an interview published today there had been too many calls for state intervention and that if firms applied for insolvency it did not necessarily spell their demise.

"If the business model is suitable for the future, an insolvency can also help to retain jobs," he told weekly magazine WirtschaftsWoche. "Our insolvency law gives firms the chance to write off debt and continue operations."

Merkel, Schaeuble and Guttenberg are all conservatives, and leading Social Democrats (SPD) -- who rule in coalition with their rivals -- have stressed their desire to save Opel if possible as Germany heads for a federal election in September.

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How is this General Motors new? This should be a Feature. Very nicely written op/ed; even though I first thought it was about prostate health.

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http://detnews.com/apps/pbcs.dll/article?A.../903070386/1148

The federal auto task force that arrives in Detroit on Monday has spent the past two weeks meeting with a range of industry players, pushing its work beyond the automakers' immediate cash crisis and strongly hinting at a longer term goal.

Accounts of the task force's discussions with Detroit Three executives, industry trade groups and analysts suggest the advisers to the Obama administration's cabinet-level committee have gathered plenty of the basic financial information necessary to assess the need for immediate aid. But the group's focus appears to extend far beyond the balance sheet, looking more deeply into the question of what a successful U.S. auto industry would look like in the long run.

that sounds promising. i've always had hope in the man who campaigned on hope and integrity.

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that sounds promising. i've always had hope in the man who campaigned on hope and integrity.

How is this for hope:

Daimler, BMW plan to swap 7% stakes, report says

Paul McVeigh

Automotive News

March 8, 2009 - 9:45 am ET

http://www.autonews.com/article/20090308/C.../303089996/1193

MUNICH -- Daimler and BMW plan a share swap to boost cooperation between the two automakers, the German magazine Der Spiegel said today.

Daimler would take a seven percent stake in BMW, and BMW would have the same stake in Daimler, the magazine said in a report on its Web site.

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How is this for hope:

Daimler, BMW plan to swap 7% stakes, report says

Paul McVeigh

Automotive News

March 8, 2009 - 9:45 am ET

http://www.autonews.com/article/20090308/C.../303089996/1193

MUNICH -- Daimler and BMW plan a share swap to boost cooperation between the two automakers, the German magazine Der Spiegel said today.

Daimler would take a seven percent stake in BMW, and BMW would have the same stake in Daimler, the magazine said in a report on its Web site.

pretty unbelievable. reeks of second or third-to-last ditch effort. I wonder how big that partnership will get before this is all over. but that's a really interesting alliance. I want to see honda with someone good and big. that would be an ultimate combo, honda engineering with someone who is less functionality-centric and more form-centric

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but that's a really interesting alliance. I want to see honda with someone good and big. that would be an ultimate combo, honda engineering with someone who is less functionality-centric and more form-centric

LOL - You miss the point and overthink it.

There is no hope.

Did you read the opening link to this thread?

VW's CEO is quoted he does not expect many OEMs to survive.

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"Is there really that much of a real difference to the consumer between a midsized Toyota Camry, Hyundai Sonota, Nissan Altima, Honda Accord..."

No, of these, they're all equally ugly!!

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For these reasons the time is now ripe to dynamite and rebuild the global automotive landscape.
Edited by ZL-1
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we don't neccessarily need to get rid of all the companies. what has been happening and what could help more long term is more joint venture and partnerships....assuming the companies pull their head out of their ass and play nice.

the bigger part here is that since the USA is the biggest auto market, they should have the most companies etc. but the American citizen is determined to blow away our industry by buying, as the article put it....

Is there really that much of a real difference to the consumer between a midsized Toyota Camry, Hyundai Sonota, Nissan Altima, Honda Accord, and the seven or eight vehicles offered by the US manufacturers in that segment? For the most part the functionality is identical as far as the consumer is concerned.

so the journalist even admits the cars are all the same and on the same level, but the people still decide to buy a camry (which CR says only has average reliability) over everything else....championing mediocrity and sending money offshore in a big double whammy.

i hate the socialist overtones of this article. The USSA is just upon the horizon, but you the voters asked for this.

What is a 'sonota', by the way?

Edited by regfootball
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From the article:

In a recent interview with the German paper Spiegel, Volkswagen CEO Martin Winterkorn was asked his prediction as to which independent automakers will still be around in three years?

Winterkorn stated:

“There will be two Americans, one or two Japanese, one French company, and perhaps one large Chinese company. Daimler and BMW will exist. But so much is in flux at the moment that predictions are very difficult.”

I continue to believe consolidation is necessary to improve the viability of the industry and that includes the terminations of brands and companies. It is time for governments to coordinate a restructuring of the business model prior to recapitalizing the industry. For example does it really make sense for the US government to aid both GM and Chrysler and end up with three weak companies including Ford or for France to bailout both Renault and PSA? Does the market need both Opel and VW or BMW and Mercedes-Benz? Is there really a demand in the market for 10 Japanese manufacturers competing in the same markets? Is there really that much of a real difference to the consumer between a midsized Toyota Camry, Hyundai Sonota, Nissan Altima, Honda Accord, and the seven or eight vehicles offered by the US manufacturers in that segment? The consumer is given many choices but for the most part the functionality is identical.

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Son of Toyota = Sonota

i will say this, i think hyundai is becoming quite successful at chipping away at toyota's role in the market. people bought toyos for 'reliability' and 'value'. well, CR is telling the sheep to buy hyundais now for the same reasons they told them to buy toyos, reliable non emotional vanilla transportation appliances, but they are selling cheaper than toyota and have longer warranties too.

toyota should be very afraid. people will not be loyal to toyota when they can a toyota clone with less cash and more backup.

since so many people this seems to be all they want. vanilla on 4 wheels and a blessing from CR telling them what to buy.

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