Opel's Future?

[michaedo]

Looking at all the avatars it would seem we've all got pretty dependable
Opels at the moment. Why are we talking about new cars and the companies that build them? I've got my wagon and Mercedes, at my age, the two will get me to the finish line. Sorry "Big 3" I don't figure I'll be needin' another
set of wheels....ever.
Don.

[Opelkurt]

It gets very interesting.

The German government has taken steps to protect Opel if GM implodes.

Meanwhile, a German solar panel company, "SolarWorld", has made a headline grabbing offer to buy Opel outright. This offer apparently is not being taken very seriously.

Opel is busy reassuring potential customers the company is sound. GM may want to take note of their strategy....

-Kurt

[spamseptictank]

Originally Posted by neuropel Greed indeed...this one really makes my heart bleed for those auto execs. It's definitely a cultural problem. Big Three auto CEOs flew private jets to ask for taxpayer money - CNN.com Todd

I'm not the sharpest bulb on the stove, but based on that headline, why didn't they drive? Do they not care for their own product?
Besides, if only foreign cars are available and the price goes up too much, I hope that someone would emerge to manufacture a better (or at least less expensive, not cheaper) vehicle. Unfortunately, they'd probably be treated like Tucker or DeLorean.
OK. I'm done.
Dave

[Gumby]

Originally Posted by spamseptictank I'm not the sharpest bulb on the stove, but based on that headline, why didn't they drive? Do they not care for their own product? Besides, if only foreign cars are available and the price goes up too much, I hope that someone would emerge to manufacture a better (or at least less expensive, not cheaper) vehicle. Unfortunately, they'd probably be treated like Tucker or DeLorean. OK. I'm done. Dave

If you have a nice jet to fly there wouldn't you? Besides they probably don't own the jet, it's very likely funded on someone elses money and they haven't been paying. It's only a matter of time before those things go away... especially if they go down the road of bankruptcy or a major restructure of their debt.

The name of the game right now is cashflow. The companies that are in trouble right now are not there because their operations suddenly stopped having a positive net operating income (NOI) but that their debt service is now weighing on them to the point where they can't pay their debt and cover all expenses at the same time. Most companies are fending off this slow death by selling assets to generate cash to continue to operate... but this a short term plan based on the idea that at some point the economy will turn around and they will hopefully still be around to see it.

Right now is the market for anyone who conserved cash (porsche is a good example) and didn't engage in rapid high risk growth.

I honestly won't cry to see the "big three" file bankruptcy because when all the dust settles and the economy is on the up again there will still be the automakers in some form or another.

[Aardvaark]

While I don't like a lot about the domestic auto companies and their unions, I have to say the criticism of the big three CEO's using the privately leased jets was a cheap shot by congress and the media.

Having worked for a company that has owned it's own jet for many years, the cost was worth it in time saved for both the executives and us lower minions by using it rather then commercial when available. It usually made sense to fly highly paid (and us lowly paid) people quickly to and from meetings in a few hours while they work on the flights rather then turning it into more or less down time on much more time consuming commercial flights. Guess I'm saying using private jets and planes isn't the luxury many would have you believe. Jmo.

[73Manta72gt]

I agree about the jets but the big three guys weren't smart enough to see the cheap shot coming and they didn't come with a plan and don't seem able to take responsibility and move forward. Politicians aren't geniuses, but they made the CEOs look like fools.

GM needs a plan like:
nobody makes over 100K/yr
bring Opel to the USA.
Kill dieing brands
close plants and become smaller
union wage concessions 10-20%

[manyopels]

While it's easy to talk in generalities and 'woulda, shoulda, coulda', there is also a very personal and human face to the mounting problems. Certainly many of you can relate. For instance, my girlfriend has worked for the past 21 years in an automotive-related subsidiary. She is now very anxious about the future of her job, and believes within six weeks an announcement will be made putting her out of work, with a mortgage to pay and teenage daughter to support I'm not saying this is occurring here, but all too often the fingerpointing and blame as reported in the media by various parties forgets how wide-ranging actions, or lack thereof, can affect those least responsible for the problem in the first place. My thoughts are certainly with her, and others in a similar situation.

[namba209]

Originally Posted by Aardvaark While I don't like a lot about the domestic auto companies and their unions, I have to say the criticism of the big three CEO's using the privately leased jets was a cheap shot by congress and the media. Having worked for a company that has owned it's own jet for many years, the cost was worth it in time saved for both the executives and us lower minions by using it rather then commercial when available. It usually made sense to fly highly paid (and us lowly paid) people quickly to and from meetings in a few hours while they work on the flights rather then turning it into more or less down time on much more time consuming commercial flights. Guess I'm saying using private jets and planes isn't the luxury many would have you believe. Jmo.

There were a couple of snippets in the news last week that caught my attention about all this.

The response by the Auto Industry spokespersons was: "We used the private jets for safety reasons". Now just what does that mean? Their cars aren't safe enuff for them, or commercial aviations isn't safe? Lame excuse IMHO. But not necessarily so. After I got my A & P and went looking for a job, I found that many would hire me and my experience, but couldn't pay my asking wages. ASE certified auto mechs were making more than A & P mechs. So I went back to work for the Government.

There was also an organization of folks that owned private jets that were flying wounded Armed Forces Veterans families, round trips, to the various medical facilities so they could be with their spouses/family members. All at no cost to the families or members. It was noted total cost, fuel, parking fees and maintenance could be over $5000 per flight. Now I understand this could be a charitable contrubution for the companies owning the jets, but a nice thing just the same.

In regards to another post inthis thread about restructuring, closing plants, layoffs, metc., for every auto worker laid off or fired, there could be 7 more in associated industries that got the same fate. Not a real good plan, but something that needs to be addressed. O.K. I'm off the soapbox again.

[blind_msq]

If i would work at gm and had to decide what brands to dispatch, i woul defenetly get rid of the useless HUGE cars that all noobs buy and use them in the city. The bigger the car is, the more useless it is. Why would you need a terraint vehicle or an SUV to drive in the city? Running costs are high, production costs are high. Few ppl buy it.

Since we're talking about gm, they made the most stupid decision ever, which is renouncing to sportive models produced by Opel. They just are unable to think about opel's tradition in motor-sport.

A perfect car to buy is one that is reasonable priced and capable of good track performances.

Another stupid choice was to renounce producing the opel calibra models...

[traytodd]

The jet thing does look bad, but I never see anyone counter with " how did you get to work this morning? Was it in a gov't car? Did you fly in from CA on a gov't jet?" Pelosi & Reid both have USAF transportation available. I do not know if the big 3 let lesser individuals ride along on the most exclusive jets, but when you are paying someone $14M/yr you want them working as many hours as possible.

Where is the Lee Iococa of today. Why is Bob Lutz or some other executive not on the airwaves explaining to us that the US makers do make quality cars, do make fuel efficient cars, and that it might be in our own best interest to buy these over the foreign competition. In other countries, the citizens have a strong local content bias. It is tough to sell a US product in Japan when local products are available.

Years ago if a dealer sold Ford, it sold only Ford products. Today almost every dealer sells one or two competing brands. How is this allowed?

If I was GM, I would combine SAAB and Saturn dealerships in the US and add Opel to the mix. I would dump Hummer, drop GMC light trucks in favor of Chevrolet (there is no difference anyway), I would make Chevrolet the small fuel efficient car line, Pontiac the performance line, Buick the mid to full size car line and Cadillac the luxury line. Make each brand distinctive, no brand would sell the same model. I would close marginal sales outlets and factories. There is always some fat in large organizations. I would go after that. Anyone not fully employed would either be found a job or released. If unoin contracts call for people to collect pay eventhough there is no work, then I would insist they use that time at a charity or assisting local government. There would be no pay for bench time. I would mount a strong public relations campaign as noted above to explain these changes to the public, why they should buy GM products and why saving the US auto industry is in their own best interest. As part of that, I would commit to keeping jobs here along with all the tax revenues generated.

I know it is far more complex then that but Detroit has miserably failed at the PR game. They need to eat some humble pie but at the same time start educating the public about their technology and their place in the American economy.

Terry

[West Coast GT]

I agree that cash flow is the most likely cause of GM's current problem. If they care to ask my opinion, I'd suggest the following:

Do not change the current models for several years. Although the models have already been designed, save on re-tooling costs, which are considerable. Volkswagen made the Bug the most successful car using this strategy. Incremental changes for improvement will enhance the models enough.

Stop duplication of models. Example: Pontiac Bonneville and Chevrolet Impala.

Keep designers on-staff and working on designs 10 years down the road.

Stop this nonsense of 0% interest financing. Using the "Net Present Value" approach to sales fails because it's based on several assumptions regarding inflation. Charge a fair interest rate for customers financing their new car purchase. This idea of free credit (0% interest) is a bad one.

Shake up the traditional relationship with dealerships. Most automobile manufacturers extend credit to dealerships to support the dealerships' inventory. Let them find their own financing for a while; especially to dealerships representing several manufacturers.

Stop offering factory rebates. Sell cars to dealerships at a fair price. It's the dealerships' role to sell the cars. Let them offer rebates by scaling back their own profit margin. This allows for market competition to work its magic as the dealerships compete for customers. My personal feeling when I see a $5,000 factory rebate is the original asking price was $5,000 too high. Were they trying to gouge us?

Understand that the market segment they generally target is out of commission for a while. I've driven around our area looking at foreclosed homes. Guess what? A lot of them have new, nice, cars in the driveway. A lot (not all) people stretched too far (some like to think they're smart and "leveraged" their money). They often wanted upscale new cars to go with their upscale new house. The auto industry needs to react by scaling back upscale young family cars, and producing what appeals to conservative older buyers who are still in decent financial shape.

[neuropel]

Three private jets were required?....THREE? At an estimated $20K for each flight?
To go to DC and beg for money?
The GM jet was worth 20 million - that's a lot of cash from what I understand (I don't think many people realize just how much a million really is). Since then, I think GM announced that they're going to bite the bullet and sell off three of their corporate jets - whew, times are hard.

Now they have 10 days to come up with a "business plan" to convince congress they need money. I have a hard time understanding how an industry that has been out of touch for so long is going to be able to come up with an awe-inspiring business plan in 10 days.

I think their only hope is to get someone along the lines of a Steve Jobs to come in and shake up the entire industry. Innovation is a culture, not something that is just mandated by out-of-touch management.

(and now, I too will get off my soapbox)...

[flyboirob]

Toyota is not unionized....how much does their cars cost....your point

[charlie1966]

Let me get up on the vacated soapbox.

There are many people who could do better than the heads of the small 3 but it still defies belief that they have mismanaged such successful companies for so long. I think that shareholders should sue the arse of them, but that will never happen. I can't abide incompetence. 1 of the exec's is on 14 million and he needs a company jet to make better use of his time, it wasn't money well spent. Why are the largest shareholders not up in arms looking for blood( largest shareholders are usually pension funds). Yours and my pensions are involved regardless of country. Steve Jobs was mentioned about taking over and sorting out the mess. We have our own examples of exceptional entrepreneurs, Michael OLeary being 1, someone who does what it takes to make his company successful. Like or loath him and many do loath him, look up him and the company Ryanair and you will get mixed opinion but he is a good exec. But would any of these guys want to take over a basket case. Don't think so. If so many peoples lives weren't affected I would say let the companies go to the wall to spite these incompetent managers. Is there an answer to this? Only time will tell but the media talking the whole thing down certainly doesn't help.

How about a god news story for once. Probably wouldn't know what a good news story is or even existed.

If I have insulted anyone. Oups! sorry but I hate all this doom and gloom.
Now back to your regular scheduled programing.

[Avec]

Originally Posted by 73Manta72gt I agree about the jets but the big three guys weren't smart enough to see the cheap shot coming and they didn't come with a plan and don't seem able to take responsibility and move forward. Politicians aren't geniuses, but they made the CEOs look like fools. GM needs a plan like: nobody makes over 100K/yr bring Opel to the USA. Kill dieing brands close plants and become smaller union wage concessions 10-20%

Without bankruptcy, the last three won't happen and the first really is not a big expense for the companies. Sure the executives make excessive amounts for running their companies to the ground, but the real disadvantage is in the cost of building the car. Exec payroll is not included in that.

Currently, it is estimated that through current and historic union contracts for pensions, retirement health care and the like approximately $1500 per car is added to the cost. I know that at least one of the three has stopped contributing to white collar employee 401(k) plans.

The interesting question is whether they should sell off the profitable lines such as Opel and Saturn or try to keep them and sell Pontiac and Chevy?

[tomking]

I will make two comments. Again I agree with Mark. Criticism of the big three flying in was a cheap shot by many. Most simply envious of the privileges that go with high level corporate positions. I have been waiting for someone to suggest that perhaps they should have gotten together and flown in on one jet together. O the howls and cries that would ensue then and would lead to some attorney general investigating them for anti trust issues. Of course corporate leaders fly in jet planes all over the country for meetings.
My second agreement with Mark is Yes, Aardvaark
Owes Tom King a salad! LOL.

Originally Posted by Aardvaark While I don't like a lot about the domestic auto companies and their unions, I have to say the criticism of the big three CEO's using the privately leased jets was a cheap shot by congress and the media. Having worked for a company that has owned it's own jet for many years, the cost was worth it in time saved for both the executives and us lower minions by using it rather then commercial when available. It usually made sense to fly highly paid (and us lowly paid) people quickly to and from meetings in a few hours while they work on the flights rather then turning it into more or less down time on much more time consuming commercial flights. Guess I'm saying using private jets and planes isn't the luxury many would have you believe. Jmo.

[SpringGT]

Does anyone notice the irony in the U.S. Congress giving a lecture to anyone on the misuse of money and the lack of a viable plan? We should be so lucky as to be able to tell congress no more money from us until they come up with a sensible plan for our financial survival.

[officertyo]

Originally Posted by springgt does anyone notice the irony in the u.s. Congress giving a lecture to anyone on the misuse of money and the lack of a viable plan? We should be so lucky as to be able to tell congress no more money from us until they come up with a sensible plan for our financial survival.

amen!

[charlie1966]

Various stories doing the rounds indicate a lot of interest from a number of parties to buy Opel, but GM are not selling. So far, but who knows they may have to. In the long run I think Opel will be OK.

[tomking]

That is a great point!

Originally Posted by SpringGT Does anyone notice the irony in the U.S. Congress giving a lecture to anyone on the misuse of money and the lack of a viable plan? We should be so lucky as to be able to tell congress no more money from us until they come up with a sensible plan for our financial survival.

[charlie1966]

The German government have announced that they will inject funds into Opel if Opel give assurances that the money will stay in Germany and not go to GM in the US. The EU have agreed to allow the German government to do this( Eu approval is needed for state aid), to the tune of 500,000 Euro. Opel have given the required assurances, so for Opel fans the future is a little better. For GM who knows.

[Avec]

Originally Posted by charlie1966 The German government have announced that they will inject funds into Opel if Opel give assurances that the money will stay in Germany and not go to GM in the US. The EU have agreed to allow the German government to do this( Eu approval is needed for state aid), to the tune of 500,000 Euro. Opel have given the required assurances, so for Opel fans the future is a little better. For GM who knows.

Do you mean half a million Euro or half a billion Euro?

[baz]

not gm or opel but it looks like jag will go down too
Report says Jaguar in talks for 1 bln stg loan - Yahoo! News UK

i cant see tata getting $1.5 billion from the gov here

[charlie1966]

Originally Posted by Avec Do you mean half a million Euro or half a billion Euro?

Sorry 500 million Euro. I was thinking of my own bank balance.

I wish!

1/2 million wouldn't pay for the corporate jet.

[Gumby]

Originally Posted by charlie1966 Sorry 500 million Euro. I was thinking of my own bank balance. I wish! 1/2 million wouldn't pay for the corporate jet.

1/2 million wouldn't pay for a whole jet but it would make a few of it's monthly payment.