GM and Honda...one more time
05-16-2006, 08:56 PM
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GM and Honda...one more time
Folks we've had this discussion before, but the great thing about the American economy is that it lets the consumers decide who's better...and who's not!
First, who's hot: from the AP-
TOKYO - Honda Motor Co. will build new plants in Japan, the United States and Canada to boost production amid soaring demand for its vehicles, the company's president said Wednesday.
Who's not: Yahoo finance
Robert Kiyosaki-Right now, the carmaker is struggling. "The reason GM is in trouble is because its cars aren't that good," commented a friend of mine. I replied: "GM's problems go deeper than its cars. GM's problems begin with how it is managed."
Personally, I like GM cars. My first new car was a 1969 Corvette. It cost $6,000. And although my monthly payments left me with little to live on, my love of the car made the pain of the monthly payments worth it. I wish I had it today. Since then I have owned GM SUVs and Chevy trucks. So I'm not a critic of their products. I like some of them.
"From the beginning of 1985 to the end of 1994, General Motors added approximately $33 billion in debt, which, equates to a per-share increase in debt of approximately $43.70. The company also issued 132 million additional shares of its common stock. General Motors' per-share book value also dropped $34.29 a share, from $45.99 in 1985 to $11.70 in 1994, as new-car-development costs sucked up retained earnings. What did all this do for increasing the shareholders' wealth? Nothing."
First, who's hot: from the AP-
TOKYO - Honda Motor Co. will build new plants in Japan, the United States and Canada to boost production amid soaring demand for its vehicles, the company's president said Wednesday.
Who's not: Yahoo finance
Robert Kiyosaki-Right now, the carmaker is struggling. "The reason GM is in trouble is because its cars aren't that good," commented a friend of mine. I replied: "GM's problems go deeper than its cars. GM's problems begin with how it is managed."
Personally, I like GM cars. My first new car was a 1969 Corvette. It cost $6,000. And although my monthly payments left me with little to live on, my love of the car made the pain of the monthly payments worth it. I wish I had it today. Since then I have owned GM SUVs and Chevy trucks. So I'm not a critic of their products. I like some of them.
"From the beginning of 1985 to the end of 1994, General Motors added approximately $33 billion in debt, which, equates to a per-share increase in debt of approximately $43.70. The company also issued 132 million additional shares of its common stock. General Motors' per-share book value also dropped $34.29 a share, from $45.99 in 1985 to $11.70 in 1994, as new-car-development costs sucked up retained earnings. What did all this do for increasing the shareholders' wealth? Nothing."
05-17-2006, 04:40 AM
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Not again
But GM is a shrinking company we'll call it that. I was reading an article and it said GM was a retirement home with an auto buisness in the back (I'd call it a retirement home and healthcare provider). GM has 3x as many retired workers as active workers. A lot of GM revinue goes to paying for it's workers benies to the tune of $5B in healthcare per year, not to mention the pensions etc.. Not to mention Job bank etc...
Bottom line if GM got rid of it's workers perks it'd be sitting pretty. I know that's not cool, but IMO the UAW is the root cause of GM/Fords problems as well as building cars people don't really want to buy (unless they're given mad incentives), When GM was making $10K profit on each large SUVs it could afford to give the UAW excessive pay and perks, That ship has sailed, unless GM suddenly starts building and selling for a profit cars like Accord/Civic/Odyssey etc.. it's going to continue to shrink b/c SUVs are going by-by and Toyota is going to start selling PU-trucks (for real),
I was reading where Caterpillar (CAT) kicked the UAW in the ASS and is now making money hand over fist. GM has to be at the brink of bankruptcy to kick the UAW's ass so it's not far from where it wants to be (IMO).
But GM is a shrinking company we'll call it that. I was reading an article and it said GM was a retirement home with an auto buisness in the back (I'd call it a retirement home and healthcare provider). GM has 3x as many retired workers as active workers. A lot of GM revinue goes to paying for it's workers benies to the tune of $5B in healthcare per year, not to mention the pensions etc.. Not to mention Job bank etc...
Bottom line if GM got rid of it's workers perks it'd be sitting pretty. I know that's not cool, but IMO the UAW is the root cause of GM/Fords problems as well as building cars people don't really want to buy (unless they're given mad incentives), When GM was making $10K profit on each large SUVs it could afford to give the UAW excessive pay and perks, That ship has sailed, unless GM suddenly starts building and selling for a profit cars like Accord/Civic/Odyssey etc.. it's going to continue to shrink b/c SUVs are going by-by and Toyota is going to start selling PU-trucks (for real),
I was reading where Caterpillar (CAT) kicked the UAW in the ASS and is now making money hand over fist. GM has to be at the brink of bankruptcy to kick the UAW's ass so it's not far from where it wants to be (IMO).
05-17-2006, 04:56 AM
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rai has it. GM is covering a lot of cost for a lot of people. Honda and Toyota effectively get to take advantage of that disadvantage. At first the cost differences were small and covered over by the large difference in quality. Now the quality difference is actually quite small but the cost difference is huge. Before you get too proud of Honda consider, if GM goes under we the tax payer will suffer for it.
05-17-2006, 07:00 AM
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GM has 1950 business to compete in effecientcy of global economy where wage are competed in global scale. Its tough but at the same time where is the vision, while Jap. brand produces effecient motor, big 3 continue with the romance of the muscle care era.
05-17-2006, 07:26 AM
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Originally Posted by NFRs2000NYC,May 17 2006, 06:31 AM
Not gonna happen. if GM goes under, Toyota will buy ALL of it's facilities, technologies, etc, and thats the end of it. They will also employ ALL of GMs employees with a new contract. Toyota wont let that opportunity pass.
Vast overcapacity is part of what got GM into this pickle in the first place. Why would you think Toyota would undertake that risk? Toyota didn't become one of the most successful companies in the world by making large-scale, dumbass decisions like "let's buy ALL of GM because it's on sale!" They may do some targeted buyouts, but there's no way Toyota will just indiscriminately buy everything GM owns.
And this of course assumes that GM does more than "go under," because for a company like GM, bankruptcy means a forced reorg and restructuring, not a cease-and-desist of all operations.
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05-17-2006, 08:25 AM
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I just read a TIME Magazine article that says GM may not be as bad off as earlier predicted. Their plan to raise cash by selling portions of the company will allow them to sail on for a few years until their retiree support costs drop significantly. Their full-size SUV sales are still doing well. And their stock price has recovered 40% recently.
The government has indicated there will not be a bailout.
And I can't imagine anyone, especially Toyota, buying out GM. Perhaps Ford would be interested in some of the specific factories, models, or patents?
Car Talk related, the article lists "4 Cars That Could Rescue GM": the Saturn Aura, Buick Lucerne, Chevy HRR, and Chevy Tahoe. It also names two models that are flops, the Pontiac G6 and Buick Terraza.
-Bob
The government has indicated there will not be a bailout.
And I can't imagine anyone, especially Toyota, buying out GM. Perhaps Ford would be interested in some of the specific factories, models, or patents?
Car Talk related, the article lists "4 Cars That Could Rescue GM": the Saturn Aura, Buick Lucerne, Chevy HRR, and Chevy Tahoe. It also names two models that are flops, the Pontiac G6 and Buick Terraza.
-Bob
05-17-2006, 08:33 AM
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Interesting reading here:
Financial info from the past 5 years:
GM doesn't look too healthy to me...
Buffettology : The Previously Unexplained Techniques That Have Made Warren Buffett the World's Most Famous Investor by Mary Buffett and David Clark.
In the book Buffettology, about Warren Buffett's approach to investing, a passage clearly illuminates GM's problems:
"This same phenomenon [a company growing only because money is being borrowed] can be seen in the financial records of the General Motors Company, which indicate that between the beginning of 1985 and the end of 1994 it earned in total, approximately $17.92 a share and paid out in dividends approximately $20.60 a share. During this same time period the company spent approximately $102.34 a share on capital improvements. The question that should be running through your mind is, if Generals Motors' earnings during this time period totaled $17.92 a share and it paid out as dividends $20.60, where did the extra $2.68 that it paid out in dividends and the $102.34 that it spent on capital improvements come from?"
"From the beginning of 1985 to the end of 1994, General Motors added approximately $33 billion in debt, which, equates to a per-share increase in debt of approximately $43.70. The company also issued 132 million additional shares of its common stock. General Motors' per-share book value also dropped $34.29 a share, from $45.99 in 1985 to $11.70 in 1994, as new-car-development costs sucked up retained earnings. What did all this do for increasing the shareholders' wealth? Nothing."
"In the beginning of 1985, General Motors stock traded at $40 a share. Ten years later, at the end of 1994, the stock traded at, you guessed it, $40 a share. So after ten years of business activity, $33 billion in additional debt, and 132 million new shares issued, the market price of the stock did nothing."
In the book Buffettology, about Warren Buffett's approach to investing, a passage clearly illuminates GM's problems:
"This same phenomenon [a company growing only because money is being borrowed] can be seen in the financial records of the General Motors Company, which indicate that between the beginning of 1985 and the end of 1994 it earned in total, approximately $17.92 a share and paid out in dividends approximately $20.60 a share. During this same time period the company spent approximately $102.34 a share on capital improvements. The question that should be running through your mind is, if Generals Motors' earnings during this time period totaled $17.92 a share and it paid out as dividends $20.60, where did the extra $2.68 that it paid out in dividends and the $102.34 that it spent on capital improvements come from?"
"From the beginning of 1985 to the end of 1994, General Motors added approximately $33 billion in debt, which, equates to a per-share increase in debt of approximately $43.70. The company also issued 132 million additional shares of its common stock. General Motors' per-share book value also dropped $34.29 a share, from $45.99 in 1985 to $11.70 in 1994, as new-car-development costs sucked up retained earnings. What did all this do for increasing the shareholders' wealth? Nothing."
"In the beginning of 1985, General Motors stock traded at $40 a share. Ten years later, at the end of 1994, the stock traded at, you guessed it, $40 a share. So after ten years of business activity, $33 billion in additional debt, and 132 million new shares issued, the market price of the stock did nothing."
GM
They have lost a total of $3.55 per share.
They paid a total of $10 per share in dividends.
Stockholders' equity has declined from $19.5B to $14.6B.
Debt has increased from $165B to $285B.
F
They have lost a total of $.51 per share.
They have paid a total of $2.05 per share in dividends.
Stockholders' equity has increased from $7.7B to $12.6B
Debt has decreased from $137B to $121B.
BRKA (just for fun)
They have earned a total of $18,916 per share ($29.1B in total earnings, after tax).
They have paid no dividends.
Stockholders' equity has increased from $57.9B to $91.5B.
Debt has increased from $12.5B to $14.4B.
They have lost a total of $3.55 per share.
They paid a total of $10 per share in dividends.
Stockholders' equity has declined from $19.5B to $14.6B.
Debt has increased from $165B to $285B.
F
They have lost a total of $.51 per share.
They have paid a total of $2.05 per share in dividends.
Stockholders' equity has increased from $7.7B to $12.6B
Debt has decreased from $137B to $121B.
BRKA (just for fun)
They have earned a total of $18,916 per share ($29.1B in total earnings, after tax).
They have paid no dividends.
Stockholders' equity has increased from $57.9B to $91.5B.
Debt has increased from $12.5B to $14.4B.