Ford and GM's Slow Slide to Oblivion Continues

Discussion in 'OT Driven' started by TriShield, Oct 5, 2005.

  1. TriShield

    TriShield Super Moderator® Super Moderator

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    Sales slowdown hits automakers

    October 4, 2005
    BY SARAH A. WEBSTER
    FREE PRESS BUSINESS WRITER

    Despite a summer sales rage caused by employee pricing promotions, General Motors Corp. and Ford Motor Co. on Monday reported a double-digit sales plummet in September that reversed their sales gains for the year.

    Consumers flocked to GM and Ford showrooms this summer to take advantage of GM's Employee Discount for Everyone program and Ford's Family Plan. Sales results surged for local automakers. Dealerships ran short of cars and trucks. The pictures of empty dealer parking lots seemed to foretell a revival for domestic automakers.

    In September, though, sales of GM vehicles fell 24.2% compared to the same month a year ago. Sales of Ford brands fell 19.5% during the same period.

    Those big declines offset the blockbuster gains the two automakers made over the summer with their employee pricing promotions
    , which ended Monday. Year to date, sales are now off 1.3% year to date at GM and 1.4% at Ford.

    Consequently, market share so far this year has declined to 26.8% at GM, down from 27.9% a year ago, and it fell to 18.9% at Ford, down from 19.7% a year ago.

    SUVs, especially the biggest models made popular by domestic automakers, were rejected by consumers, who opted for more fuel-efficient vehicles. Sales of SUVs declined 30.4% during the month, and they are off 7.9% for the year so far
    . Sales plummeted for the Ford Expedition, Chevrolet Suburban and Hummer H2.

    "Many of the superlatives that were used to talk about sales this past summer turned to expletives in September," George Pipas, the top sales analyst for Ford, said during a conference call with journalists.

    The real local success story heading into the fourth quarter seemed to be the Auburn Hills-based Chrysler Group. The local automaker mixed its Employee Pricing Plus program with hot new products such as the Jeep Commander SUV to keep ahead of the pack.

    Sales for the division of DaimlerChrysler AG were up 4.0% in September and 7.1% for the year, compared to the same period a year ago. Sales for all of DaimlerChrysler rose 3.7%.

    That was far better than the overall auto industry
    .

    Nationwide, U.S. consumers bought 1.3 million cars and trucks in September, a decline of 7.6% compared to the same month a year ago.

    Chrysler's strong performance helped offset a sales decline in the Mercedes-Benz division, resulting in a DaimlerChrysler sales increase of 6.4% through September. Market share for DaimlerChrysler is now 14.8% through September, up from 14.3% a year ago.

    Asian automakers also made gains despite the rougher month. Sales for Asian automakers, meanwhile, increased 7.8% for the first nine months of the year, capturing 36% of the U.S. market, up from 34.3% a year ago.

    Experts had expected industrywide auto sales to slow down this month.

    Employee pricing programs, they said, had pulled buyers into the market early and the promotion had been steadily losing steam since GM first implemented it in June.

    More unexpected factors, though, included storms in the Gulf Coast, which caused wide-scale destruction and volatility in gas prices, and declines in consumer confidence.

    "It's not a time when people are thinking of major investments," said Leo Jerome, president and owner of the Lansing-based Story Automotive Group, which owns a variety of domestic and import new vehicle franchises in Michigan.

    For now, gas prices are rising again, and industry experts said that consumers seemed to be generally shifting toward smaller vehicles, such as cars and crossovers, as a result.

    Crossover-utility vehicles, or CUVs as they are sometimes called, look like SUVs but are more fuel-efficient, ride more smoothly.

    Car sales were up 6.3%, while light-truck sales plunged 17.8%.

    Crossover sales, meanwhile, increased 19% during the month and are up 16.6% for the year, according an analysis by Autodata Corp. of Woodcliff Lake, N.J.

    The credit rating agency Standard & Poor's echoed those sentiments in a note on Monday: "We believe soaring gasoline prices after hurricanes Katrina and Rita are leading to an accelerating decline in demand for SUVs."

    Even though GM and Ford's results are now down year to date, they're still a bit better than they were before the summer sales craze started. For the first five months of the year, GM sales were down a sharper 6.7% and Ford's were off 5.7%.

    For now, it looks like automakers are returning to a traditional marketing strategy.

    GM said it would move to a Total Value Promise program, while the Chrysler Group will begin an Advantage program. Both efforts will sell consumers more on the attributes of the vehicles than the price.

    Ford, meanwhile, is expected to announce a True Blue Pricing program today that will offer consumers a mix of cash and low-interest rate deals.

    ------

    S&P says it's considering downgrades of GM and Ford

    Tuesday, October 4, 2005
    BY DEE-ANN DURBIN
    ASSOCIATED PRESS

    Standard & Poor's Ratings Services said Tuesday it is reviewing the credit ratings of General Motors Corp. and Ford Motor Co. and could downgrade them further into "junk" status as early as mid-January.

    S&P placed Ford and GM's ratings below investment grade earlier this year, a change that makes it more difficult for the two largest U.S. automakers to borrow money. GM's debt totaled $284 billion as of June 30, while Ford's debt stood at $158 billion, S&P said.

    Analyst Scott Sprinzen said S&P probably won't downgrade Ford more than one notch, but it could take more drastic action with GM.

    "We see Ford as the better of the two credits. The earnings and cash flow of Ford are holding up better than General Motors this year," Sprinzen said.

    Ford said it wouldn't comment on the review. GM said it is taking action to improve its position.

    "We continue to focus on North America and improving our business as quickly as possible," GM spokeswoman Gina Proia said.

    S&P will look at the effect of higher gas prices as well as incentive spending, analyst Robert Schulz said. The agency also will take into account any restructuring actions and the outcome of GM's continuing negotiations with the United Auto Workers to lower health care costs. Ford Chairman and CEO Bill Ford said the company could announce restructuring actions when it releases third-quarter earnings on Oct. 20.

    S&P will focus on North American operations. GM's North American operations lost $1.2 billion in the second quarter, while Ford lost $907 million.

    Auto supplier Delphi Corp. will be another factor, Schulz said. Delphi, GM's former parts division, has threatened to declare bankruptcy by mid-October if it doesn't reach an agreement with GM and the UAW to lower costs. Schulz said it's not clear how much impact a bankruptcy filing or restructuring would have on GM.

    S&P said high gas prices appear to be accelerating a move away from sport utility vehicles in the U.S. market. Sales of trucks and SUVs were down 18 percent industrywide in September, and GM and Ford were particularly hurt by the declines. GM's truck and SUV sales fell 30 percent while Ford's fell 28 percent, in part because they pulled ahead demand with heavily promoted discounts this summer.

    Sprinzen said GM's heavy emphasis on a new lineup of SUVs could be problematic, although the performance of new products won't be the only factor S&P considers.

    "We're very reluctant to hang our ratings on our own assessment of how products are going to do in the market," Sprinzen said. "We don't put a lot of stock in our own intuitions about that."

    GM shares fell 41 cents to $30.63 and Ford shares fell 4 cents to $9.85 in morning trading on the New York Stock Exchange.
     
  2. TriShield

    TriShield Super Moderator® Super Moderator

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    Meanwhile, Chrysler remains strong, even propping up hurting Mercedes-Benz.
     
  3. Mr. President

    Mr. President New Member

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    What's amazing is how much I don't care :dunno:
     
  4. BLoG

    BLoG Scented Meat

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    I was looking at the ford figures broken down.

    Their CAR sales are actually up 3% for the month
    The e-named SUVs were way down, but the F-150 was strong.
    Jag was horrible, but Land Rover was way up.

    I'm not worried one bit about Ford, with the new Fusion now out and getting great reviews.
     
  5. AndyB

    AndyB I love you baby Kaitlyn and Dad

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    Maybe if GM and Ford stop charging a premium price for thier medicore products they would make some money :dunno:

    Last time I was at the dealership they want $50k for a plain 1/2 ton suburban :wtf: $45k for a diesel pickup :ugh:
     
  6. AdvanTech

    AdvanTech OT Supporter

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    good read!
     
  7. BLoG

    BLoG Scented Meat

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    The Ford Fusion starts at 17,995 for a base model. It's going to sell huge :o
     
  8. hsmith

    hsmith OT Supporter

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    i don't care about jobless union employees, the money will go elsewhere in the economy. it will be put to far superior uses
     
  9. 6SpeedTA95

    6SpeedTA95 OT Supporter

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    because they dont build vehicles on par with the japs or europeans
     
  10. LowkeyG

    LowkeyG OT Supporter

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    bittersweet news
     
  11. GM and Ford had to know this was going to happen. I think GMs reasoning behind this was to get their new wave of vehichles out on the market and I think it worked but well see.
     
  12. 6SpeedTA95

    6SpeedTA95 OT Supporter

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    yeah but the unions are ridiculous...botht he companies and the unions have screwed themselves over...UAW FTL!!11
     
  13. Multinational corporations that love to outsource jobs?
     
  14. hsmith

    hsmith OT Supporter

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    Americans have been demanding different vehicles and the car companies have not been producing them. Ford and GM deserve to have their doors closed forever.

    Other car companies would prop up, it would probably be good for the economy becuase we would see someone aiming for all high efficency vehicles.
     
  15. ViperKiller

    ViperKiller AD USAF

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    GM first.
     
  16. hsmith

    hsmith OT Supporter

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    no
     
  17. Los

    Los Active Member

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    cars suck. I walk.
     
  18. 6SpeedTA95

    6SpeedTA95 OT Supporter

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    :rofl: riiiight...

    lots of these same companies are outsourcing jobs from india and china to the US. Oh yeah and so you know if the unions hadn't gotta fuckin' stupid and if the automakers hadn't caved to every demand in the good years we wouldn't be here.
     
  19. TriShield

    TriShield Super Moderator® Super Moderator

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    Honestly, I believe both Ford and GM are completely fucked and will eventually go bankrupt.
     
  20. There are studies showing that we have a net loss of 2 million due to outsourcing. But keep repeating that bullshit that they send jobs over here too, maybe even you will believe it after a while.
     
  21. 6SpeedTA95

    6SpeedTA95 OT Supporter

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    I dont see GM going bankrupt. I think they have 56 billion in cash.
     
  22. GM is nowhere close to going bankrupt
     
  23. hsmith

    hsmith OT Supporter

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    we have always been losing jobs to outsourcing. we have always been losing jobs to new machines. but guess what, it means people find other jobs and become productive.

    it is the way it has always worked. people have always had a fear of losing their job to someone cheaper or a machine. guess what, same thing happens, time marches forward and people get new jobs.

    Stop worrying.
     
  24. iceburgslim

    iceburgslim Guest

    The government will bail them out if it ever gets to that point. :greddy:
     
  25. SaintGRW

    SaintGRW OT Supporter

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    Come on GM, just outlast ford :x:
     

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