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Setting themselves up to fail.

3K views 13 replies 13 participants last post by  iyaayas 
#1 ·
I had read how GM has been sort of creating their own little bubble of credit. Selling cars to people they shouldn't for the sake of selling cars. Just a shell game as yea on one hand they looked profitable since they were selling cars, it was the other side GMAC that was going to take a hit when all the subprime loans they made went south.

Well I guess everybody is doing it. The wife wanted to trade her van for a Honda. Well its the end of the year, they are offering better deals to move cars. We can pay the loan and its 100$ less than the van was. But I just couldn't believe that they asked for absolutely no proof of income. Her credit isn't even that great. 'How much do you make a month' was all they asked and wrote it down. We could have told them 10 grand, never asked for a pay stub or anything.

And before anybody says anything, her Honda has 65% US made parts and was assembled here. A quick look at your average GM shows most of their parts are made in Mexico. Pretty sad that everything has reversed, a 'foreign' brand is now mostly US made and domestic brands are made elsewhere.
 
#2 ·
GM is one of the most profitable auto makers in the world right now, and GMAC isn't even their subsidiary anymore. They work with the new GM Financial or Ally Bank (for leases). Honda's profits go back overseas to R&D departments and the corporate fat cats in Japan (yes, they have the same problem we have). GM profits get sent to the good ole USA where they do pay income taxes (in Q3 2012 they paid 357 million). And since they are the top selling maker in the US, their vehicles contribute most to sales tax in states.

If GM died, then the whole auto industry would have basically collapsed. GM collaborates with almost every other automaker (you know that all the 6 speeds in both GM and Ford cars are the same tranny, right?) and shares suppliers with the others companies as well. The second biggest auto maker in the world collapsing would have been devastating.

GM DOES have one of the worst CEO's in the history of the company right now though. Dan Akerson needs to be ousted by the board, he has no qualification to be running one of the most complex businesses in the world.

PS, the reason Honda has such great deals is because they are having trouble moving cars right now. Around the industry, they are well known as a company that has lost its direction. Those deals are cash on the hood. It's designed to clear out inventory that isn't moving at a brisk enough pace and isn't a good thing for the financials. Honda and Toyota have some of the highest incentives right now (along with the outgoing GM trucks which are being replaced next year). GM has the highest Average Transaction Price in many categories right now, so obviously people are buying their cars. They are in no trouble, neither is Ford (Even though Ford has a high debt load, they have one of the greatest CEO's ever)
 
#9 ·
You seem to have an bias option there. I worked for a tier 1 supplier for several years, visiting the assembly plants, and the difference between Detroit and Georgetown is overwhelming. A large number of GM's sub-assemblies are built in Canada and Mexico. And on a personal note, I first new car I got was a Monte Carlo that burned 1 quart of oil every 1000 miles, GM stated to me in writing this was within tolerance and would not open the engine unless the oil consummation was 1 quart every 500 or less miles... WTF..... later traded for Toyota, built here in USA. Was treated like VIP at service time. never an issue with it.
 
#4 ·
GM has a glut of cars right now they have to get rid of.
I just picked up a new Truck 2 weeks ago. Wasn't looking for one but I could not pass up the deal they gave me. I know the salesman personally and he told me they had 240,000 extra trucks on the lots that they had to get rid of before April when the 2014 redesign comes out. (Ugly in my opinion)

The deal was great for me. They started at 11,000 off the sticker. I went from a 2008 with 141,000 miles to a New 2013 for $20,415 Also went from standard 4x4 to Z71 and picked up the new 6 speed tranny and blue tooth. Even already had the bed liner and the step rails.
 
#5 ·
The GM lots around here are PACKED with cars and trucks. Honestly, I have never seen such high inventory. A couple dealers have expanded the size of the lots. A very noticeable difference from a couple years ago when their inventory was extremely low - to the point I thought some of them were closing up shop.

Unless they're selling a crap load of vehicles, I can't imagine all that inventory is a good thing.
 
#11 ·
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No, having that much excess inventory is definitely NOT a good thing. Those GM dealers have to pay GM Corporation on their floor plan, every month, that those vehicles sit on their lot, unsold.

This can be a huge ongoing expense. I can't imagine WHAT those dealers can be thinking, to want to carry that much inventory.
 
#6 ·
I just found out yesterday that I need a new transmission for my 2005 Avalanche. It has 125K miles on it. The dealership said they could get me a new one in for $3100. I'm trying to decide if I want to put the cash into it. I just put $1400 into it three weeks ago. I'm not too happy with GM right now. I have 2 choices: put the cash into the truck or see how much I can trade it in for, and get a newer truck. If they have that much inventory, I might look into replacing it. I don't have the cash, so I'd have to finance it, which I really don't want to do. The truck still runs, so I have some time to decide. I'm not looking forward to driving it up route 95 tomorrow morning and back on Friday night, though.
 
#8 ·
One might be having trouble moving inventory, but still would think they would at least want to know if you can actually make the payments. Selling cars to deadbeats hardly makes sense. It was honda credit who did the deal, so they are are still on the hook if I lied about my income.

GM is most profitable because they were able to dump all their debt not long ago. Seems a pretty poor business model to count on dumping your debt every so often to stay in business. You would think that people would really think long and hard about loaning them a dime. From what I have read nothing has changed at GM, so why would you think they plan to pay you back.

I worked as a tech for 7 years, on just about every car line there is. European, US, and Japanese. With that knowledge, anybody asks me what car to buy, Honda or Toyota. Sorry just the way things are. Saw way to many 'exploders' with cracked heads, blown trans, etc, etc, etc. Chevy had horrible trans problems for a long time. In the 90s it was almost common to replace them in less than 40k miles. Dodge the trans dropped out of their mini vans every 70k almost as if designed to. Or chugging away from lights a trail of blue smoke in their wake.

I met some people at a friends house, driving a neon. I asked if it leaked oil everywhere from the head gasket, of course, they all did usually within 60k. When I worked on Hondas we really didn't fix them as much as maintain them. As long as you kept the oil changed and did the timing belt on schedule they would run forever. They didn't leak oil everywhere. And well didn't really seem to have trans problems. I worked on toyotas that had 250k miles on them, still ran like a top. A chevy cavalier, that just aint gonna happen.

An 05 truck with 125k and needs a trans, question what will be next? I have seen people pour money into cars, on thing after another. I do the math and which is more expensive fixing the car, not to mention shop time, or a payment.
 
#10 ·
A payment is almost always cheaper, but you might want to compare apples to apples on this one. Total cost of repairs likely over the next 1-5 years vs. $20-40K on a new truck. Probably repairing is cheaper.

An 05 truck with 125k and needs a trans, question what will be next? I have seen people pour money into cars, on thing after another. I do the math and which is more expensive fixing the car, not to mention shop time, or a payment.
 
#12 ·
Mixed feelings on GM products and Ford too for that matter. Had a Ford Bronco years ago and the engine blew after 4 days. Now have a Pontiac Grand Prix. A 2006 model with 193K. Have put about 3 thousand into it over the last 4 months. Still needs another grand. I too am wondering if I want to lay down anymore money on it. If I do buy another car it will likely be a Honda, Toyota or Hyundai.
 
#14 ·
Im not buying anything from a company that basically robbed me. Its getting harder and harder to find products that are quality, made by a company that isn't robbing you.

GM is still in business only through tax payer money handed over by puppets in washington. They make a crappy product ( IMO ) they overpay their executives to the point of bankrupting their company, and thanks to nafta most gm's aren't made here anymore.

I have a 95 suburban I use for plowing. Won't buy a new GM. Won't.
 
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