Big Three survival bailout requests rise to $34B

[Terri]

By JULIE HIRSCHFELD DAVIS and TOM KRISHER
Associated Press
December 3, 2008

WASHINGTON (AP) -- Humbled and fighting for survival, Detroit's once-mighty automakers appealed to Congress with a retooled case for a bailout as large as $34 billion Tuesday, pledging to slash workers, car lines and executive pay in return for a federal lifeline. GM and Chrysler said they needed an immediate cash infusion to last 'til New Year's, and warned they could drag the entire industry down if they fail.

Chrysler LLC said it needed $7 billion by year's end, and General Motors Corp. asked for a quick $4 billion as just the first installment of as much as $18 billion to stay afloat and weather even worse economic storms. Ford Motor Co. had a more upbeat report, but the other two members of the U.S. Big Three painted the direst portraits to date -- including the prospects of shuttered factories and massive job losses -- of what could happen if Congress doesn't quickly step in.

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[elmerck1]

My heart bleeds for all three, but it is not green blood. Poor management and outlandish salaries and bonuses are the reason they are going down the tube, plus their quality does not match up to the american made so called foreign cars. Their warranties are not as good as the other mfgrs, and they don't stand behind their dealers like they should. I called the Chevyusa number one day because the car was still in warranty, and the battery died. There was a dealer within a mile of where I WAS, BUT THEY SENT A WRECKER FROM MOBILE ,30 MILES AWAY JUST TO GIVE ME A JUMP START. It is just this kind of business they do., and it is not only GM.Ford and Daimler-Chrysler do the same thing.I don't understand why Daimler-Chrysler is asking the american taxpayer for money.They should be asking Germany for a loan.

[Conservatism101]

Talk about over-done government involvement.

The Big Three should have actually made nice cars that people wanted 10 years ago, instead of postponing making greener vehicles and more modern vehicles and then whining to the feds when sales were lost rapidly to Toyota, Nissan, and other foreign car makers.

The Big Three have been part of the free market for way too long to stupidly fall victim to foreign market invasion. It is their own faults that they are all three in severe financial problems.

[autoxr1]

I'm getting tired of reading these lies and myths about the domestic automakers. Let's look at the FACTS for a change.

Myth #1: The Big Three don't make cars people want to buy.
- GM sold over 9 million new cars worldwide last year, the same as Toyota.
- The Big 3 have roughly half the U.S. market, while the other 15 automakers combined that sell in this market had the other half.
- Evidently a LOT of people want the cars and trucks that the Big 3 manufacture!

Myth #2: Quality of the Big 3's cars is lousy.
- Consumer Reports this year said that Ford quality across the board now equals that of Toyota and Honda.
- The J.D. Power surveys for the last few years have confirmed this. Their 2008 New Vehicle Quality survey has Mercury ahead of Honda, and Ford, Cadillac, Chevrolet, Pontiac, Lincoln, and Buick all better than the industry average. The WORST quality brands include Mini, Land Rover, Suzuki, Mitsubishi, Subaru, and Volkswagen.
- J.D. Power's long-term reliability survey for 3-year old cars also shows the Big 3 brands do well. Mercury and Cadillac are #2 & 3 (after Lexus), and both lead Toyota. Those two plus Buick, Lincoln, and Ford are all ahead of the industry average.
- The Chevy Mailbu and Ford Fusion rank higher for quality then the Camry or Accord, per JDP.

Myth #3: The Big 3 cars have poor fuel economy.
- GM now offers more Hybrids than Toyota (or anyone else).
- GM has more cars that exceed 30 mpg Highway than any other automaker.
- The new Ford Fusion gets 3 mpg better than the Camry and 2 mpg better than the Accord on the highway.
- The new Fusion Hybrid gets 5 mpg better than the Camry Hybrid.
- Toyota now makes more sizes of SUV's than Ford, and their fuel economy is no better than the same-size entries from Ford, GM, and Chrysler.
- Ford's new F-150 gets better mileage than any other full-size pick-up truck, including the Toyota Tundra.

The present market downturn has hit ALL automakers, and Toyota, Honda, and Nissan all had BIGGER sales declines in November than Ford! The Big 3 were well on their way to restructuring before they got hit by the Credit Crisis. They have closed many unprofitable plants, and shed 40 - 50% of their employees over the last five years. They are retooling other plants from trucks/SUV's to new small cars, in order to continue to build vehicles that people want to buy.

The Big Three deserve to get the bridge loans they are now requesting, TO BE REPAID WITH INTEREST and supported by stock warrants. The taxpayers will make money once again, just as they did on the Chrysler loans in the 1980's. This is far different than the Feds throwing $10's or even $100's of billions of taxpayer dollars at banks with no oversight and no expectation of repayment!

[Mr. D.]

The Big Three have been part of the free market for way too long to stupidly fall victim to foreign market invasion. It is their own faults that they are all three in severe financial problems.

Except that they haven't had a "free market".

To begin with, The Wager Act of 1935 effectively created a labor monopoly. Monopolies are otherwise considered an unfair restraint of trade. Add anti-pollution requiements, CAFE standards and all the other government mandates. Then include the "green" car you mentioned (that is only required becaue the government refuses to permit us to develope our energy resources) and it's pretty clear that the market is anything but "free."

It's certainly not going to be a free market with politicians completely in charge of the U.S. auto manufacturers.

If anything is to be done, a structured bankruptcy makes the most sense to me.

[autoxr1]

You're right, Mr. D - - the Big Three have NOT had a free market for decades. In addition to the issues you noted, foreign automakers are allowed to sell unlimited numbers of imports in the U.S. while their home markets are closed (or highly taxed) for Ford, GM, and Chrysler to export vehicles there.

These same foreign automakers benefit greatly from government-provided health care that saves them over $1,000 per vehicle vs. the Big Three's cost structure. Their governments also subsidize their R&D, and have other policies to keep their auto industries strong. The U.S. government seems to have no comprehension of the value of a strong manufacturing base! I guess we're all just supposed to work at Starbucks!

As if that is not enough of an advantage, U.S. states such as Alabama, Tennesee, and Ohio have given $Billions in subsidies, tax abatements, free land, etc. to foreign automakers to build plants in their states. This provides them with another huge cost advantage over the Big 3. That's why Sen. Shelby is such a hypocrite for saying the Big 3 deserve to fail. His state of Alabama spent over $300 million of its taxpayers' money, or $175,000 per worker, to lure a Mercedes plant there. They have done the same with Hyundai, Toyota, and Honda.

Is it any wonder that the Big 3 have a tough time competing with these highly subsidized foreign automakers?

[ds77]

still dont understand the big 3 business plan as it still evolves around an industry that is contracting; yet they are trying to show growth in future to show profitability; in other words, if the market does not grow; then losses continue; and i think market will not grow.

[Caliphant]

I don't understand why Daimler-Chrysler is asking the american taxpayer for money

cause Daimler AG sold Chrysler in Aug. 07. It´s a mere investment of one of those hedge fonds companies now - Cerberus Capital Management.

Automakers got their bailouts in the late 70s and throughout the 80s and they got their import quotas that allowed them to outpace competition. I don´t feel for them - they took the fed money and quotas to build oversized cars nobody wants to buy now. I love their sorry excuse for that - "We were merely providing what consumers asked us for."

Great, but where are your provisions for the time after SUVs and minivans?? GM is not building compact cars - its subsidies and Korea and Europe are! Toyota made serious financial commitments in the 90s to invest in the sustainability of their business (and they figured out how to make a profit even on micro cars).

GM, Chrysler and Ford would never do this - if oil goes back to 20/b they´ll just return to building their Explores, Navigators whatever, spread their profits around and wait for the next bailout.