General Motors CEO - Rick Wagoner Resigns..

[Homeslice]

Originally Posted by goof2

Maybe that is why Ford wants nothing to do with the government bailout. While GM might have been doing as well on Escalades they are now essentially paying people to remove them from the lots.
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No matter how much of a rebate they give, I still bet they make money on them. Remember, all an Escalade is is a Chevy truck with an enclosed body and fancy trim. Same as a Navigator is just an F150. That's a hell of a cost efficiency. Now, most of their passenger cars I'm sure they're losing money on.

[101lifts2]

It costs GM about 15-18K to produce most of its vehicles...A 40K Cad. Escalade is around the 18k figure, so they could discount it 20 grand and still make coin.

The problem is selling Cobalts where they loose on every one.

[goof2]

Originally Posted by Homeslice

No matter how much of a rebate they give, I still bet they make money on them. Remember, all an Escalade is is a Chevy truck with an enclosed body and fancy trim. Same as a Navigator is just an F150. That's a hell of a cost efficiency. Now, most of their passenger cars I'm sure they're losing money on.

Originally Posted by 101lifts2

It costs GM about 15-18K to produce most of its vehicles...A 40K Cad. Escalade is around the 18k figure, so they could discount it 20 grand and still make coin.

The problem is selling Cobalts where they loose on every one.

The other problem is while Escalades, Silverados, Rams, etc. may theoretically be profitable, they have to be sold first. They could cost a dollar each to build but they don't have a positive impact on the company when they are sitting in lots by the tens of thousands not being sold.

Even if they are profitable though, it only strengthens my original point. The government doesn't want GM building cars that can apparently still be profitable. They want GM building cars that have historically lost money. GM certainly did plenty to bring this on themselves. Management placed the company in a position where they are dependent on government aid for their survival.

When Chrysler was given government aid in 1979 in the form of $1.5 billion in loan guarantees (over $4 billion today) the government didn't tell them what they should be building. Even without the now indispensable hand of government, Chrysler was able to repay the loans in 4 years. That apparently isn't the case as far as the current administration is concerned.

This brings me back to my original point. The government is trying to force these companies to build historically unprofitable cars, essentially guaranteeing the failure of these companies. The executives now have to work for stock, which will be worthless once the companies fail. Under these conditions how are GM and Chrysler supposed to attract any talent at all?

[pauldun170]

The problem is that we assume that in order for GM to survive they need to sell more cars and make a profit on each one.

Unfortunately this is not the 20+ years ago. The market is diverse and increased sales will not fix GM's problem. Even if GM could pull off a "hot" volume seller and increase sales they would still be in hot water.

They need to shrink.
They need an old fashion "regroup".

They have crappy obligations throughout from labor to vendors (vendors them selves have the same issue of crappy labor contracts and vendors).

They have an OBSCENE amount of redundancy in the portfolio.