Ford More Likely to Default than GM

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Just as an addition, it's really the management that sucked for american brands. Their managements were the ones that let the unrefined designs roll off to the dealerships. And I think Gilitar, you meant american cars. American made toyotas are great, and fords made in mexico still suck. By the way, it's not only the cars that are garbage, the commercial are what really kills them for me. "The chevy xxxx has more xxxx than the Toyota xxxx" as if calling a truck with automatic on/off switch hybird isn't bad enough.... Maybe if they stop doing those commercials people like me will consider walking into their dealerships.
Originally posted by andyd: So what kind of warm fuzzy feeling does this engender when the new car is down for warranty work, and the owner is being chiselled by a Dlr's service manager?????? Tell me Mr Bean Counter, what is the effect of that scenario on future sales and the long term health of your once great carco? A pox on your kind. Another thought is what is the actual gain of saving 5$ cost per unit, if money has to be set aside to repair the shoddy part down the road???????? [/QB]
Don't blame me for the fact that management made those decisions. All I do is ensure that companies comply with authoritative guidance from the SEC and, post-Enron, the PCAOB with respect to their financial accounting and reporting. Management makes the decisions to cut costs by skimping on materials, or to invest in long-term solutions by implementing quality control (like GE's Six Sigma processes, which are now widely used throughout various manufacturing entities.) Management is put in place by the Board of Directors, and the Board is authorized by the shareholders. No, not you with you 1,000 shares on GM in your portfolio, but institutional investors like a major bank with millions of shares on their books. Management will always do what "The Street" wants to hear, period. It doesn't matter if it's GM or MCI Worldcom, all of those executives who make the big decisions have their respective compensation packagews tied directly to earnings. Period. Toyota can make a better product than GM because their costs are lower. Their workforce is younger, and thus their benefits packages don't have the weight is the levels of seniority that GM has within its workforce. In 20 years, the situation will change. It may even reverse for both companies. Don't get petty with me because you can't count the beans yourself. Maybe you should try to pick up an annual report for any Fortune 500 company and see if you can make an accurate prediction about the true nature of that entity. There are analysts on Wall Street who make and break entire companies who will never know as much about the company as an independant auditor. Some make good guesses, and some have a knack for reading between the lines to make even better guesses (like Warren Buffet.) As far as your question about saving $5 today versus creating a reserve to deal with warranty issues in the future, have you ever heard of the time-value of money? Net present value calculations? A bird in the hand is worth two in the bush? You're ticked-off about the quality (or perceived lack thereof) being sold by a car company, and the real answer to your questions is in the financial management of that company, not the product that they make. That's the way that Wall Street wants it, so for better or for worse, that's the way it is. Don't buy Ford, or GM, or whatever you don't want to buy because of the way you feel about their product. But don't get mad because they've already accounted for that.
I dunno if I am gettin o/t, but the Big Two American car cos remind me of the 'ol Soviet Union. They have everything they need to do the job. Plenty of capital, eager workers, design capabilities....but just can't get the product right because of the structure of the "System".
Gil, yer just goat-gittin here, aren't you?
American made cars are garbage. The american laborers are not to blame. It's the companies and the unions that are to blame. It's time for Ford, GM and the unions to go. When their value goes low enough Toyota or VW will buy them.
I've been no cheer leader for American cars here, but in large sedans, (Lincoln, Crown Vics, Caddies), and trucks (The F150/250/350, especially, not sure about Chevy's offerings), these are still the class of the world for the money. You fun-lovin rabble-rousers! [LOL!] That blanket you threw is complete Poo... Savings won't help GM sell more cars The number of workers accepting General Motors' buyout offer far exceeded expectations. Maybe those employees realize the automaker's management doesn't have what it takes to regain market share. If there is one thing that Wall Street loves, it is a company that slashes costs and does so ahead of schedule. So, it wasn't a big surprise to see General Motors' (GM, news, msgs) stock rise on Monday's announcement that nearly 35,000 workers accepted the company's buyout offer... One bright spot in a huge cloud of problems I can appreciate the fact that the company is reducing its cost structure and doing so at an accelerated pace. That's definitely a short-term positive. But it doesn't come close to countering GM's big negatives, the worst of which are slumping sales and declining market share. Then there's the bloated product mix, copycat -- not to mention generally dull -- styling, lack of vision, a lousy credit rating, deteriorating financials and an overwhelmed and overmatched management team... Instead of applauding GM for reaching its target of job cuts ahead of schedule, analysts should be asking why so many employees were tripping over themselves to get while the getting was good. As for investors, I suggest they follow the path of the employees and get out while the stock is making new highs. The day of reckoning may have been delayed, but unfortunately it can't be avoided... I'm not sure they managed to "account" for all these issues... [Wink]
Originally posted by crw: Wow, I always thought that the old "bean-counter" argument was mostly anecdotal... something that people think is happening but in reality the whole thing is somewhat blurred. But here we have a real live breathing accountant telling us that's exactly his criteria! I realize he's just following orders, but in this day I can't believe the shortsightedness of this!!! Like someone said, they're doing a good job of accounting themselves into bankruptcy.
I haven't done a good job of explaining this, so I'll try again. It isn't my job to tell management what to do - I just apply rules to the numbers that they report, and make sure that they are reporting things accurately. The numbers themsleves tell management what to do. If management wants to show a profit or a loss in a given area, they allocate or rescind funding, shift resources, make capital investments or close down facilities to have the desired effect. My job is to make sure that the effect being reported in their regulatory filings is truly what's happening. Those numbers in their 10-Q and 10-K reports are the grist in Wall Street's mill. It is the data that analysts use to give credit ratings, make buy or sell recommendations, and drives trading amongst investors (knowledgeable ones, and otherwise.) The Street cares about one thing - growth. Growth is reflected by earnings. Earnings are predicted, and trading volumes on the Street between the time the predictions are made and the earnings are released are based on those predictions. When a company meets or exceeds the predicted earnings, then things are OK. When a company misses its earnings forecast, then things get nasty. The stock price takes a hit, as institutional investors sell their holdings. Management's compensation is invariably tied to earnings and the corresponding stock price, so the CEO, COO, and CFO all take home smaller bonus packages for that period. Therefore, management will do whatever it takes to hit their projected earnings. The founder of MCI, Bernie Ebbers, would hold meetings with his senior accounting and financial managers to beat them over the head about earnings. As far as he was concerned, the only thing that counted for anything at MCI was meeting Wall Street's expectations FOR FINANCIAL PERFORMANCE. If that meant selling good services and a quality product, fine. If that meant spending money for corporate retreats, team-building efforts, and new-age motivational seminars, that was fine too. If that meant committing fraud, releasing false financial data, and cheating investors with fake information, he didn't want to know about it, but that's what he wanted them to do. Unfortunately for Bernie, he chose the latter. This former Sunday school teacher, who created MCI from a diagram that he drew on a napkin ion an Atlanta diner one evening several decades ago, is serving several decades in prison. For fraud. All because those earnings had to be at a certain level to justify his bonuses. If you think for a second that GM won't sell a piece of garbage to you in the interests of keeping earnings higher than they would be if the car were better quality, then you're naive. If it's cheaper to maintain a reserve for warranty purposes rather than implement a better quality intake manifold gasket, you can forget about ever seeing that gasket get implemented. That is, unless they are required to do so through regulation, or someone makes the financial case to the Board that improved quality is critical to future projected earnings, so an effort to emphasize quality must move beyond the marketing pitch and really be implemented in the production process. This has happened at GM (despite what everyone thinks) but it has taken a long time, and is still being implemented. I don't mean to insult anyone (although several of you have decided to take some fairly simpleminded shots at me, apparently) but that is the way that public companies work.
Originally posted by Drew99GT: A timing belt costs less than an intake gasket!!! [Razz]
How many intake gaskets have ever failed on a 4-cylinder Cavalier? [Roll Eyes] A broken timing belt on a typical import results in massive destruction to the valves, and possibly the head and pistons. Any Mitsubishi product with its hydraulic timimg belt tensioners comes to mind. Most domestic belt-driven OHC engines are "free spin" design, so little to no damage occurs if it does chuck a belt.
Vortec, I think your explanation is clear, but I still do not think it is wise to invest in a company that shows increased earnings in combination with decreased revenue and market share.
Originally posted by Jimbo: Vortec, I think your explanation is clear, but I still do not think it is wise to invest in a company that shows increased earnings in combination with decreased revenue and market share.
I agree.
Oh well, I guess I'll add my inflammatory statement. Support the country you live in or live in the country you support. FWIW I have had very good service out of my domestic cars. Even the best of imports couldn't have done better considering the high initial cost and cost of parts. [Cheers!]
The biggest "vehicle" I saw on the road when I was in europe last year was a X5. I was there for three weeks, 4 countries. In the US? let's see, the biggest I saw TODAY was a F250. Enough to park a few Smarts on there. But yeah, Americans arn't the best drivers. But then, I am from Asia and THAT, is what you call asses behind wheels.
Gilitar....the unions are not the reason for what's happening to chevy and ford. There is without a dobt different quality expectations from foreign to american cars. The percieved lack of quality is what hurts american cars. The foreign cars are made better than american cars. If you went with a piece by piece comparison with foreign and american cars there is a noticable difference. I will buy american and foreign but i do believe there is a noticable difference in quality.
A friend of mine has a 2005 Pontiac Grand Prix. It was caught in a flash flood, so he has a rental. A 2005 Kia Optima. My impressions: (1)The AM/FM/CD radio looks like it came from a Korean flea market. The fader/balance/volume control-in-one knob is a throwback to 1992. I found the user's manual for it and I was joking that there would be installation instructions in it. Then I found the connection diagram in the user's manual. I guess this could be useful in the event that the radio outlasts the rest of the car and you want to use it elsewhere, though I'm not sure it would be worth the effort... (2)It really has a 2.4L I4? (I'm basing that comment on how slow it is, not how fast it is. I would expect an engine that size to offer just a little more motivation than this one is providing). (3)The interior certainly didn't strike me as luxurious, but I couldn't get over the cheap-*** radio. He said the brakes stink, it doesn't feel like it's very stable when cornering at higher speeds (as when driving on on-ramps), and the steering gives you an upper-body workout.
Originally posted by cousincletus: Oh well, I guess I'll add my inflammatory statement. Support the country you live in or live in the country you support. FWIW I have had very good service out of my domestic cars. Even the best of imports couldn't have done better considering the high initial cost and cost of parts. [Cheers!]
Absolute hogwash. Support people that do things right. Supporting second-class operations and product helps NO Americans. People that do prolong the agony and keep them from improving. Period.
^^ Maybe in your little theoretical fantasy world. You have already made up in your mind that American products are junk and no matter what quality awards they win you will still have your biased opinion. I don't see a quality difference big enough to justify paying a much higher price and higher parts costs. You're just dreaming if you actually believe we can keep running up a huge trade deficit without consequence.
If your beloved US-automakers going into the toilet is "all good" then the root of the problem has been revealed. Best of luck.
I guess now that it seems they <i>BOTH</i> will go down in flames, all of you domestic bashers/haters will have cause to celebrate twice as hard. Will you celebrate when the whole country implodes due to the trade deficit? Or will you just willingly convert to Taoism and bow to your new Nippon masters?
^^^No point in even trying to make sense with the likes of ScottB. He'll realize when he loses his job to the foreign competition and then he can pop his zits in the unemployment line.
You little guys just don't get it, do you? I haven't seen ONE person who is gleeful or otherwise happy about this. But you juveniles continue to read that into the posts. It's reality. It's happening. You guys just don't want to acknowledge it. I don't buy their products for a number of reasons: 1) Let down in the past 2) I don't know if they'll be here to support the vehicles I buy 3) I don't like but a very few of what they do offer, and I couldn't find any when I was ready to buy. Now you little guys can continue to look at the signs of reality, and make ME out to be the reasons for their failures, but I'm just not quite prepared to take on that responsibility. Carry on.
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