Bailing out the Detroit automakers

['BusNative]

So... isn't this program working? Not just for Ford, but in general...

Ford to Post U.S. Sales Gain on 'Clunkers' Incentives (Update2) - Bloomberg.com

Ford to Post U.S. Sales Gain on 'Clunkers' Incentives (Update2)
By Mike Ramsey and Craig Trudell


Aug. 3 (Bloomberg) -- Ford Motor Co. will post its first monthly U.S. sales increase since 2007 as the government?s ?cash-for-clunkers? incentives boosted industrywide deliveries of new vehicles to the highest levels of this year.

Details will be released today when Ford joins automakers in announcing July deliveries, said Ken Czubay, the company?s U.S. sales and marketing chief. He disclosed the year-over-year improvement in an interview yesterday without giving specifics.

Industry sales probably ran at an annual rate of more than 10 million autos, 2009?s best showing, after the trade-in credits stoked consumers? interest, said George Pipas, Ford?s sales analyst. Such a result may indicate a bottom in the market?s worst slump since 1976...

[xcrunner]

Originally Posted by jimotis4heisman

certainly ill entertain your debate of diminishing returns has some validity. however i dismiss it. was the goal to increase fuel econ, if so all vehicles should be vaild if they meet the requirements. a person driving a camry that got say 22 mpg should be just as incentivized to increase their mileage as the person who drives a pick up that gets 12mpg...

ill also note their were some good deals, a friend of mine traded in his early 90s "farm truck" got 4500 plus dealer matched 4500 plus got a 1500 rebate for a total of 10500, then bought an avenger...

You want to increase fuel econ but not at a huge loss of other things.. If you're switching from 12mpg to 20, and wasting a truck in the meantime (by trading in a truck you would have used for 5 more years), that's still a good deal because 12 to 20 is such a huge difference. If you upgrade from 22 to 32, the waste of the car is a bigger deal than the improved fuel econ.

Now I will agree with you that they should have let you switch from say 22 to 52. The most logical thing to do is the proper curve; e.g. if you have 18 mpg you need to improve by 2 mpg, if you have 19 you need to improve by 2.1 or whatever, etc etc so it all makes sense mathematically. I assume they just kept it simple for simplicity's sake.

[jimotis4heisman]

Originally Posted by 'BusNative

So... isn't this program working? Not just for Ford, but in general...

Ford to Post U.S. Sales Gain on 'Clunkers' Incentives (Update2) - Bloomberg.com

gm -19.4%
chrysler -9.4%
toyota -11%
ford +2.4%


end of the story even with the new numbers the projection is about 11.24m cars vs the "norm" of 16m

Originally Posted by xcrunner

You want to increase fuel econ but not at a huge loss of other things.. If you're switching from 12mpg to 20, and wasting a truck in the meantime (by trading in a truck you would have used for 5 more years), that's still a good deal because 12 to 20 is such a huge difference. If you upgrade from 22 to 32, the waste of the car is a bigger deal than the improved fuel econ.

Now I will agree with you that they should have let you switch from say 22 to 52. The most logical thing to do is the proper curve; e.g. if you have 18 mpg you need to improve by 2 mpg, if you have 19 you need to improve by 2.1 or whatever, etc etc so it all makes sense mathematically. I assume they just kept it simple for simplicity's sake.

that was generally my point... ie camry for prius (or whatever need be) should have been "acceptable"

the average trade in so far is "estimated" at 15.8mpg
average sale "estimated" 25.4mpg
(keep in mind that the midweek revisions last week, that even adjusted mpgs for cars that were 20+ years old)
47% of cash for clunker cars have been ford, gm or chrysler
#1 car so far is ford focus
toyotas leaders are corolla and prius hybrid (for 40% of their sales combined)

Clunker Plan Gives Car Sales a Lift - WSJ.com

['BusNative]

Originally Posted by jimotis4heisman

gm -19.4%
chrysler -9.4%
toyota -11%
ford +2.4%

which time periods?

[jimotis4heisman]

Originally Posted by 'BusNative

which time periods?

july, hyundai had an ass kicking (i cant find the number right now, ill edit when i pull it up)
gm -19.4%
chrysler -9.4%
toyota -11%
ford +2.4%
hyundai +12%
kia(part of hyundai but seperate numbers kept) +4.7%
nissan -25%
honda -17%
subaru +34%
mazada -15%
mitisubushi -50%
suzuki -57%

korean/japanese market share for the month was 48.7%

total sales for the month-997,824 down (-12%)

['BusNative]

Originally Posted by jimotis4heisman

july, hyundai had an ass kicking (i cant find the number right now, ill edit when i pull it up)
gm -19.4%
chrysler -9.4%
toyota -11%
ford +2.4%
hyundai +12%
kia(part of hyundai but seperate numbers kept) +4.7%
nissan -25%
honda -17%
subaru +34%
mazada -15%
mitisubushi -50%
suzuki -57%

korean/japanese market share for the month was 48.7%

total sales for the month-997,824 down (-12%)

Thanks for the numbers...

From above:

Industry sales probably ran at an annual rate of more than 10 million autos, 2009?s best showing, after the trade-in credits stoked consumers? interest, said George Pipas, Ford?s sales analyst. Such a result may indicate a bottom in the market?s worst slump since 1976...

what about a bottoming?

[muffler dragon]

Originally Posted by jimotis4heisman

hyundai +12%
korean/japanese market share for the month was 48.7%

Last four cars I've purchased have been Hyundais. Never felt wrong about a single one (Sonata then Santa Fe (old style) now Elantra and Accent).

[Bucky Katt]

GM is current with their invoices now. Thanks, America!

[jimotis4heisman]

Originally Posted by 'BusNative

Thanks for the numbers...

From above:



what about a bottoming?

is it a "bottom" or is this just a shot that delays it? certainly has pushed off some of the pent up demand, however in a country where the status quo has historically been a market of 16m with this effort we are talking production of 11.5m if we take the rosy estimate. its a cyclical market, whoever survives it will be in for a boon once the cycle flips...

in other news, another one of the obama motors investments appears to be doing well...
The Columbus Dispatch - News

GMAC Inc., said Tuesday it posted a wider second-quarter loss of $3.9 billion as it shifted from being primarily an auto and mortgage loan company to an online, retail bank. In the year-ago period, the company posted a loss of $2.48 billion.
Revenue during the quarter fell 28 percent to $1.27 billion from $1.76 billion.
The bulk of the latest quarterly loss stems from a $1.6 billion charge related to company's mortgage business. GMAC also incurred a $1.2 billion tax charge on its conversion from a partnership, or LLC, to a privately held corporation. The company remains a preferred lender to General Motors Co.
...
GM's bankruptcy protection filing did not have a significant affect on GMAC's credit losses which still rose to 2.2 percent, compared with 1.4 percent a year ago, on general economic weakness in North America and Europe.
In May, the Treasury Department announced a new $7.5 billion injection for GMAC - still short of the $11.5 billion the government's "stress test" last month showed the company needs to stay afloat if the economy worsens. Of the injection, $4 billion was earmarked for new loans to Chrysler dealers and customers. The remaining $3.5 billion was to go toward boosting GMAC's capital base. The Treasury now has a 35 percent stake in GMAC.
Hull said GMAC is in contact with government regulators regarding the funds it needs to raise to meet the stress test requirements.
In addition to $7.5 billion injection, the Federal Deposit Insurance Corp. took the rare step of allowing the junk-rated company to gain access to its debt guarantee program. GMAC will be allowed to issue as much as $7.4 billion in FDIC-backed debt. The FDIC guarantees the debt that GMAC would issue in case the company defaults on payment.
The Federal Reserve also waived rules to give GMAC's new bank, called Ally Bank, more leeway to make loans to GM customers.
Ally Bank had assets of $42.5 billion at the end of the quarter, up from $36.4 billion at the end of the first quarter, the only comparable quarter. Ally received $25.4 billion in deposits in the quarter, including $14.5 billion in retail deposits as the company heavily marketed its new bank status.
...

[jimotis4heisman]

Originally Posted by muffler dragon

Last four cars I've purchased have been Hyundais. Never felt wrong about a single one (Sonata then Santa Fe (old style) now Elantra and Accent).

likely manu in the us.

['BusNative]

Originally Posted by jimotis4heisman

is it a "bottom" or is this just a shot that delays it? certainly has pushed off some of the pent up demand, however in a country where the status quo has historically been a market of 16m with this effort we are talking production of 11.5m if we take the rosy estimate. its a cyclical market, whoever survives it will be in for a boon once the cycle flips...

Trade-In Program Tunes Up Economic Engine - WSJ.com

AUGUST 4, 2009
Trade-In Program Tunes Up Economic Engine

By JUSTIN LAHART

Of the nearly $800 billion of stimulus funds, the $1 billion "Cash for Clunkers" program may offer the most bang for the buck in terms of jump-starting the economy.

The program comes as auto dealers' inventories are running lower, after the bankruptcy-related shutdowns at General Motors Co. and Chrysler LLC.

Car companies may need to raise production as a result, and to do that, they will have to boost their own depleted stockpiles of raw materials and parts.

The prospect has some economists scrambling to raise their forecasts for growth in the second half of the year.

"A billion dollars for 'cash for clunkers' looks dramatically more efficient, dollar for dollar, than anything else the Congress has passed yet," Credit Suisse economist Neal Soss wrote in a note last week. The program played a big role in his upward revision of his projection for gross domestic product. Mr. Soss now expects GDP to grow at a 2% rate in the third quarter, up from his previous 1.3%...

in other news, another one of the obama motors investments appears to be doing well...

The Columbus Dispatch - News

GMAC is a lending company, not an auto company. Not sure why continued losses - and a y-o-y increase is surprising or remarkably newsworthy considering they issue consumer loans in (what has been...?) a down economy.

[jimotis4heisman]

Originally Posted by 'BusNative

Trade-In Program Tunes Up Economic Engine - WSJ.com




GMAC is a lending company, not an auto company. Not sure why continued losses - and a y-o-y increase is surprising or remarkably newsworthy considering they issue consumer loans in (what has been...?) a down economy.

gmac provides financing for 75% of all gm dealers. it is the preferred lender for gm and chrysler. its the largest lender of auto loans. not hard to pull a few strings together...

['BusNative]

Originally Posted by jimotis4heisman

gmac provides financing for 75% of all gm dealers. it is the preferred lender for gm and chrysler. its the largest lender of auto loans. not hard to pull a few strings together...

I didn't say they weren't related, but, again, they are consumer loan underwriters. It's a correlated, yet wholly different business. Not hard to see that either.

[xcrunner]

Originally Posted by jimotis4heisman

that was generally my point... ie camry for prius (or whatever need be) should have been "acceptable"
Clunker Plan Gives Car Sales a Lift - WSJ.com

Oh well in that case you're right... but to get any kind of substantial change it would have had to been a pretty significant jump, and I doubt they expected many people at all to make the change from 20 mpg to 50 mpg. And then all that does is complicate people.. People go in with a 20mpg car and think they just have to upgrade to 22, people have an 18 mpg car and think they have to upgrade to 40 something.. easiest just to keep it simple.

['BusNative]

The Kudlow... likes... Cash for Clunkers?

Good op-ed, in my opinion...

August 6, 2009
Why I Like the "Cash for Clunkers" Plan

By Larry Kudlow

As a free-market capitalist who does not believe in artificial spending and pump-priming from Uncle Sam, I'm going to eat a little crow with the following statement: At this moment in history, if we're going to use fiscal stimulus as Washington insists, I favor extending the cash-for-clunkers car-rebate program.
With the greatest respect for my conservative friends and colleagues who totally disagree with me, here's why.

In virtually no time, the clunker program has become a national pastime. It has captured the public's imagination in a way that no other federal stimulus has. Everyone is talking about it. And I truly believe that consumer spirits have been buoyed by the prospect of going out and buying a new car -- even with federal assistance, and even under the duress of federal mileage standards.

After a very dreary year or two, people might just have fun trading in their clunkers and buying something new.
Even today, as unfashionable as it sounds, and given Washington's attack on horsepower, Americans are still in love with automobiles. They still like going to showrooms, checking out the new models, inhaling the great new-car smell, and yes, kicking the tires and making a buy. Cars may no longer be the heart of our economy -- that's all techie, information gadgets now. But folks still love the car thing.
Now, I wouldn't want the government to pass out free money for everything. But in this particular case, the cash-for-clunkers rebate program is working. It's working so well that it's running way ahead of the computers that are administering it at the Transportation Department and Citibank.

Well, sure. That's government for you. But unlike most of the rest of the fiscal-stimulus plan, this program actually works because the federal cash rebate actually contributes to a consumer purchase. It's not just another welfare-type transfer program.

Incidentally, with all those people rushing into the car-dealer showrooms, the ones who cannot afford new cars are buying used cars. Used car prices are up substantially this year, a healthy sign for the entire auto business...