Government Motors has got problems again...

Tsing Tao

Tsing Tao

I know this is Ricter's favorite topic... :)

"General Motors is in trouble. On the heels of a 1.3 million car recall over fault ignition switches (that allegedly caused 12 deaths and could have been fixed with a $1 part), the bailed-out car maker has announced it will take a $300 million charge in Q1 to cover costs associated with this and 3 new recalls covering an additional 1.5 million cars. As Reuters reports, unsold vehicles will be placed on a stop-delivery until development of a solution has been completed. Why is this such a problem? Because GM's channel-stuffed dealer inventory is already at all-time record highs as the entire industry projected the sales to continue ad infinitum and inventory-to-sales surged to near-record highs.

From the Wall Street Journal:

General Motors Co. said it would take a $300 million first-quarter charge to cover costs associated with its faulty ignition switch recall and three new recalls announced Monday covering about 1.5 million different vehicles.

The auto maker recalled 1.18 million sport-utility vehicles with model years dating back as far as 2008 over seat air bag issues. The air bags may not deploy because of a wiring problem. Separately, the auto maker also is recalling 63,900 of a Cadillac model and 303,000 vans.

The announcement comes as GM begins the process of offering repairs to 1.3 million vehicle owners in the U.S. who are affected by a faulty ignition switch recall GM announced in February. The auto maker is in the midst of answering lawmakers and federal authorities over why it took GM nearly a decade to initiate that recall. The switches have been linked to 12 deaths...

On Friday, the Detroit automaker was hit with what appeared to be the first lawsuit related to the ignition-switch recall, as customers claimed their vehicles lost value because of the ignition switch problems. The proposed class action was filed in a Texas federal court.
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And all this as inventories surge to record highs...

This was an increase from the 780,140 in January and is the largest ever channel stuffing print yet recorded by the post-bankruptcy GM in history.

GM%20Feb%20Dealer%20Inventory_0.jpg


Good luck liquidating all that pent up inventory without major incentives and margin crushing price reductions for the everyone in the distribution chain.

ZH.com
 
I'm a former fan of GM, and by that, I mean that's all I used to own.
70 Chevelle SS LS-6 454
69 GTO Ram Air IV 4 speed
79 Trans Am 4 speed
88 Monte Carlo SS with 400 sb and a 671 Weiand blower
88 Iroc Z (stock, and total junk)
Numerous GMC Z71 trucks
I could go on...

Today, I wouldn't buy a new GM vehicle if it were half price! IMO, GM deserves what they get for being in the healthcare, and benefits business vs the car business. I couldn't believe what went down in Bowling Green, KY at the corvette factory a few yrs ago. They'd shut down production for a month, but union rules meant workers had to show up at the job. What did they get paid to do during the shutdowns? Sit in break rooms. No, I don't feel sorry for GM at all, even though there will always be a place in my heart for what they USED to build.
 
Ricter said:
Everyone's inventory is higher than planned--bad weather.
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Yes, you sound just like Krugman now - blaming snow in winter for bad economic performance. What's next? Rain in Spring? Heat wave in Summer?
 
Tsing Tao said:
Yes, you sound just like Krugman now - blaming snow in winter for bad economic performance. What's next? Rain in Spring? Heat wave in Summer?
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I sound like autonews, autonation, ibtimes, wardsauto, the wsj, and forbes.
 
AAAintheBeltway said:
It's sad. One of America's truly great companies destroyed by unions, government and bad management.
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It's those three things. and yes, ots very sad!
I remember calling Ford junk, "fix or repair daily," etc., "back when." They refused government money in 2009, have solid management, and are producing a superior product. I'm wanting a Roush stage III Mustang, but being smart, should stick with the F150. I pitched F Stock right here on et when it was unfairly beaten down to penny stock at $1.50, and look at it now. I bought 10,000 shares, and yes, should have bought more, but that's emotion...
 
Ricter said:
It's a conspiwacy!
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Propaganda isn't a conspiracy, silly. It's just spin. The blaming of "snow" and "weather" has spiked these last few years as eCONomists seize on something...anything...to justify the performance in the economy. Or rather lack of performance.

The fact that various websites devoted to the selling and marketing of cars use "weather" to blame bad car sales isn't entirely shocking.
 
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