GM, Bailout, Obama....

[rwh11385]

vedubin, I'd never fault you for being someone who actually reads entire articles... but making sweeping generalizations about car buyers based on a tiny fraction is pretty weak. As is being completely ignorant of the circumstances and never bother to consider business reasons:

GM Financial provides just over 8% of GM's financing.

Anyone with good credit probably would do much better with their own bank than the dealer. And since Ally went independent, there wasn't really a good in-house lending option, so the only people who generally could get loans were those with good credit and from their own bank. And as the following article will state, subprime AUTO lending can be profitable and lower risk than housing (how many repo shows are there??). GMAC was definitely a profitable part of the business, and there was a big hole left after it was ripped out.

So GM was in a bad position to pay back its loan if it didn't take action to be competitive with other manufacturers: http://www.usatoday.com/money/autos/...redit-gm_N.htm

"For some time, our dealers and customers have said that not having an in-house finance arm hurt our ability to offer sales and leases," said GM CEO Ed Whitacre on a conference call. "As a result, we were not as competitive as we could be. ... Now we are going to fix that."

With the recession, job losses, bankruptcies and foreclosures, the number of people with subprime credit scores has grown, while GM was less able to serve them. GM says about 4% of its buyers now are subprime — a smaller percentage than other big automakers, indicating the company has been losing buyers to other automakers that can get the customers loans.

Most important quote from that article: "Some 40% of U.S. car buyers are categorized as non-prime or subprime borrowers, says Melinda Zabritski, director of automotive credit for Experian Automotive."


So they had a smaller share of their sales going to subprime buyers because they lacked in-house lending, which meant they were also missing out on almost HALF the market! Do you think it is a good business move to completely disregard nearly HALF of the market? If numbers were below average and increased, does that necessarily mean that they are now worse than average... or could they be on par with the rest of the industry. (or rather, competitive?)

[Vedubin01]

vedubin, I'd never fault you for being someone who actually reads entire articles... but making sweeping generalizations about car buyers based on a tiny fraction is pretty weak.

did not make a sweeping generalization but merely stated that GM has started taping the sub prime market. You do this when sales are sluggish and you are willing to take risks. (kinda like a 4th and long) Soon you will see government forcing GM to extend more of these loans to help those 40 percent you speak of. Sound familiar?

[rwh11385]

did not make a sweeping generalization but merely stated that GM has started taping the sub prime market. You do this when sales are sluggish and you are willing to take risks. (kinda like a 4th and long) Soon you will see government forcing GM to extend more of these loans to help those 40 percent you speak of. Sound familiar?

Actually, they have not "started taping" the sub prime market. As mentioned before, they had GMAC previously [Ally], so this is a return to a group of customers they had before and also that their competition was serving better than they were.

Sorry that your ignorance of the auto industry leaves you using football references. And great irrelevant reference to the housing market...

While subprime loans were a big part of the mortgage crisis, they aren't such a bad thing in the auto world. Lenders have long experience making them work.

"If managed properly, lending to non-prime and subprime customers can be a source of profitability for automakers, retailers and lenders," Zabritski says.

Again, you rely on assumptions and other industries instead of actually reading anything related to the topic at hand.

[Vedubin01]

Actually, they have not "started taping" the sub prime market. As mentioned before, they had GMAC previously [Ally], so this is a return to a group of customers they had before and also that their competition was serving better than they were.

Sorry that your ignorance of the auto industry leaves you using football references. And great irrelevant reference to the housing market...




Again, you rely on assumptions and other industries instead of actually reading anything related to the topic at hand.

Thats what they said during the housing market.

[z31maniac]

Are you guys ignoring the 40% drop in profits, or did i miss something

[rwh11385]

Thats what they said during the housing market.

Yeah, and that equates them in some kinda of retarded logic?

Even the article you posted said:

Subprime lending in cars is not as risky as in housing. Car loans are cheaper, so customers have an easier time making payments. When they do go into default, the cars can be repossessed and sold to recover some of the loss.

Plus,

http://content.usatoday.com/communities/driveon/post/2012/05/late-auto-loans-rate-declines/1

Late payment rate on auto loans now lowest in 13 years

What's more, the improved record comes despite lenders having written more loans to high-risk borrowers.

In the first quarter, the rate of U.S. auto loan payments at least 60 days overdue declined to 0.36%, a 27% reduction from the same period last year, according to credit reporting agency TransUnion.

TransUnion says the rate is the lowest since it started tracking auto loan data in 1999. The highest rate recorded by the company was 2.39% in the first quarter of 2000.

[Vedubin01]

Are you guys ignoring the 40% drop in profits, or did i miss something

For Fuck Sakes can you get your information correct. Its 41 percent damn it! ;)

http://www.guardian.co.uk/business/2012/aug/02/gm-profits-slip-european-struggles

[gwb72tii]

Yeah, and that equates them in some kinda of retarded logic?

Even the article you posted said:


Plus,

http://content.usatoday.com/communities/driveon/post/2012/05/late-auto-loans-rate-declines/1

Late payment rate on auto loans now lowest in 13 years

yup, huge fleet sales and a decline of 41% in profits
the only people left with a loan are the few that still happen to have a job.
stats can be skewed to show anything you want mr economist
and you should know better than most

[rwh11385]

Are you guys ignoring the 40% drop in profits, or did i miss something

For Fuck Sakes can you get your information correct. Its 41 percent damn it! ;)

http://www.guardian.co.uk/business/2...pean-struggles

Or 38%, depending on the source: http://www.bloomberg.com/news/2012-0...pean-loss.html

You could look at the numbers, or take it in context that they are still celebrating profitable quarters - as low of a bar as that is or not. Plus, they beat expectations.

The world's largest automaker reported that profits were down 41% from a year ago to $1.5 billion, or 90 cents a share, in the second quarter. Still, that was well ahead of the 74 cents a share of profit that analysts were expecting

And not a big of a decrease as Ford:

Last month, Ford Motor (F, Fortune 500) reported a 57% plunge in profits in the second quarter

The real thing to remember is that they rode a "wave" of business last year from lack of Japanese competition due to supply issues... and instead of working hard and focusing on fixing problems still present, they padded themselves on the back. The company is far from fixed, but better than it was before.

[rwh11385]

yup, huge fleet sales and a decline of 41% in profits
the only people left with a loan are the few that still happen to have a job.
stats can be skewed to show anything you want mr economist
and you should know better than most

Yeah yeah yeah, the guy who dishes numbers to clients but claims all numbers lie. . . . Oh, let's not forget make great claims without backing it up (saying that few people have jobs anymore)

[mrsleeve]

the only people left with a loan are the few that still happen to have a job.

Yeah well I will say this. What we have is paid for, We can afford a set of ones if we wanted too. We are not buying anything for a long while, and going to drive what we have into the ground before we replace anything. It helps that I am not home and only putting about 6k miles a year on my truck and she is only doing about 10k a year on hers

have you seen what they are getting (not just the MSRP) for a new nicely equipped Diesel 3/4 ton GOD DAMMIT. Same goes for Full size SUV's

[gwb72tii]

Yeah well I will say this. What we have is paid for, We can afford a set of ones if we wanted too. We are not buying anything for a long while, and going to drive what we have into the ground before we replace anything. It helps that I am not home and only putting about 6k miles a year on my truck and she is only doing about 10k a year on hers

have you seen what they are getting (not just the MSRP) for a new nicely equipped Diesel 3/4 ton GOD DAMMIT. Same goes for Full size SUV's

you can by a nicely equipped M3 for the same price

[gwb72tii]

the only reason GM is better than before is that they defaulted on their debt, therefore they are now profitable.
ask the previous bondholders how much better GM is today after they received pennies on the dollar while the union walked away with newly awarded, by obama, equity ownership in the "new" GM.

[mrsleeve]

you can by a nicely equipped M3 for the same price

I know but a M3 wont pull my horse trailer that well or get round in the 75+ inches of snow we have for about 5-6 months a year ;)

[rwh11385]

the only reason GM is better than before is that they defaulted on their debt, therefore they are now profitable.
ask the previous bondholders how much better GM is today after they received pennies on the dollar while the union walked away with newly awarded, by obama, equity ownership in the "new" GM.

George, you're a simpleton. Ask anyone who has driven a Cavalier and a Cruze if they have improved.

GM was a financing company which also happened to sell cars before, and now they actually try to make decent to good cars instead of cheap crappy ones. It'll take a while to fix the rest, but saying the only thing that has improved is debt is moronic.