Skip to comments.September Vehicle Sales: Press Still Won't Concede Possibility of GM, Chrysler Bailout Backlash
Posted on 10/03/2009 7:35:04 AM PDT by Zakeet
Reviewing September's detailed sales results in the car business carried at the Wall Street Journal, three things stick out immediately:
No other major maker had a year-over-year September decline that was even half of that seen at GM or Chrysler.
Yet the press, while beginning to acknowledge serious problems at the companies, both of which were first bailed out by the government and then taken through government-orchestrated, contract law-violating, UAW-favoring bankruptcies (GM discussed here, Chrysler here), still will not entertain the possibility, despite the evidence, that consumers are shunning them because of their bailed-out status and their heavy-handed tactics in bankruptcy.
What follows are excerpts from three reports that covered September's industry results.
At the Associated Press, Tom Krisher and Dan Strumpf even went so far as to try to get a comment out of Uncle Sam's Treasury Department (bolds are mine):
A Cash for Clunkers hangover hit every major automaker except Hyundai last month, pushing down sales and leaving the industry searching for signs of a recovery in October.
U.S. sales of cars and light trucks fell to just under 746,000 in September, down 41 percent from August.
Both GM and Chrysler were the biggest losers last month, while Ford, the healthiest of the Detroit Three, reported the smallest drop of major automakers. Of the top companies, only Hyundai posted higher sales, up 27 percent from September 2008.
.... General Motors Co.'s sales plunged 45 percent while Chrysler Group LLC's fell 42 percent. The weak results continued a string of monthly sales drops for the troubled pair. Now the question is whether their government-funded recovery plans are working.
.... A spokeswoman for the U.S. Treasury Department, which has provided roughly $65 billion to keep GM and Chrysler going, would not comment on the sales figures.
Including equity that was in effect expropriated from the two companies' disfavored lenders, the total amount of aid provided to GM and Chrysler is significantly higher than the already huge figure the AP pair cited.
An unbylined Reuters report acted as if the two companies were innocent victims of last fall's TARP debacle, got a "the sky is not falling" denial out of Chrysler, and noted that GM is significantly increasing production (you read that right; bolds are mine):
Sales in September 2008 were rocked by the collapse of Lehman Brothers and the financial crisis, events that pushed both GM and Chrysler to seek a federal bailout. With consumer uncertainty rising, sales in September a year earlier had dropped to a 12.2 million unit rate.
.... "In the short term, I don't see much of change for GM and Chrysler in terms of sales declines. The No. 1 reason really is their product lineup," said Jesse Toprak, an analyst at Truecar.com.
"The bigger question is whether they can restructure themselves to make money at lower sales levels -- it's going to be tough, obviously," he said.
Fiat SpA Chief Executive Sergio Marchionne, who has taken charge of Chrysler's turnaround plan after the Italian automaker took management control at the U.S. automaker, said reduced incentive spending had contributed to the depressed sales result for September.
"We are not bleeding like people think we are," Marchionne told reporters.
.... GM said it was sticking with plans to increase production in North America by 20 percent in the fourth quarter compared with the third quarter.
.... "Clearly, the economy is starting to gain some momentum," said GM sales analyst Mike DiGiovanni. "But we know it's still going to be bumpy and clearly the economy is still dependent on policy stimulus."
That would be the same "policy stimulus" that Noel Sheppard at NewsBusters noted earlier today was the subject of derisive laughter from CNBC's Melissa Francis and Lawrence Kudlow when Former Clinton Labor Secretary and current Obama economic advisor Robert Reich tried to claim that "the stimulus package is the thing that is actually keeping the economy up, keeping people employed."
As to "restructuring to make money at lower sales leves" -- uh, I thought that's among the reasons they went through bankruptcies. Only a few months out, they have to restructure yet again if they're ever going to make money?
At the New York Times, Nick Bunkley quoted a Chrysler spokesman whining about allegedly tight credit, and noted that GM's core brands fared almost as poorly as the ones that are going away:
We believe the remainder of 2009 will continue to be a challenge for the U.S. automotive market, said Peter Fong, the head of Chryslers sales organization. Credit markets have thawed slightly but still remain tight, and consumer confidence, as we saw in September, is tenuous.
.... At G.M., which is eliminating four of its eight brands as part of its postbankruptcy restructuring, sales for the four brands that will remain Buick, Cadillac, Chevrolet and GMC were down 41 percent in September.
But as usual, there wasn't a word in any of the three reports about what I noted over a month ago at the end of the Cash for Clunkers program.
The big story in vehicle sales ever since the bailouts of GM and Chrysler commenced in December of last year has been how those two companies have consistently lost market share ever since. The press has almost dogmatically refused to consider the possibility that consumers continue to shun now state-controlled GM and shotgun-wedded Chrysler because they refuse to do business with bailed-out companies that gobbled up tens of billions of dollars of taxpayer money, running roughshod over disfavored classes of creditors and violating long-established principles of contract law in the process. Even if the avoidance in some cases isn't ideologically based, but instead revolves around warranty and other concerns, lost sales are lost sales.
One has to wonder why the government and its car czars and onsite management at the two companies have never entertained the idea that a backlash might occur, and why it never tried to do anything about it once its presence was apparent in the marketplace. It may be that the establishment media's refusal to take the shunning seriously is contributing to their complacency. If so, they are not doing the companies any favors.
All of this happened because of my brilliant leadership.
Is nobody making the connection that these so-called “bail-outs” are nothing more than transfer payments to the UAW?
I think it's more a case that consumers are shunning them because they make a crummy product and because demand for their primary product - light trucks - is way down.
The article fails to mention one very key point that is the reason GM & Chrysler had the least benefit from the CARS program and had horrible September sales.....inventory.
After being shut down for several months, both companies had very little inventory on the lots. The CARS program came too fast for GM or Chrysler to react and produce their most fuel-efficient vehicles, hence they had the least benefit from the government program meant to help them (another Obama failure).
As of September, GM & Chrysler had record low inventories and were still ramping up production (with a model year changeover at the same time), so they still had few vehicles to sell.
Is there a backlash taking place? Yes.
Is there a lack of confidence in companies that just came through bankruptcy? Yes.
Did the government botch both the bankruptcies and the CARS program? Yes.
But, as always, there is more to the story.
I don’t think they look at silly things like evidence...Didn;t Biden just extoll the virtues of the stimulus ( the day before higher that expected job losses ). They will never admit failure, ever.
I would avoid them if I was shopping this year. Ford deserves to be rewarded imho. Every aspect of the auto bailout is seemly and reeks of alterior motives.
I’ve never bought a foreign branded vehicle, but now I will NEVER buy a UAW manufactured vehicle...the limp wristed liberals that have been buying foreign for years need to step up and purchase UAW vehicles.
* should read ulterior*
Now the question is whether their government-funded recovery plans are working.Er...I don't think there's a question about that. That's the point! Government management of ANYTHING doesn't work!
OTOH, there is something the government can do to fire up the economy...
i am thats why i will walk before i drive a gov union auto
Hyundai sales are so good that the plant down in Montgomery is going back to a 5 day workweek, after scaling back earlier this year.
But...that would result in more high-paying jobs and less dependence on the gubmint. Can’t have that!
I bought a new pickup in February. I got an F-150. Before this truck, I never owned a Ford, was always a Chevy guy. I never considered the Chevy, this time.
The UAW may be able to muscle the government into giving them a car company or two, but they won’t be able to muscle the public into buying their product. The only question is how long will it take them to realize that.
I’ve bought GM all my life - and the Chevy I bought in 2006 will be the last GM car I ever get.
I, and 10's of millions like me, will never buy another GM product. Never.
I've owned brand-spanking-new GM products in the past...and still have a 2001 Tahoe I purchased new. They do make great vehicles.
I've never owned a new Ford...but that's the only new vehicle I'll purchase from now on.
I'll stand on principal with this one.
I’ve always liked GM the best of the domestics, but I will not support socialist, collectivist, unconstitutional actions like using taxpayer money to give industries to labor unions and screw the preferred bondholders. Unconstitutional because they are totally violating equal protection under the law. They are taking tax money from auto workers in the south, and transferring it to their competition in Detroit! How would you like to be working and part of your pay going to your competition? What gives with that?
...despite the evidence, that consumers are shunning them because of their bailed-out status and their heavy-handed tactics in bankruptcy.
I am one of those that shunned both GM and Chrysler/Dodge because of the bail-out.
I like both manufacturers but will not buy any of their products untill they are divested of Government control.
I was in the market for a new truck so I ordered a 2010 Ford F-150 Raptor to be delivered next month.
Screw the Bail-outs!
I’d like to know why, if consumer credit is so tight, that I got a packet of checks yesterday from Discover, the first one was for $5,000 the others were blank, fill in any amount up to $15,000.
I’ve always preferred Ford over GM but now it’s not even a consideration. I will may buy a Ford but I will never buy a GM or Chrysler.
Auto Brand loyalty in America is probably greater than marital fidelity. GM has always had brand loyalty over Ford. Where is it now? I do think people are deciding that they will NOT buy a car from a govt company. This is the kind of thought process that is defeating Obamacare.
Yes, I get those mailings daily from various sources, Discover, Amex, Visa. Somebody somewhere has plenty of money to lend.
Yes, it’s sad that GM now actually has some highly competitive vehicles. In addition to the Malibu, they have the new Chevy Equinox, which has gotten very good reviews, and the new 2010 Buick LaCrosse recently won a head to head shootout with the Lexus ES350.
If only they had let private capital come in and revive GM without the unions, GM could have been a success story. My hope now is that GM quickly fails again, and can do a proper Chapter 11 and restart free of the government tentacles.
The mainstream media doesn't have much interest in reality, do they?
Regardless of what happens with the UAW, with other car companies, or with our country, for the rest of my life I will not under any circumstances buy a GM/Chrysler vehicle manufactured after the date that they took MY tax dollars against my will. I am boycotting both companies for life, along with all TARP banks. My next car may be a Ford, but it will not be from either of the two nationalized companies. I seem to have a lot of company in that decision. How's that socialism working for you, UAW?
I promise to say only nice things about you forever, (or at least until the check clears.)
Gosh, wouldn’t you think that management with a modicum of foresight could have foreseen that CFC was steamrolling its way to Congressional approval, that demand would therefore increase, and that all company efforts should be focused on ramping up production to meet that demand?
Apparently not. So what do we conclude?
1. That the new government-appointed management is incompetent and/or does not know how to run an auto company?
2. GM and Chrysler have been so damaged and are so disorganized that they were incapable of ramping up production in a timely manner?
"... the press has almost dogmatically refused to consider the possibility that consumers continue to shun now state-controlled GM and shotgun-wedded Chrysler because they refuse to do business with bailed-out companies that gobbled up tens of billions of dollars of taxpayer money, running roughshod over disfavored classes of creditors and violating long-established principles of contract law in the process"
Exactly right and well stated.
Here are the facts as I see them:
1. The UAW spent at least $4.9 million to elect Obama. UAW Donations
2. Obama dictated the terms of GM and Chrysler bankruptcy granting UAW special creditor status and making the labor union a major shareholder in both companies.
3. Americans object to the payoff and avoid GM and Chrysler dealerships like the plague.
4. GM and Chrysler must die in order to make the stolen shares of stock totally worthless.
Things will eventually reach a point when even the densest liberal will see a connection between the lack of sales of Chrysler/G.M. products to the rebellion of the American people to the "bail outs".
Coming soon, a government sponsored (tax payer sponsored) rebate program for buyers of G.M./Chrysler and it will be a big one.
I read on Bloomberg that bankruptcy law requires that retirees' pension benefits have priority in bankruptcy over bond holders, so it may not be true that contract law was actually violated in these bankruptcies. But I was amazed that the administration left the UAW contacts essentially intact with no reduction in hourly wages and benefits. That's just a payback to the UAW for its political support of the Dems, when clearly GM and Chrysler need a lower cost structure and lower vehicle prices to help them compete with foreign car companies and Ford. That was an awfully short-sighted and overconfident decision by the administration to not cut the hourly pay and benefits for union workers at GM and Chrysler.
I think ultimately the cost of union labor and some salaried workers will have to be reduced for those companies to survive. Meanwhile they're probably going to need and get still more tax money from the Treasury Dept. as the political payback continues. The public will get increasingly annoyed by the continuing subsidies for GM and Chrysler and the unpopularity of those subsidies may force the administration to let corporate managers cut union pay and benefits. But will it be too late by then? Will there be a major backlash against those companies for all the subsidies they received and the super cushy deal given to the UAW by this administration--a backlash that makes it impossible for those companies to stay in business? Stay tuned for further developments. Meanwhile I'm shopping for an SUV and looking only at Japanese and Korean brands.
The press are being dishonest? Who'd a thunk it?
Maybe that's why newspapers are going out of business.
I think this administration made a big mistake when they left the UAW’s contracts intact at GM and Chrsyler. That super cushy deal for the UAW was obviously political payback for supporting the Democrats for decades. There should have been at least some kind of meaningful reduction in sky-high UAW labor costs—at least a 10% reduction. When there are concerns about warranties and whether these companies will stay in business, GM and Chrysler need lower vehicle prices to compete and they can’t price low enough with their current vehicle cost structure. The UAW doesn’t understand that when two vehicles are essentially the same in performance and quality, then just a few hundred dollars in price can be the deciding factor that makes consumers buy foreign brands.
Under no circumstances would I buy a government made car.
I am not alone.
I have been wonering about this, thanks for posting.
One thing the administration ignored is that GM and Chrysler make most of their profits by selling trucks and SUVs to Republicans and independents, who are exactly the kind of people who are greatly annoyed by the super sweet deal given to the UAW in these bankruptcies. Liberals tend to buy foreign brands and buy more cars than trucks and SUVs. So the administration alienated GM & Chrysler’s most important customer group with the way they handled these bankruptcies. That was a major miscalculation by the White House and its manufacturing “czars”. The UAW should have taken some kind of a haircut to show that everyone was willing to sacrifice to keep GM and Chrysler in business, for reasons of fairness and to not annoy their most important group of customers.
A Toyota dealer I know said the past 2 months have been the best ever- over 200 cars sold per month.
True, liberals in general know next to nothing about business, market dynamics, customer preferences, etc. Exactly the reasons government should keep its nose out of such matters, and let the private sector research the situation and do it right.
I asked my senator Evan Bayh for a picture of the 50 year old UAW retiree my taxes were supporting for $3200/month pension and silver plated healthcare. So far no response.
I love Suburbans but will opt for a Toyota next year for my wife. I'll NEVER buy another GM product or Chrysler product.
Pass it around, If you buy from GM... you are supporting Obamalamadingdong and the union parasites that are his butt monkeys.
“the Chevy I bought in 2006 will be the last GM car I ever get.”
I have 2 Suburbans I use for Business, one I bought a 2008 Suburban during last fall’s panic (Great price!), and the other needs replacing soon.
I think I’m going with a F-350 Extended, this time. Government Motors won’t be seeing a dime from me.