Steve Biro: Thanks for the clarification. I’m curious about what happened to owners of warranted AMC cars? of course, back in the 80’s, IIRC, most warranties were still 12 months, 12k miles, correct? So maybe it wasn’t much of an issue. Presumably those people who had bought Hornets or Javelins in 79 or 81 saw the writing on the wall.”

Sorry it’s taken me so long to respond. You’re right.. warrantys were only 12 months/12,00 miles in those days, so it wasn’t a big issue. However, customers who bought AMC vehicles in the last year of the old AMC were covered by Chrysler because Chrysler assumed all of AMC’s obligations.

So why do they bother? They have a _fiduciary_ responsibility to shareholders. They are required to put the interests of shareholders above all else. *Bankruptcy Law* places shareholders below creditors, as others have noted, but this is only relevant *once bankruptcy is filed*.

In other words, once they’ve screwed up the business so badly that they file Chapter 11, then why not simply file Chapter 7 and let the judge decide otherwise? That’s not the order in which things happen, but why? As far as the fiduciary interests of the board is concerned, once the shareholders are screwed there’s nothing left. Yet boards don’t behave that way…consider Delphi. Should Steve Miller be sued because of his choice to file? If not, then what exactly, *other than bankruptcy law itself*, compelled him to file? After all, he publicly claimed “October” as a deadline when “October” was nothing more than the effective date of a law which made filing bankruptcy more difficult. But on either side of that deadline, shareholders were equally screwed.

Tom.

As an alternative, I wonder if GMC or Chevy trucks could survive as an independent marque, divorced from the sinking GM. Certainly out here in the West there is no shortage of GM trucks on the road.

However, Steve’s description of AMCs slow death does contain a kernel of an interesting notion: What if it’s not Ch. 11 or Ch. 7, but rather something more like what happened to AMC? IOW, as the General sinks deeper, the jucier plums are picked by other automakers. Not sure what these would be – Corvette, maybe? Would either GM or Ford have the stones (or the cash) to buy GMs Crown Jewell? Would/could an import buy that line (would anyone buy a Toyota Corvette?) And are there any other desirable properties that could be salvaged by a savvy investor? None I can think of off the top of my head, but you never know.

GM could offer a lifetime warranty. Between their horrible past treatment of customers and financials woes it means nothing.

Chrysler’s lifetime warranty? An even bigger scam – their systematic and well planned denial of warranty claims for the well known sludge problem in their V8 is living proof they have no intention of taking care of the customers. Just google “Durango sludge” for an interesting read.

And for someone who cries “Toyota sludge” in defense – sorry – they look good in contrast to Chrysler who denied warranty claims even if you had oil change receipts. And eventually Toyota extended warranties and admitted the issue. Chrysler? – you’re still f–ked. GM’s not much better.

GM (and the others for that matter) have for too long allowed their warranties be to become worthless in the eyes of consumers by trying to wiggle out of fixing problems. Their promise has become worthless.

To be “fair”, this warranty weasel dance is not exclusive to GM. I know lots of people who have had the same BS with German (VW!) and Japanese cars too.

But if GM wants to stand out, then raise the bar and make your warranty a clear, no-BS, word of honor. Done right, the warranty should not exceed two paragraphs. In fact, it should not exceed two sentences. “If anything breaks, we will fix it immediately at no cost to you. If we can’t fix it, then we will replace your car with a new one.”

The federal government bailing out GM with it’s buying power isn’t going to happen. For one thing, they are generally required to put purchases our for bid to the lowest priced qualified bidder. For another, how are they going to get away with focusing all buying on GM and thus sticking it to Chrysler and Ford?

As for the idea of a Democrat controlled new president and congress bailing out GM … I highly doubt it. First you have the problem of helping one company but not all three. Do you think Ford and Chrysler lobbyists are going to stand by and watch a bail out of their main competitor? The three domestics primarily compete with one another for the shrinking Buy American customer base and only secondarily compete with the Asian makes.

The only scenario where I can imagine government involvement would be in a big forced marriage like the one which created British Leyland. Seems highly unlikely, and we already know how that turned out!

The majority of the Democrat’s political base hates General Motors. About the only thing you could get the editorial pages of the New York Times and the Wall Street Journal to agree on is probably opposition to the idea of bailing out GM with taxpayer money.

GM of the 1960s was a juggernaut riding high over the US economy and psyche. Now 40 years later they are a stumbling giant with people scrambling to get out from under it’s fall. The only fall back plan is China, and the Chinese are going to rip that rug out sooner than anyone can imagine.

I will never forget my involvement with a deal in China many years ago. Our people and the Chinese customer negotiated for weeks over a contract. The process was far more time consuming and difficult than it had ever been with any other customer. Once it was done and we started making things happen per that contract we were shocked to hear from our Chinese counterparts: ” …. oh, the final contract is only a step in continued negotiations, we will not follow it … “.

The roots of this are clear. Back in the 70’s, when the paradigm for successful compact cars shifted, GM chose to assign it’s efforts to the higher margin fullsize and pickup markets. Reasonable in the short term.

But younger buyers don’t want full size cars and don’t need pickups. To find appealing quality vehicles they had no choice but to look to the imports. And once they had done so, it became much easier for Honda, Toyota, et.al. to keep them. Brand loyalty is a powerful thing if you work at it. And they have worked very hard at it.

As those young buyers aged, they bought bigger, higher margin vehicles. They kept the memories of the poor quality domestics, and gave the bigger domestic vehicles little thought – even when they were very good. This further marginalized the domestics’ available markets.

And now their buyers are at the point where they are buying their last cars. And GM is desperate. I recently spoke to a retired Marine who flew F4’s for 20 years. He told me he would never consider any domestic vehicle for his grandson. (He was buying my ‘02 Acura for the grandson in question.)

I would like to say I see a clear, painless path for the domestic automakers. And I do see a clear one. But it’s going to involve considerable pain.

I know we’re talking about GM and I hate to digress, but I must correct you about a few things.

1. Exxon-mobil has been a continual denier of climate change and has undermined many studies, projects and movements to say otherwise. Which didn’t do their public image any good. They aren’t perfect.
2: It’s LORD Browne! ;O)

Yeah. Exxon-Mobile is about as PC as my nickname when it comes to climate change.

GM might learn something from them, however. Instead of embracing greendom and the warmer-mongers, confront them with some facts about the small costs of a ~10 MPG difference vrs the costs of going small/or hybrid.

2007 GM Powertrain warranty is 5 years/100,000 miles $0 deductible including Roadside Assistance.

That warranty is only on the engine. Hyundai’s is bumper to bumper (or it is in the UK). Engines rarely fail (even GM’s!) but transmissions, wheel bearings, cooling systems, even down to minor things like a wing mirror falling off, that’s more likely. But GM are always saying how their quality and reliablity is the same as Toyota’s. So, prove it or make way for Toyota!

But as Mr RedBarchetta points out, GM’s reputation for not honouring warranties is also a mill stone around their neck. How are they going to close THAT “perception gap”……?

Really, my point is this. It’s NO GOOD that GM keep whining like bitches that no one will trust them because of their reliablity of a few years ago. Now, they say, their reliablity and quality is the same as Toyota’s and Honda’s. But they won’t put their money where their mouth is. They’d rather spout out that they’ve won some award, that nobody cares about, rather than say “Look, here a warranty that’s longer than our competitors. Now try us!”. Hyundai’s reputation was worse than GM’s, but because of their quality drive, they turned from a regional player into the 5th largest car maker in the world by volume* and they are now thought of in the same vein as Toyota and Honda. It’s not rocket science, it’s just giving customers an incentive (bad choices of words!) to buy GM.

* = I realise that last year Hyundai was 6th largest, but they were behind DaimlerChrysler. Now that DaimlerChrysler has disbanded, I believe, that Hyundai makes more cars, than both Daimler or Chrysler. Feel free to correct to me. :O)

Perhaps history has some insight for us here? What happened when AMC cratered? IIRC that was in the mid-80’s or so, correct? Did they go ch. 11 and then 7 or was it straight to 7 or was it something else? I seem to recall that for a short time there was a brand called “Eagle” that was making some formerly AMC cars, but it didn’t last too long. Then I seem to recall some short alliance with Renault, and after that the sale of Jeep to Chrysler.”

I don’t remember the details about International, but I can tell you AMC didn’t go bankrupt. Not Chapter 7 and not Chapter 11.

Renault bought a controlling interest in AMC (late 70’s or early 80’s), which proceeded to build some Renault models in the U.S. Remember the Alliance sedan and the Fuego sport coupe? At the time, I didn’t think they were bad cars. Most of AMC’s older (and aging) models were culled from the line at that point – which the exception of the Eagle and Spirit, which were the AWD versions of the old Hornet and Gremlin.

But one of the smartest things AMC ever did was to buy Jeep at the beginning of the 1970’s. See, AMC didn’t have a truck line and the Jeep line (which included pick-ups) took care of that very nicely. Enter Lee Iacocca and Chrysler Corp., which coveted Jeep for years. AMC repeatedly spurned offers by Chrysler to buy Jeep. And the new smash-hit Jeep Cherokee made the brand even more attactive at that point. Finally, with Renault having limited success selling its cars, it finally agreed to sell Jeep to Chrysler – but only if Chrysler took the whole ball of wax – all of AMC. And so a deal was struck.

Once Chrysler took over, it created the Eagle brand so that Jeep dealers would have some cars to sell. Eagle cars included the Premier (a large Renault sedan already in the pipeline) and a few versions of Mitsubishis – including an AWD version of the Mitsubishi Eclipse. The Eagle line didn’t last many years. And, with the big SUV boom of the 1990’s, Jeep dealers didn’t need it.

Hope this helps.

At this point in time, that’s not all that compelling. Particularly when Honda and Toyota both have 5 year/ 60,000 mile powertrain warranties of their own.

A 5 year warranty in the UK would be quite long by local standards. In the US, that’s not really the case, Americans have higher demands for these sorts of things.

GM would have to seriously consider a 7-10 year warranty that exceeded 100,000 miles in order to look considerably advantageous as compared to the competition. And given the widespread skepticism of the product in its current state, even that may not be enough.

Americans want to have a warranty, but they also want to have an ownership experience that doesn’t require using it. Luxury brands are cut some slack, but the run-of-the-mill cars are expected to run without skipping a beat, warranty or no warranty.

1. Exxon-mobil has been a continual denier of climate change and has undermined many studies, projects and movements to say otherwise. Which didn’t do their public image any good. They aren’t perfect.
2: It’s LORD Browne! ;O)

Also, with regards to GM, I had another brainwave!

We’re always talking about streamlining brands but can’t do it. Well, why don’t GM just spin the businesses off and let them work independently? Only the businesses which GM have little or no interest in (i.e GMC and SAAB) Well, either that or SELL them!!!! I truly believe that the Chinese or Indians will jump at the chance to own one of those brands. Established dealer networks in the United States and other countries and access to their technolgies to beef up their own cars.

Also, and I’ve said this MANY times so pardon me for repeating myself, but in order to shift cars (and hence, make MONEY!) why don’t GM takes a leaf out of Hyundai’s book and actually work for customers’ money but giving a 5 year warranty in order to kerb that so called “perception gap”? Face it, if GM are sooooo confident about their quality, then an extra 2 years shouldn’t cost them anything. Unless they have something to hide……?

which CEO of BP are you referring to? Surely you don’t mean Lord John Browne?

Browne turned BP from a minor player in the oil market into a colossus on the scale of Shell and ExxonMobil.

Yes. Mr Browne. Admittedly, I was being overly harsh. BP has been a good investment and probably will be a good investment as long as their refineries stop blowing up.

Of course, Exxon-Mobile has been much, much better.

which CEO of BP are you referring to? Surely you don’t mean Lord John Browne?

Browne turned BP from a minor player in the oil market into a colossus on the scale of Shell and ExxonMobil.

Interesting times ahead. And for a sobering read on Tough Oil, check this out. Even the generously compensated Lee Raymond of Exxon is on board now.
They should have given him a gun, not the world’s biggest compensation package:
http://www.tomdispatch.com/post/174829/michael_klare_tough_oil_on_tap

Exxon-Mobile is profitable and has been an excellent investment. Lee is worth it. (The ex-CEO of BP – with his ‘Beyond Petroleum’ and crap stock performance – he needs the gun).

Oil is not going away – and there will always be those willing to pay a premium for performance or size.

Companies (like Exxon-Mobile) that excel at extracting a resource will always make money. Even if a resource is dwindling, they may make more money, given their superior expertise and technology.

Ditto for International Harvester. They were always a niche player in the consumer/light truck market but had a solid reputation from the 1930s into the 60’s. They made a full line of trucks and SUVs (long before that term came into common use, though.) By the early 70s they were in trouble – gas crisis, I assume, since all of their products were big, heavy gas guzzlers. In 1975 they stopped making everything in small vehicles except for the Scout II and the Scout II -derived Terra and Traveler, and by 1978 or so they stopped making everything but the Scout II. 1980 or 81 were the last years of the Scout, at that point they stopped making ‘consumer’ vehicles altogether and concentrated on their commercial trucks, but even then they were in bankruptcy by the mid-80s, IIRC (going from memory here.) Some time in the early 90s, they emerged with a new name, Navistar, making updated versions of their commercial trucks.

So what happened there? Anyone know? I was around then, but not much interested in the car business. However, my first two vehicles were both IHC Travelalls, so I do have some curiosity about the company.

I’d buy them if they were there – they just aren’t.

I can think of one fleet sales market that might actually help GM: the Feds.”

I don’t think that this is likely to happen in numbers high enough to matter to GM. Federal law requires the GSA and other govennment agencies to but Alt Fuel vehicles in high percentages of their total fleet purchaces. Up till recently they got a round that by buying Flex fuel vehicles and assigning them to areas where E85 is not available. I believe that the law was recently changed to reflect the reality that these vehicles were not being used as intended.

The fleet managers for these agencies can also see how much the price of fuel is going up. When you agrigate a 10% fuel savings over thousands of vehicles that saves a lot of money! As one of my bosses once told me “a million dollars might be a rounding error, but you add enough of them together and it becomes real money!”

My sister works for a state government in the midwest. They recently sold off all the Ford Escorts they had bought for Honda Civic Hybrids. Saving fuel and money. I can’t believe that they are the only ones doing this.