By on November 18, 2008

We’ve said it before. We’ll say it again. Before The Big 2.8’s bailout begging blitz, the average American had no idea how close Ford, Chrysler and GM were/are to bankruptcy. And now, today, they do. So when it comes to buying a new car, well, it’s either a sympathy you-know-what (as if) or “Maybe we should look at a Toyota this time.” As much as Detroit’s sales sucked in October, the numbers will be nothing (something?) compared to November. By December, a black hole will tear-open the time-space continuum above Detroit and swallow The Big 2.8 whole.

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33 Comments on “Motown’s Dirty Little Secret is Out: Detroit On the Brink of Collapse...”


  • avatar
    toxicroach

    GM still has 7000 dealers? Wow, I thought they had 3000 and that was still too much.

  • avatar
    Xennady

    First!

    Yes I know that’s stupid…but now I can send my resume to the big three and hope to be CEO!

    Just kidding. It’s game over time for these fools. I’m amazed that more Americans didn’t know this was coming.

    But I suppose they haven’t been reading this site.

  • avatar
    toxicroach

    The media has been dutifully ignoring it to avoid getting their advertising pulled.

    Most auto websites think telling the truth is attacking Detroit, and if everyone thought happy thoughts the problems would take care of themselves. GM apparently had an aura of immortality about it for some reason.

  • avatar
    928sport

    This is the Dawn of the the living Dead! A homeless person could have done a better job getting money! Rick Wagner looked like crap today, or should I say a begging person trying to stay alive. It will a long 63 days around the GM farm.

  • avatar
    Tavert

    6 brands. They need to shut down 6 brands. Maybe sell Saab to Mazda? Or just let the Chinese sort it all out. At least some reasonable voices are given a bit of time in the MSM. Maybe your average uninformed non-gearhead voters and politicians will learn to listen.

  • avatar
    dastanley

    928sport:

    Hey Wagoner’s gotta earn his 15+ million somehow. It may as well be by going to Uncle Sugar and admitting that he’s a total fuck-up of a CEO. I’m surprised his mother let him go out in public without combing his hair for him.

    On the other hand, if anyone’s looking for a new, really cheap disposable car, like say a Cobalt or Aveo, after GM does C11 or C7, I’m sure they’ll be available. Even if their Silverados and Suburbans are on the lot at fire sale prices, hell I’d get one if I were in the market.

  • avatar
    tom

    A) The truth has an anti-Detroit bias.
    B) It shows how dishonest GM is. They say, that going C11 will prevent potential customers from buying a GM product. But everybody who would turn away because of a C11 will turn away now, on the brink of bankruptcy

  • avatar
    Stu Sidoti

    Anthony Mason? Angus MacKenzie? Katy Couric?

    Jeeeeeeeeeeeezus, that’s the ignorant leading the stupid if ever I saw such a thing…

    They SHOULD have at least asked some people who knew something about the car industry…if they did that they might actually be accused of doing a little journalism.

    Now imagine the same spot with Farago, DeLorenzo and Buickman….now that story would have some POP to it !!!

  • avatar
    no_slushbox

    This was actually shocking, the mainstream media actually got the issues with GM right.

  • avatar
    Verbal

    Endgame.

  • avatar
    RogerB34

    Detroit will get $25B from Congress in Jan. Slam Dunk! Payment for Nov 2008 support and votes.

  • avatar
    Demetri

    The thing is, TTAC has been reporting this for three years and everyone looked at this site as if it were a mad prophet raving on a sidewalk, wearing nothing but a tattered rag fashioned into a diaper. Where are the props?

  • avatar
    Adub

    January will be too late, unless the Detroit Three can convince every creditor to hold off on payment until February. They might be willing to go along with that, since their chances of payment after a bankruptcy filing would be less. Some chance is better han no chance, I guess.

  • avatar
    KDM

    I have a question. If it would take 1 billion to close each of the 4 to 6 brands, how is that too expensive? They were losing 1 billion a month and now it’s what 2-3 billion, correct? Why didn’t they close down the brands when they had the money? If they had they might have been at least breaking even by now. Stupid, stupid management.

  • avatar
    Robert Schwartz

    Good Article in Teusday WSJ: “Eyes on the Road: Detroit’s Small Car Discount: Compact Cars From Ford, GM, Chrysler Sell for Far Less Than Rivals; Key to Revival” by Joseph B. White:

    “Consider the Ford Focus, … It’s the best-selling compact car from a Detroit brand. The typical Focus currently sells for about $15,500, … It’s also $3,371 per vehicle less than the average selling price of the Honda Civic, the benchmark in this class in the U.S. market. …

    “General Motors Corp. has a similar problem. Its best selling compact car, the Chevy Cobalt, sells for $4,192 less than a Civic, …”

    Another Interesting tidbit from the Journal:

    “U.S. Car Makers Fail to Improve Resale Values: Honda Retakes Lead Position In Kelley Blue Book’s Top 10; Bad News for Gas-Guzzlers” by Mike Spector in the Wall Street Journal on November 19, 2008

    Kelley Blue Book, … plans to announce Wednesday its annual ranking of the top 10 brands for projected resale value — and not a single one will be American. … [resale value is the % of a] vehicle’s sticker price … retained after five years … The typical Chrysler car, for example, is expected to retain just 24.2% of its original cost. By comparison, the top-rated Honda brand’s vehicles are expected on average to retain 44.5% of their value.

    * * *

    Chrysler LLC’s portfolio of Dodge, Jeep and Chrysler brands retain only 27.8% of their value. General Motors Corp.’s eight brands collectively retain 30.3%. And Ford Motor Co.’s brands, including Ford, Lincoln, Mercury and Volvo, retain 30.7%. The five individual vehicles with the worst residuals were all big cars or trucks with large V-8 engines, including Ford’s Lincoln Town Car and GM’s GMC Savannah van.

    * * *

    For buyers, resale value disparities mean it often costs less to own a more-expensive car if it holds its value better over time. Consider the Honda Civic EX automatic sedan, one of America’s top-selling small cars and among Kelley’s top resale models. According to Kelley, the Civic, which lists for about $20,675, should retain about 55% of its value over five years. Meanwhile, a Chevrolet Cobalt LT automatic sedan, which lists for $17,295, retains only 32% of its value. At the end of five years, the cost of the Civic minus its projected resale value would be about $9,304, while the initially cheaper Cobalt would end up costing about $11,761.

    * * *

    The Toyota brand, which is expected to retain 42.7% of its value, rose in the resale rankings this year, helped by the inclusion of hybrids like the Prius and subcompacts like the Yaris. Those vehicles’ relatively high resale values helped offset lower residuals from Toyota’s SUVs.

    BMW’s Mini brand and Toyota’s Scion brand both carry residuals exceeding 50% but weren’t ranked by Kelley because they don’t offer more than four models in their portfolios. …

    Chrysler’s Jeep Wrangler ranked as the best SUV resale pick, retaining 42% of its value. GM’s Cadillac CTS bested all full-size cars. The Ford Focus, which has surprised even Ford executives with its increased popularity, boosted its resale value five percentage points to 36%, not far behind some Asian and European makes.

    But domestic models like the Ford Expedition SUV [19%] and the Dodge Durango SUV [20%] dominated Kelley’s list of worst-performing vehicles in terms of resale value.

  • avatar
    John Horner

    It is a bit surreal to see the mainstream press finally coming around to what has been talked about online for years now. Just how old is the original GM Death Watch?

    Sure as can be, big change is indeed happening. I wonder what we will have to talk about this time next year?

  • avatar
    Point Given

    It’s like some twisted horror movie.

    One must die so the others may live. You choose.

  • avatar
    RobertSD

    Well, in this horror movie, it’s more like if one dies, they all die. If you get a chance to read Mulally’s statement to congress today, it goes something like this:

    “Please give GM money. If they go down, we go down with them.”

  • avatar
    seoultrain

    A billion dollars to shut down Oldsmobile seems like a bargain. To eliminate Pontiac, Buick, GMC, Hummer, Saturn, and Saab for less than $10 billion would be totally worth it, but it won’t happen as long as GM’s management remains.

    Also, can someone explain how GM dying will kill Ford? Yes, suppliers will go under, but isn’t Ford large enough on its own to sustain enough partners to continue building cars? Seems to me that Ford then becomes the sole relevant domestic company with great products on the horizon.

    I’d say that Ford joining with GM and Chrysler is hurting its image. Ford needs to let people know that it’s the domestic company that doesn’t need a bailout. It’s the only way to escape the sales bomb that the other two will experience.

  • avatar

    It appears that Ford feels they can pull through, but that they are joining the others at the begging bowl out of the simple rationale that it would be silly to let them get billions, and not get some for yourself.

    Seems as if Ford’s gotten in place the most flexible and responsive organisation of the three. Chrysler is just a ploy by Cerberus; while GM is off in La-La-Land and will remain there until the top management and board have been kicked out on their asses – they have too many bad decisions to defend to be willing to face reality.

    Almost exactly two years ago, I had an editorial up with this section in it. Wish I was this prescient in all matters:

    But Mulally is a self-professed disciple of The Way and if Ford’s resources don’t run out first, he’s the man who can give it the best shot. Who would you rather have making the effort: Wagoner and Lutz in their constant states of denial, or someone who’s actually hit the bullseye already?

    Mulally is already applying his knowledge to the task at hand. For example, he knows that Ford must align itself more closely with its suppliers’ best interest. FoMoCo’s suppliers are wobbling with fatigue, having been squeezed dry by their overlords. They’re so fed up they’ve started to squeeze back, exploiting the weakness of the rulers up at the Castle. Hopefully both sides will see the light before they force one another off the field of battle. Ford’s already seeking a more constructive relationship with its key suppliers, so don’t think Mr. Mulally is simply holding Thursday chat sessions.

    Mulally’s also begun realigning his forces in the field, making the various divisions understand they’re answerable to High Command and that the brandmash has got to stop. That’s going to be the tough one. There are hundreds of stakeholders who will be resisting any transfer of power back to the corporate mothership. I suspect this is why Mulally insisted on being co-director along with Bill Ford. A fly on the wall would have heard this: ”I’ll do it, but only if you’re willing to rain hell on the holdouts that will be fighting my changes. You and me Bill, we’re in this together.”

  • avatar

    # Demetri :
    November 19th, 2008 at 12:03 am

    The thing is, TTAC has been reporting this for three years and everyone looked at this site as if it were a mad prophet raving on a sidewalk, wearing nothing but a tattered rag fashioned into a diaper. Where are the props?

    Rarely props given for telling the truth in business, Demetri. Too many stakeholders defending positions.

    TTAC has had its access to products and shows curtailed, and Robert’s actually had less advertising sent his way for “being against American cars.” Farago has in reality fought FOR the US auto industry, by warning of what will happen if it doesn’t change its ways.
    Now it’s happened.

    “Crock’o’shit”* Lutz and his best buddy Wagoner managed to run GM clear off a cliff, and it didn’t have to happen.

    When I began writing for TTAC in 2005, I was fairly fresh out of banging my head against the wall of GM irreality, and I was concerned. Really couldn’t see how the company could keep making a rational appeal to the market.
    Put together this little thing in one of my later editorials – which I called The Disconnect: most automakers were aiming for the top of the market, but GM as the biggest volume company couldn’t do that, yet that was where their focus was.
    Does not compute – and now we know for sure.

    https://www.thetruthaboutcars.com/the-disconnect/

    (* “Global warming is a crock of shit!” Bob Lutz)

  • avatar
    ra_pro

    Most people frequenting this site realized that Detroit couldn’t continue doing what it’s been doing but honestly even we must be surprised with the sudden speed that doomsday arrived. Even a few weeks Farago predicted that GM still had a cushion of 1-2 years worth of cash. Funny (if it wasn’t sad) how Farago, Mr Doom’ngloom himself was in the end too optimistic.

  • avatar
    Geo. Levecque

    After watching all those CEO’s yesterday on CNBC begging to the Banking committee, it made me think that as they all said more or less the same thing in wanting the figure of 25 billion, it could have been 50 or more in all reality, one of the committee hearing about all their problems said that he expected they would be back soon for more Money! It will never end!

  • avatar
    hltguy

    I am of the opinion even if the auto companies get the taxpayer money, there will be a lot of pissed off americans who will not buy their products because of such. The backlash may be worse than the “cure”

  • avatar

    Let’s “rationally” state that the dealerships is where the action is. GM has 7.000 of them.

    And it appears that the company is asking for 10 billion, out of the potential 25 billion kitty.

    Suddenly, we’re looking at less than 1,5 million dollars/dealership. This is just to keep the number in perspective – I’m certain the dealers are bleeding more. In other words, GM alone would require multiples of 25 billion just to stay afloat, due to its irresponsible bloat.

  • avatar
    Pig_Iron

    They’re just figuring this out now?

    Hate to say we told them so…

  • avatar
    200k-min

    A friend just bought a new car last week. Traded in a Ford Explorer on a Camry. He cross shopped the Accord and Camry but the 0% swung him to Toyota. Another lost sale for Detroit. Bailout or not, I don’t see this pattern ending.

    That said, as a buyer of used vehicles I would be interested in a slightly used Ford for next to nothing. Maybe a Fusion or MKZ for $10k or less. Not a terrible car and if the price is right I’d buy. No hope for GM or Chrysler, I long ago wrote them off at any price.

  • avatar
    John R

    “This was actually shocking, the mainstream media actually got the issues with GM right.”

    Yeah, this is kind of eerie to see what we’ve always known and spouted off about for some time actually be in the MSM. I guess the next thing to impress me would be the talking heads to ask if Wagoner and crew really deserve their pay (Wagoner “earns” more than the entire BOD of Toyota combined!).

  • avatar
    fallout11

    “Even a blind pig finds an acorn occasionally.” – Old country saying

    This has finally reached the “terribly obvious to all” stage. Truly sad.

  • avatar
    taxman100

    Bankruptcy of all or any of the Big 3 means liquidation of that operation. No carmaker has even come of out of bankruptcy as a functioning entity.

    Liquidation means they will no longer be around to slam, which means this website will lose it’s reason for existance.

  • avatar
    BostonTeaParty

    taxman100, that thought has crossed my mind alot recently, as RF has been plugging mainly GM to have a business plan for their scenarios. i hope RF has his in place. A look at the content on here, take away the bailouts, and the death watches, what you left with these days? Whats the next step RF? I’m not trolling/flaming i’m genuinely interested in where you see the site going if everything goes the way it looks for the autos?

  • avatar
    npbheights

    …it looks like a Renault deathwatch is in order…. Probably ttac will follow the demise of the current worldwide automobile producers until cars come from the only land where it is cost effective to build them. Then expect artful, informative and entertaining reviews of the latest and greatest vehicles from SAIC, Great Wall, Dongfeng and others. Can’t wait.

  • avatar
    fallout11

    You guys may not have been around long enough to know it, but TTAC existed before the deathwatches ever started, and it will still be here long after the Detroit 2.3 cease operations.

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