Is this the end of V8SC?

[billy bigtime]

According to todays press, GM is close to being a basket case. If they go into liquidation will Holden(as a subsiduary) go down the tube as well, leaving no competition for the Fords. Will it be the end of our beloved series or will Toyota fill the breach?

[GTRMagic]

If GM failed in the US, there would have to be a federal government bailout... their economy would not be able to sustain the stoppage...

It seems a very fat business, with divisions doing all sorts of things, while competing against one another... despite jetissoning a couple of brands in recent times, the "car" part of GM doesnt seem to do all that well... in the US anyway....

V8Supercar has built its business on a Ford Vs Holden mantra... they are thus slaves to each of these manufacturers... if TC had a sniff Toyota was interested, presumably they would already be involved

[billy bigtime]

I would imagine Toyota would put their hand up for Holden in Oz?

[mmciau]

I'd suggest GM NA would use Chapter 11 provisions in the US to "trade" out of any difficulty (if there are any difficulties!!!)

Mike

[crYnOid]

GTRMagic is correct. If GM was to go into liquidation (which the US gov. would never let happen) someone estimated that at least 1m jobs would be lost. That would be a massive hit to the US economy so the US gov. would never let that happen.

GM is also a very very unattractive purchase as they have massive debts and are also the largest health care provider in the US due to the deals with the unions. Something like US$1600 per vehicle in the US goes to health care.

GM also have manufacturing capacity for 35-40% of the US market........... they have 25%. That is alot of workers getting paid big fat cheques (because of the unions) each week for not enough product. And to top it off GM can't fire the union workers so they just have to wait for them to retire and not hire anyone to replace them. They still have to pay for their health care after they leave.

The short of it is that no one will buy GM because it is a very bad buy due to debt, union workers and excess production capacity, and GM has damaged its reputation even more in the US by using short term solutions to gain sales which is now hurting them as they have used them for to long (incentives).

Holden is one of very few profit making divisions of GM, they wont be going anywhere.

[Aarrgh8]

Billy/msb, you've read a lot into that article that wasn't there.

While you're exercising your fertile imagination, you can speculate what would happen to FIAT, Saab, Isuzu, Opel, Vauxhall, Subaru and Suzuki, if your dream was to happen. You might also wonder where a lot of shipping lines, railways, mining companies etc would purchase equipment.

IF GM was to ever go into liquidation, rest assured that those smaller companies in the US that make cars would have long gone.

[xrystl]

Originally Posted by Aarrgh8

Billy/msb, you've read a lot into that article that wasn't there.

While you're exercising your fertile imagination, you can speculate what would happen to FIAT, Saab, Isuzu, Opel, Vauxhall, Subaru and Suzuki, if .

R8 , interesting speculation !! - GM Europe is a basket case and has been for some years , GM has been trying to offload its share in Fiat for some time - Opel and Vauxhall have been on a downward spiral since the mid nineties - Saab has been in the red since the mid eighties and haven't improved with GM ownership - GM exposure in Subaru is minimal and GM investment in Suzuki was only to have a supply of mini type vehicles .
Ford is in a similar situation with its Premium brands = Jaguar - Aston Martin - Volvo .
A bit hard to figure why GM and Ford would buy these automakers and not make huge improvements to the products - the reason that the Automakers were going under was poor product planning and market stagnation - along comes the Huge GM and Ford corporations and the products stay the same and the Japs make a killing .

[GTRMagic]

Originally Posted by Aarrgh8

While you're exercising your fertile imagination, you can speculate what would happen to FIAT, Saab, Isuzu, Opel, Vauxhall, Subaru and Suzuki, if your dream was to happen. You might also wonder where a lot of shipping lines, railways, mining companies etc would purchase equipment.

IF GM was to ever go into liquidation, rest assured that those smaller companies in the US that make cars would have long gone.

Part of GM's future strategy is said to be to get rid of their shareholdings in other brands... they are trying desperately to escape from the Fiat alliance (at a penalty of over US$2bn... ) and loooking for other things to do with Saab, Subaru etc etc....

Its nto a good sign, but is what happens when a company gets so big it becomes fundamentally unmanageable...

At least there are no family members in the driver's seat, or should I say back seat driving, like the blue mob....

[pete55]

I thought GM's plan was to use the Subaru tie up more, not less. Apparently there are plans for several new cars and model upgrades using the Subaru link. Apparently GM has plans to use Australian models and model designs more in the future also.

[hrt_rulz01]

everyone is buying to much into this. nothing is gonna heppen to holden so thats all that matters. who cares about fiat!

[Chucky]

Originally Posted by hrt_rulz01

everyone is buying to much into this. nothing is gonna heppen to holden so thats all that matters. who cares about fiat!

Believe in the Easter Bunny to do you?

GMHA had better have a good looking balance sheet lest it become part of the dead wood removed to keep the tree alive.

[GTRMagic]

I was thinking more about teh cross guarantees of boring things like bank accounts, overdrafts, financing facilties, GMAC etc etc....

Take MCI Worldcom as a case in point... the minute their enterprise stumbled, the OzeMail concern began a wave of subscriber losses and local profitability (and value) concerns....

When the parent company sneezes, the local arm almost always catches a cold... which can lead to pneumonia....

[GTRMagic]

The GM situation isnt sounding too positive... there is an article Here

It seems the GMAC financing business is the cash generator, while the car making business actually seems to burn money....

Where the issue exists is that the finance division requires cash to lend to other people... in cars, consumer finance, leasing etc etc...

... so if the GM bonds are re-rated to "junk" status by Standard and Poors, then the impact of this is any future bonds or borrowings by GM will requiring a higher interest rate to be paid, due to the increased risk a ratings agency like S&P has put on the GM company.

It certainly isnt good news....

How does that affect the subject at hand... well Holden seems to be doing well enough at the moment, but a mere 20 years ago, they too were in financial crisis... "technically bankrupt" is the term that was bandied about at the time...

... take a squiz at consumer sentiment about Mitsubishi when the media hyped up the stories that the triple diamonds were leaving Australia for good.... sales literally stopped!! Causing more issues and pressures on cash flows that are only really being tickled for now, as volumes dont seem to be back at pre-gloom levels.

This very same thing could happen to Holden... and showroom traffic could stop... and mean discretionary spending, such as a marketing program with racing cars, would also need to be cut back, or indeed cancelled.

I wonder then what the landscape would look like if Holden were to pull out, leaving V8Supercar as a one-make Ford series...

It would make the rejection and objection to additional makers like Mitsubishi, Hyundai, Toyota or BMW look rather foolish I would have thought....

[hrt_rulz01]

just say if GM do file for bankruptcy (very unlikely), i would think Holden, as the most profitable part of GM would either be bought out by another company or stand alone like the good old days. just a thought but lkets not jump to conclusions. alot of politics & money involved.

[GTRMagic]

I dont think its "very unlikely" at all.... the GM business has put some blood into the water, they are being hammered quarter after quarter by the analysts about poor performance.

Holden is not isolated or immune from any of this....

[monaroCountry]

Holden like somebody have said before is the shining jewel in the GM world, they have been the most profitable and most innovative. If GM were to go I would thing that Holden has the best chance of surviving, because 1) have an engine plant 2) have its own new platform 3) great design facilities 4) government support 5) great customer satisfaction/support and 6) have existed with limited GM interference.

[hrt_rulz01]

someone would buy them out or they would stand alone. i would like it better that way so its actually an australian owned brand again!

[GTRMagic]

Originally Posted by hrt_rulz01

someone would buy them out or they would stand alone. i would like it better that way so its actually an australian owned brand again!

Last time Holden was Australian owned, their primary business was to do with horses and buggies

[hrt_rulz01]

i did abit of research. how could GM go from last quater earnings (2004) of $193 billion to this. check it out.

http://www.gm.com/company/investor_i...tion/earnings/

[GTRMagic]

Originally Posted by hrt_rulz01

i did abit of research. how could GM go from last quater earnings (2004) of $193 billion to this. check it out.

http://www.gm.com/company/investor_i...tion/earnings/

So they turned over US$193 billion for the quarter... and reported a profit of US$3.6 billion for the same period which equates to 1.9% return on sales.

Given the enormous capital levels required in this industry, it would not cover the cost of funds.... Indeed if there is US$115 billion in bonds out there, even if they pay 5% p.a. the cost of just servicing that debt, let alone spending money on capital infrastructure would be US$5.75bn p.a. or US$1.44bn/qtr.

[hrt_rulz01]

not exactly but so what. holden seem to be doing fine here in australia, basically on their own. so what would be different without GM!

[hrt_rulz01]

GM have nothing to do with most of holdens designs actually! even resources im not sure about. its all made in australia. gm may give them funds but thats about it! but since holden is making record profits, im saying that it could stand alone if it wanted to. anyway, this subject has reached the end i think!

[woodbine]

Originally Posted by hrt_rulz01

GM have nothing to do with most of holdens designs actually! even resources im not sure about. its all made in australia. gm may give them funds but thats about it!

So GM have nothing to do with the design of the Cruze, Barina, Astra, Vectra & Rodeo? And Germany, Spain & Japan are all now part of Australia?

If Holden were to be a standalone company all they would be making would be the Commodore & its derivatives.

[GTRMagic]

Ah but Holden dont have an engine plant... well not a local casting plant anyway... thanks to Ion falling over.

This is a big deal... not being able to borrow money at commercial interest rates because of market doubts, and historically poor trading performances, will make waves here....

[djt46]

catch up guys FIAT is no longer associated with GM, it did a nice job on GM's deperation and got a $US2bn severance of the put agreement between them. This meant GM handed over a cheque for the big ones a few weeks ago in return for not having to buy FIAT, which FIAT knew it could not afford to do, and FIAT became much more cash flush than it was, hence the sudden reorg at FIAT with Afla Romeo "buying"Maserati from Ferrari, like these are all owned by FIAT! FIAT and GM now only have formal joint production deals for engines and stuff, such as the V6 block from Holden for the next range of Alfas.