Wry Comment on the Auto Bailout

Sounds like the union motto.

 

Great find!

 

Oh, they are SO right

 

25 billion / 25 thousand (price of a new car) = 1 million new, fuel efficient cars we could have bought with the bailout. If we assume that these companies make a 10% margin, to keep math simple, they just "sold" 10 million cars without having to produce a single one. pretty sweet deal for them!

 

Don't forget - less damage to the environment this way too!

 

Strange thing about the facts:

GM outsells Toytota in 9 out of the top 10 markets in the world. Of course the exception is the closed home market for Toyota. Time to open your eyes.

 

So if GM outsells Toyota in 9 out of 10 markets, why are they in such deep s***? The argument about legacy health costs is bulls***, because the Big Three also expect a huge handout from Ontario and the Canadian Federal government.

Last time I checked, Ontario had OHIP (Ontario Hospitalization Insurance Plan) so there are no health care costs for the Big Three in Ontario

Anyway, I leave later this afternoon on another sucky business trip. Back in a week, and I will be fascinated to learn what folks in other parts of the world think about our whiny car makers

BTW The Ontario government is demanding the Big Three provide a detailed accounting of how they got into this mess. Apparently, the Big Three are - surprise! - balking at this

More bad timing for the Big Three. The Fraser Institute released a pretty damning report yesterday, documenting that since 1994, the generous Canadian taxpayer forked over $182 billion in Corporate Welfare

Corporate welfare: Now a $182 billion addiction

Kinda cute how these big corporations expect to get their way, and applaud when the "free market" works for them. Once they hit a brick wall, they suddenly embrace welfare and socialism.

 

Its simple, the US legacy costs were set up when GM had 50% of the market. the legacy costs of the Detroit are shown as fixed costs. If the fixed costs for 2008 are $30 billion in the US and at 25% market share of a 16 million car market , the fixed costs are $7500/unit. If the market share slips to 20% and the market falls to 12,000,000 units the fixed costs rise to $12,500 per units sold. So unless after variable costs GM is making more than $5,000/unit the the change in share and market adds to the loss.

If GM had 50% of even a 12,000,000 unit market the fixed costs would be a more manageable $5,000/unit. If Gm had 50% of a 16,000,000 us market the fixed costs would drop to $3750/unit.

Many of these legacy costs are significantly reduced begining in 2010(and maybe sooner with some recent developments. GM makes money in all of its worldwide units with the exception of the US and the loss in the US far exceeds the dividends from the other markets.