On Thursday, the Senate passed a “Cash for Clunkers” bill that would give car buyers an incentive to take in their cars and get a new or used car. So, what exactly is this “Cash for Clunkers” bill and how will it affect you?

Well, if your car gets less than 18 miles per gallon, when you go to trade in your car, the government will send the dealership a voucher for $3,500 if the car you get has at least gas mileage of 22 mpg or higher, it becomes $4,500 if it’s 28 mpg or higher. If you own a pickup truck, sport utility vehicle, or minivan that gets 18 miles per gallon or less, you would receive a voucher for $3,500 if the vehicle you purchase gets at least 2 miles per gallon higher than you current vehicle and $4,500 if the vehicle you purchase gets 5 miles per gallon more.

If you have any emotional attachment to your current car, this may not be the deal for you. When you take your car in, it will not go to a loving home or sent out to “live on a farm.” The bill is to ensure that these cars are taken off the roads, so your car will go to scrap and either shredded or crushed.

Obviously, if your trade in value is higher than $3,500 or $4,500 it wouldn’t make much sense for you to participate in this bill anyway simply because the dealership will not give you the trade in value for your car if they have to send it off to be scrapped.

GM and Chrysler have both lobbied for this bill to be passed and while it is another thing that the government has thrown $1 billion at, it is good in the long run for not only the car manufacturers, but also the environment. The only problem is that all the SUVs that were purchased at the height of the “craze” have a higher trade in value than the $4,500 currently offered. If you purchased a Tahoe in 2004, I’m sure that your trade in value is more than $4,500, so that car hasn’t been taken off the road.

I think that this bill is a step in the right direction, but in my opinion, I think that people who drive environmentally UNfriendly cars should be taxed to make up for what the government has spent on this bill.

Goodyear Tire & Rubber Company opened contract talks with the United Steelworkers of America yesterday, though the economy is still in a recession, and with the history of a three-month strike in 2006. (The strike, which began with a spirited walkout, ended when both groups agreed to create an independent health care fund to pay for health benefits of USW retirees.) The current contract between the two expires on July 18, has encompassed three years, and covers over 10,000 steelworkers.

The United Steelworkers of America said that they want to walk away from the table with improved pay and benefits along with negotiated job security. Goodyear, on the other hand, said that they are most focused on cost control. “Goodyear’s goal for its North American Tire manufacturing operations is to be competitive within North America and with the rest of the world,” Goodyear said in a released statement.

Goodyear’s chief executive, Bob Keegan, has indicated that they plan to cut 5,000 jobs internationally in 2009, including 3,800 cuts made earlier this year. Goodyear currently employs over 71,000 employees internationally, 30,000 of which are employed with them in the US. Goodyear’s salaried pension plans were frozen at the end of 2008, releasing a statement that the company “has experienced periods of declines in interest rates and pension asset values,” which has left a serious funding gap in pension plans.

This shows that the company is not in the position to go around spending more money, making cost cutting a very important factor in these negotiations. On the other hand, the United Steelworkers of America have a duty to bring their members the best pay, benefits, and job security possible, regardless of exterior situations. It will be interesting to see what kind of agreement they can come up with and how this plays out. It is capitalism at its finest, something we are at a lack of in the days of pseudo-socialism. There is a lot to be said about a union and a large production company sitting down at the proverbial negotiation table with optimism and the desire to compromise.

Kevin Johnsen, a contract coordinator with the Steelworkers, said they are primarily concerned with job security, understandable in an era of pink slips and high unemployment rates due to the economy. It is only natural they would begin dialogue protecting workers from layoffs and pay cuts in the event of another economic downturn. “We’re interested in getting a fair and equitable contract. We want to insure that all of our members continue to have jobs,” he told the Associated Press.

John B. Russo, a professor in labor studies at the Youngstown State University business school, believes the economy and turmoil in the auto industry will complicate negotiations. “It’s going to be an issue in terms of the negotiations, there’s no question about it. Any union that’s negotiating in the current economic climate is facing that backdrop,” he theorized.

There’s no need to point fingers at GM for the bankruptcy it had to file. Now is the time for the company to try to come back from the brink of extinction rather than try to figure out whom or why.

Several news articles today are about which cars doomed General Motors or “Who’s to blame for GM’s Bankruptcy?” In the articles, everything from management to the Pontiac Aztec are mentioned as reasons for the fall of the once mighty auto maker. In a previous post, I blamed the auto company’s poor quality and lack of fuel efficient cars as the reason in recent years. However, it has taken years and a multitude of events to transpire for this to happen to GM.

Now is the time for GM to get their act together.

Today GM took the first step by announcing that someone is willing to buy the Hummer brand. While it was good while it lasted (or not), Hummer would have been completely done away with without a buyer. However, now that there is a buyer, GM will be able to recover some of the costs that it lost in acquiring Hummer. There was little known about the potential buyer of the brand other than that they are looking to aggressively finance the Hummer brand and its future product programs.

The government will be taking a huge risk by taking GM by the hand and basically leading it through chapter 11 proceedings. GM hopes to have everything in order to come out of bankruptcy in just a short 60 – 90 days.

The road back to profitability for GM will be bumpy and isn’t traveled often, most companies that file for bankruptcy never come out and are forced to liquidate rather than prosper.

Chrysler has shown that it is possible for a large company to come out of bankruptcy quickly, as long as it is helped along by the government anyway. Chrysler is planning on selling the majority of its assets to Fiat, an Italian car maker. The move would help the company along and it would make a move out of bankruptcy fairly quickly.

In the attempt to restructure, nine GM plants will close completely and three will idle while GM ponders its future plans.

David Cole, the chairman of Center for Automotive Research in Ann Arbor, Michicgan, said, “We are at the threshold of a dramatic increase in profitability for the industry, and we are increasing household formation in this country by one million a year, so demand is growing.”

At least there is a bit of optimism in the face of all the pessimism surrounding GM and its bankruptcy filing.

Over the past few months, I have written some fairly hash articles and entries about General Motors and its course to bankruptcy. If any of you have read my articles up to this point, I’m sure that you’ve all noticed, I’m not a fan of the company.

Well, it was announced today that GM is going to be under chapter 11 bankruptcy protection for a little while and I believe that the whole situation could have been avoided if the company would have simply taken some steps in the right direction years ago.

First, GM was once called the “heartbeat of America.” Well, if that’s the case, then I suppose America had a massive coronary in the 1990′s because that’s when the heart stopped beating. What I mean by that is that in the 90′s (possibly even beginning in the 80′s) GM, and other American car manufacturers, started skimping on quality. The cars weren’t lasting through the loan period, and definitely not past the warranty.

While I really enjoyed having a car, and my 2000 Chevrolet Cavalier got me from point a to point b, there were definitely days when I didn’t think it would, and a few when it didn’t. I can’t tell you how many times I had the same two parts on that car fixed before I wrecked it. Although it wasn’t an “old” car, everyone I knew would joke about how it was held together with duct tape and bubble gum (probably because it actually sounded like it).

Second, GM has let Toyota, Ford, Honda, etc. just blow them out of the water with Hybrid technology. Last year when everyone was wanting a hybrid so they could save a bit of money, what was GM doing? They were pumping out Escallades, Tahoes, Z71 pick up trucks, and cars with awful fuel efficiency. When Ford was able to tout their fuel efficient line, what did GM have? The Cobalt also known as the replacement for the Cavalier.

How long has GM had the Chevrolet Volt in development? It was a few years ago that the model was introduced, and it still hasn’t seen full scale production. You can’t buy them. You know what you can buy? Tahoes.

While I don’t blame GM for trying to cash in on the SUV craze, they knew that it would be coming to an end once gas prices started going up. If they were going to continue producing the cars that they already had, perhaps producing smaller and more fuel efficient cars would have saved them. It appears that is what Ford did, and they’re doing alright.

You just spent the last four years preparing for the rest of your life. As the Rodney Atkins song says, you “majored in beer and girls”.  (If you did, you are part of 5.4 million college bingers. Be not ashamed.) You spent five long minutes every week writing answers on every part of your body that you can pull out of your clothes to look at during the exam. Okay, maybe some of that is exaggerated. I really do hope you did the best you could throughout those four years of college and did your best to prepare yourself for the next 45 years of your life (or more, these days).

One thing they probably did not teach you is money management. You will have a mortgage, car payment, marriage (likely complete with two or three curtain climbers), food, etc. The list goes on. Money does not buy happiness, but if you hang on to a little of it and manage it wisely, you will be a much happier and successful person. The first step is learning how to manage that dollar no matter how big a hole it is burning in your pocket.

The first thing you need to learn is that we do not have control. We can stock all the money away that we want, invest as much as we can, but the truth is that the government and the free market have total control. All we can do is try to steer clear of the obstacles the economy throws in our way. Try to plan ahead and give yourself a financial cushion.  Very much like the commercials played here in Maryland for Baltimore’s St. Joseph’s Hospital concerning their heart department‘s heart attack risk assessment program. It begins with a man they introduce by name. They mention all the things he does right– he jogs every day, eats right, smoke free and alcohol free, but in three days he will have a massive heart attack. You could do everything right but then have a financial attack. Just learn to do the absolute best you can with every dollar you earn.

Work hard at all the right things. Be proactive. Be ambitious. Raise your hand for new challenges. Experience new things. Beef up that résumé. Do something you like that is still financially rewarding. Network properly in your industry. Most importantly, look for good benefits. Example: many employers reward their employees with stock portfolios (401k) which will likely grow. Live your life toward one central financial and occupational goal and live up to it.

Decide what “rich” means to you. There is another country music song that says that you do not have to make a million dollars if you are putting food on the table and providing for your family. If you only make $60,000 per year but it pays for that townhouse you bought in Hanover, PA, pays the bills, buys the bread, and allows you a little money left over to stock away and you are okay with that, you have succeeded. Just remember to live under your means and put those extra few bucks away every month.

Understand the fiscally responsible way to live. Pay off credit cards on time, more than the monthly payment; total balance if you can. Banks should be paying you interest, not the other way around. If you are paying interest, you are wasting money. Treat your credit score like a baby. One mistake could kill that poor child. One mistake in your credit could be the difference in that loan you want. Learn how to manage your money properly. Get down to the dime if possible in your budget. As mentioned in a previous article, there are easy ways to budget. Some people swear by the envelope method. Understand the cost-benefit analysis of your investments. Take good care of your health. Remember that a million dollars is more than enough for retirement. The investment companies want you to invest a million with them but in reality, $350,000 is plenty if you are fiscally responsible. Last but not least, be giving and grateful. This all leads not only to happiness but financial security.

Spurring along a few personal feelings I will also throw into the mix, I have to report that Honda kicked Toyota’s bumper in a survey taken by customers of their parts businesses. Honda overtook Toyota as the top company that auto parts suppliers prefer to do business with, according to an annual survey released Monday. Toyota has been the number one dealer parts supplier since 2002, but its ratings have fallen steadily over the last two years, according to a study by Planning Perspectives Inc., that surveys manufacturing and service industries, based in Birmingham, Michigan. Honda’s marks declined from last year as well, though not by as much. It was just enough of a hold to beat out Toyota this year.

Japanese automakers continued the best relations with their suppliers, with Nissan coming in third among the six automakers ranked. Ford finally raised enough in points to come in fourth, followed by GM and then Chrysler LLC. “While Ford still has a lot of work to do, what they’re doing with their suppliers is working,” said John W. Henke, president and chief executive of Planning Perspectives, in a written statement. Toyota’s customers complained of a younger, less experienced staff. Ford’s improvement was due to its recent decision to “domesticate” the business more and transfer its top European purchasing executive to the U.S. Ford also remains the only automaker among the Detroit “Big Three” that has not accepted government aid so it just seems fitting.

Despite being a Ford guy, I will comment on the Honda-Toyota findings. I sincerely disagree with Toyota’s defeat here. When I worked in the parts business a few years ago, I did corporate sales. I had to do a lot of work with the dealerships and I was actually rather impressed with the Toyota dealers in this area, minus the dealership in Westminster, Maryland. (They went on my “hit list”, for lack of a better term, after a few very bad experiences.) I also owned a Toyota. My first car was a beige 1995 Toyota Corolla. I found it much easier to get dealer parts for that car than some domestics, and I can tell you for sure that Honda parts are not as easy to find and are more expensive. I am not sure why more parts corporations prefer to do business with Honda over Toyota. Not only do I disagree with the findings, but I call into question the accuracy of the survey, because it just makes no sense. Does anyone have an opinion on this? I would love for a reader to shed some light on this or simply tell me which way they lean on this issue.

This past Thursday, Chrysler asked a New York bankruptcy court to end its franchise agreements with 789 dealerships across the country and informed them that they would no longer be receiving stock, basically closing them. These 789 dealerships will soon be going out of business. Like any business that has just lost all life support, you will find many going out of business sales, even though these dealerships are not actually calling them such.

The dealers have just a few weeks to sell out their stock of Chrysler, Dodge and Jeep or risk losing thousands of dollars on them and their only option is to give current car buyers a serious deal. “You’ve got some very good negotiating power,” said Dave Champion, director of automobile testing for Consumer Reports magazine. “[Dealers are] really looking to shift this inventory. It’s just stacking up all around them.”

Champion said that it’s important to find out about incentives and hold backs, which are payments the dealer gets when it sells a car. “It’s not a bad idea to go in there with a low ball price…. The longer you wait, the less options you’ll have.”

Both General Motors and Chrysler say they have too many dealers for too few sales. They have wanted to get rid of less valuable showrooms so they would not exist at the detriment of more valuable dealers. The cuts would allow the stronger dealers higher profits and more money to spend on marketing, facilities and personnel, making them more competitive, also fitting in with the bankruptcy standards they must abide by in the way of effective cost cutting measures.

Fear is affecting axed dealers as they try to figure out what to do with expensive inventories that weren’t selling well even before the bankruptcy move last month. They’ve told us that the inventory is our problem,” said Keith Hollern, one of the owners of a Dodge dealer in Windber, Pa. “Want to buy one? We’re having a fire sale.”

Dealers generally borrow money to buy their inventories, then repay the loans and make a profit when the vehicles are sold. Unfortunately, Chrysler sales were down 46 percent the first quarter, so many dealers have been paying only interest for months. Even if the vehicles are sold at cost, dealers still lose thousands in interest payments.

“Chrysler doesn’t have the money to buy back the vehicles,” said company spokeswoman Kathy Graham, “but it also doesn’t want to leave dealers in a bind or see the inventory flood the market at bargain prices.” This has caused most of the dealers to sign a deal with GMAC Financial Services, Chrysler’s new finance company, to give loans to remaining dealers that Chrysler plans to keep so they can buy the 789 dealers’ unsold inventory and sell it themselves. The deal, though, doesn’t include about 4,000 2008 models still on the lots that after the summer will not sell.

Graham said those 789 dealers cut from the company will get Chrysler warranty reimbursement and sales incentives such as rebates and low-interest financing until June 9. After that, they won’t have benefits on either. That means the dealers have a high motivation to sell off their inventory before their franchise agreements end. Chrysler incentives on some vehicles can run as high as $6,000 or more. Without them, dealers who have been cut won’t be competitive with standing dealers who can comfortably offer discounts.

“They’re not giving us a lot of time,” said Michael Wolf, a Plymouth, Wisconsin Chrysler dealer whose franchise was among those that won’t be renewed. “They’re neglecting their liability of taking new inventory. They’re not taking anything back.”

“What’ll end up happening, if a dealer wants to stay in business, they’ll probably end up just selling it below cost just to get rid of it,” said Erich Merkle, an automotive industry analyst from Grand Rapids, Michigan. “You’ll probably be able to find Chrysler vehicles perhaps at under the dealer cost.”

Dale Horn, owner of a dealership in Malvern, Arkansas, who was one of the 789 that were cut, isn’t counting on any help from Chrysler to unload his inventory of 34 vehicles. “Right now, I don’t have much confidence that they will do what they say. Nobody’s called me yet saying they’re going to try to help me,” Horn said.

Waiting until the closure deadline might give buyers even greater buying power. Insiders say that inventory is beginning to dry up with word of the pending bargains. Waiting too long may be a detriment, stopping a buyer from getting their ideal car at their ideal bargain.

The Federal Trade Commission has finally taken some action toward the auto warranty “robo calls” that has been going on for at least the past year. These companies that have been cold calling warning consumers about their auto warranty ending, have been calling numbers that are on the Do Not Call list as well as companies and private numbers. It has gotten pretty annoying.

The FTC estimates that over a billion of these annoying “Your Car Warranty Has Expired” calls has been made.

The two companies named in the suit are Voice Touch Inc. and Transcontinental Warranty Inc. The injunction is also meant to get the companies to give back any gains that were gotten from these robo calls.

A large amount of investigation had to take place to track the companies down because they took outrageous measures to conceal their identities.

If fines are to be issued to these companies due to their violation of the Do Not Call act, then it would easily put the companies out of business. Over the past year, with a billion calls made, I’m sure there has been several thousand violations of the act.

I have personally received a call about my auto warranty twice. The first time I got the call, I called Toyota to try to figure out what was going on simply because it wasn’t a very well known scheme then. Now, everyone I know has received a call about their auto warranty at least once. One of my friends has actually gotten a call about her auto warranty for her 11 year old car.

It is time for this company to take responsibility for all the problems it has caused people. There are consumers who did fall for the telemarketing sale and haven’t had much luck with getting a claim filed on the warranty.

So this is an extreme case of telemarketing and violation of the Do Not Call registry, but maybe the FTC can make an example out of this company and will force other companies that are thinking about doing the same thing to take some time and think twice.

At the risk of bringing on more bad economic news, the experts have been saying that General Motors will probably be heading to Chapter 11 bankruptcy since the economy began to unravel last year. This comes right after competitor Chrysler LLC filed for bankruptcy protection as well. More then ever, the experts who are “in the know” are screaming it. Despite the rescue payments in late 2008 and early 2009, they claim that General Motors is just in too deep.

In order to make it through, outside of the rescue payments, General Motors will have to somehow swindle its bondholders out of $27 million of debt for 10 percent of their stock, which is arguably the riskiest it has ever been since the invention of the automobile. On top of that, they will have to work out deals with the union, who has an ironclad contract, close more factories, cut or sell brands, and force hundreds of independent GM dealers out of business.

Bondholders are reluctant to take the deal because the government and UAW are getting far bigger stakes in the company, said Kevin Tynan, an industry analyst for Argus Research in New York. Tynan also made sure to comment that he thought bankruptcy is ‘inevitable’ for the Detroit-based automaker.

The worst part about all of this is that they have to make it work in just three short weeks. They face a June 1 deadline the government set as part of the ‘bailout’ agreement. “I just don’t see how it’s possible, given all of the pieces,” said Stephen J. Lubben, a professor at Seton Hall University School of Law who specializes in bankruptcy. Although GM intends to restructure out of court by making deals and changes, experts say they are all but in the trap now, and will soon have to restructure supervised by the courts. GM has also thrown around the idea of selling out 62 billion new stock shares, 100 times the 611 million currently on the market.

Last week, new GM CEO Fritz Henderson basically said that they will file for bankruptcy in an expeditious fashion if the need for bankruptcy presents itself. This is all assuming that the threat of bankruptcy is not a brilliant ruse to make the stock-debt swap more appealing. After all, they need a 90% bondholder agreement to make a move that was not government agreed. GM reported a $6 billion loss for the first quarter alone, as more of a reminder that bankruptcy is still in the list of top choices, and maybe the only viable option. After all, consumers have been avoiding purchasing from a corporation that has been flirting with bankruptcy for nearly a year.

At this point, GM needs to resolve the uncertainty and get in and out of bankruptcy as quickly as possible, Lubben said. Under chapter 11 bankruptcy, General Motors can continue business without interruption while restructuring under supervision of the courts. Cutting dealers also remains a huge hurdle, with GM hoping to shed 2,600 of its 6,246 dealerships by 2010. Dealers are protected by state franchise laws, and trying to shed them outside of bankruptcy would result in either millions of dollars in payments or multiple lengthy lawsuits, according to Lubbin. GM has also begun to temporarily close 13 assembly plants for up to 11 weeks through mid-July in an effort to control inventory, ultimately controlling spending.

At the beginning of the ‘bailouts,’ this author was less than optimistic that the government, or anyone else would be able to help General Motors out of their problem because they are too deep in debt and unrealistic contracts they cannot keep. Not only is bankruptcy inevitable due to these factors, but if the economy is supposed to come back strong at all, bankruptcy is best for everyone. General Motors will renegotiate contracts, especially with the UAW, time will be allowed to strengthen assets and new automotive prototypes will be designed. When General Motors comes out of court supervision, they will be stronger than ever. How can the economy come back any stronger than that?

Can Chrysler make a comeback from bankruptcy?

Question:

Yesterday, one of the Big 3 U.S. automakers filed for bankruptcy protection. Chrysler hasn’t really had the best time during the current recession. Was filing for bankruptcy the right decision and can the company make a comeback?

Answer:

I feel as though Chrysler’s options were very limited. Bankruptcy was really the only way to ensure that the company sticks around in the future. Hopefully creditors will work with Chrysler on payments so the company may be able to turn a profit again sometime in the future.

I think that if Chrysler plays the right cards it can come out a stronger company…What doesn’t kill you only makes you stronger, right?

From the South Florida Business Journal:

As part of the deal, the federal government will provide $3.5 billion for bankruptcy financing and an additional $4.7 billion in exit financing. In addition, Chrysler will enter a deal with Italy’s Fiat in which Fiat agreed to transfer billions of dollars in cutting-edge technology to Chrysler.

“As part of their agreement, every dime of new taxpayer money will be repaid before Fiat can take a majority ownership stake in Chrysler,” Obama said.

Chrysler and Fiat will work together to try to make the company profitable and come out of chapter 11 stronger than what it was when it went it.

It is absolutely crucial that this bankruptcy goes well and is over quickly so Chrysler can still sell cars in the meantime.

The sinkhole known as General Motors has decided that it needs to borrow another $2 billion from the U.S. Treasury to remain liquid while it tries to “restructure.”

The latest injection of funding means to date GM has received $15.4 billion in funding.

In a statement, the company said, “We appreciate President Obama’s and his Administration’s ongoing support of GM and the domestic U.S. auto industry as we undertake the difficult but necessary actions to reinvent our company. We will continue to work closely with members of the president’s Auto Task Force throughout our reinvention and together we will continue to monitor our liquidity needs during this period.”

GM will temporarily close 13 North American assembly plants, an action that will remove 190,000 vehicles from the company’s production schedule, the company said on Thursday

GM is also getting rid of Pontiac, leaving it with just 4 brands under its name. In my opinion, the fewer the better. If I were to buy a domestic car tomorrow it would likely be a Ford. GM has proven time and time again that it is an untrustworthy brand and it doesn’t deserve the sales it does get.

Rather than seeking money for Opel/Vauxhall, the automaker would ask any buyer to pledge to invest directly in a new company formed from its European operations, the report said, citing two unnamed people familiar with the plans.

An investor will be asked to pay at least 500 million euros ($655.5 million) in equity, but GM will realize no financial gain as the money will be injected directly into Opel, the report said.

The company is also prepared to sell its Swedish brand Saab, for nothing, the report added.

Maybe another company can come along and make these companies successes again.

Source

All the vehicles will come from Ford, GM or Chrysler.

“This is the largest one-time purchase of hybrid vehicles for the federal government fleet in history,” according to the statement.

President Obama said, “The problems that caused this economic crisis weren’t created in a day, and it will take time and hard work to get our economy back on track. But I am 100 percent committed to a strong American auto industry, and we will stand with America’s auto workers and their families during these difficult times.

“This is only a first step, but I will continue to ensure that we are working to support the American auto industry during this difficult period of restructuring.”

I suppose it is a good thing to actually have something to show for all the money that’s being thrown at the auto industry.

Source

The Obama administration is giving GM 60 days to rework its survival plan. The new CEO of the biggest U.S. automaker said a court-supervised restructuring in bankruptcy might be necessary.

Chrysler’s operation would be funded for the next 30 days as it works to complete an alliance with Italy’s Fiat SpA, considered the No. 3 U.S. maker’s best chance of surviving.

A source familiar with the negotiations said Fiat’s stake in Chrysler could start as low as 20 percent.

GM had sought more than $16 billion in new aid after getting $13.4 billion in December, while Chrysler wanted $5 billion on top of $4 billion at the end of 2008.

Source

The fuel efficiency rules are the first step in meeting a 2007 energy law that will require car makers to meet at least 35 mpg by 2020, a 40 percent increase over the current standard of about 25 mpg.

Of course these new regulations will likely be just met by the ailing U.S. auto industry who doesn’t have the money to make any headway in leading innovations in the fuel efficiency category. Likely, they will just do enough to meet standards just as they always have, especially on such a short deadline.

I can’t help but to think if the American car companies focused more on fuel efficiency starting in 2001, how would they have turned out today? As gas prices rose, people turned to foreign auto companies so … perhaps, they would not be in the situation they are in now.

Source

The answer has been no for awhile but now the new Honda Insight has a NEW price point.

Under $20,000 for a Honda Insight?

The 2010 Honda Insight is scheduled to hit dealerships on March 24th and will be priced under $20,000 to entice buyers as well as skeptics.

The price point is to compete directly with the Toyota Prius (the price for a Prius starts at $22,000 and goes up from there).

The pricing of the Insight has something to do with car makers also having a hard time getting cars off the lot, and with gas prices under $2 a gallon, it can be hard to get people excited about hybrids. With a price under $20K it can be a bit easier.

Now, John McCain thinks that it would be best for the company to go ahead and file for bankruptcy. He said, “They reorganize, they renegotiate their union-management contracts and come out of it a stronger, better, leaner and more competitive automotive industry.”

However, GM CEO Rick Warren thinks that if GM files for bankruptcy, no one will buy GM’s cars anymore and the company will have to liquidate rather than come out a “leaner and more competitive automotive” company.

John Mccain isn’t the only Republican behind the idea, Richard Shelby, the top Republican on the Senate’s banking committee thinks that not only GM and the other car makers should file for Chapter 11, but that Citigroup and other businesses should too.

However, there are also Republicans that aren’t for the bankruptcy option. House minority leader John Boehner says that Chapter 11 is not an option for GM.

In February Toyota reported a 40% drop in car sales in the United States alone. This has led the company to seek $2 billion in loans from the Japanese government to help with the slump in sales.

So this just proves how flat the market is right now, as one article said “When Toyota starts begging, you know it’s bad” ‘

I wonder who will be next or which car companies can survive this serious downturn. I guess it’s just a matter of time before we’ll be able to see who’s made it out ok and who didn’t make it out at all.

This is the first year for the “best value” category for Consumer Reports, who offers such picks as best quality and best pick.

The magazine says that American automakers are making great improvements in quality over where they were just a few years ago, but still have to catch up with other foreign automakers that have been consistently good over the years.

This is amusing to me because I think the only reason it is on the rise is because there are more cars  being repoed…perhaps. Repo men have one of the most difficult jobs, in my opinion, because they are just representing whoever is lending to the owner. The car owners usually, if not always, know that their payments are deliquent, but still put up a fight.

However, if you’ve ever seen an episode of that awful True TV show “Operation Repo” then you know that sometimes the repo people bring it on themselves. I mean first of all, everytime I’ve ever heard of someone being repoed, its done at night, not in broad daylight or while there are a million people haning around. I suppose that could also lead to increased violence.

The nation’s biggest domestic automaker said Thursday it lost $30.9 billion for the full year and expects to state in its upcoming annual report whether its auditors believe the company remains a “going concern.” GM and its auditors must determine whether there is substantial doubt about the automaker’s ability to continue it operations.

This is another situation where the government feels that the company is too large to fail, or GM believes that and it’s their job to convince the government that it is too large to fail.

The thing is, GM has to prove to the government that it deserves and can manage a larger loan from the government by restructuring, however, with statistics like this coming out every 3 months, it probably makes the government feel very uneasy about lending GM anything.

Source

The news came after Saab, GM’s Swedish automobile company, filed for bankruptcy protection. Hopefully, Saab can be sold off by GM rather than just disappearing completely. The Swedish government denied Saab any government assistance to help keep the company out of bankruptcy.

It’s kind of sad to know that, with price adjustments, my grandmother can’t remember the last time GM’s shares had hit this low of a price. I am sad that Saab may be lost forever, but I suppose that’s better than GM going into bankruptcy (and likely liquidation) if it continues to fund the Swedish car company.

Right now GM is working with the United Auto Workers union to hammer out a deal that will satisfy both parties. GM really needs to cut the costs of the programs retirees are getting as well as start closing production plants and dealerships.

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A buyer of the 2008 Ford Fusion could choose from the various models and extra features available and come up with 2,600 combinations. For the 2010 version due in showrooms this summer, the number drops to 104.

The Toyota Camry and the Honda Accord were the two best-selling cars in the U.S. in 2008. The people who purchased more than 800,000 of them combined last year picked from a total of just 15 versions. For the Accord, the models or trim levels were limited to just four, each level complete with a variety of extra bells and whistles.

The reduction in different styles of models would help the companies cut costs.This could also help the companies cut back on models and go to a structure where they have a great line up of a few cars rather than a large amount of okay cars.

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The good news (if you can look at it that way) is that Nissan will not be cutting all the jobs at once. Job cuts are expected to happen over time between now and March 2010.

Directors on the board for Nissan’s fiscal year ending in March will not be getting any bonuses. They will also be taking a 10 percent pay cut. Manager’s salaries will also be reduced by 5%.

Here’s what’s been happening:

When a car buyer still owes money on a vehicle he is trading in, the dealer promises to pay off the outstanding loan, then resells the vehicle. But as more dealers go out of business, some are sticking consumers with the bill. Lenders can then go after the previous owner who thought the debt was paid, or repossess the car from the new owner who assumed it came with clear title. – AP

This can lead to some people having multiple car payments and not being able to afford them just because the dealer couldn’t keep their side of the bargain.

One of the worst parts of the story is that many states don’t have any kind of program or law in place to stop this from happening. Some states make dealers pay insurance in case a dealer defaults, but not in the nation’s largest auto market California where many reports are being generated.

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From Reuters:

GM will offer its U.S. hourly workers $20,000 in cash and a $25,000 voucher to buy a vehicle as an incentive to retire or leave the company, an official with the United Auto Workers union briefed on the plan said.

Chrysler’s program offers retirement-eligible workers $50,000 in cash and a voucher of $25,000 for a new Chrysler vehicle if they leave, according to a person with direct knowledge of the offers.Workers who opt to leave Chrysler with no retiree health care benefits would get $75,000 and a $25,000 car voucher, the person said.

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I personally don’t think that the President should pass the bailout plan, if he could tell…the majority of Americans do not think that bailing out the automakers is the best way to spend $15 billion.

The $15 billion that is supposed to go to the auto companies is out of the funds we have allocated to the financial sector to keep their heads above water…not auto makers that are bound by their union workers and crappy automobiles.

Mr. Bush, if you pass this bailout for the United States auto makers, please make sure that they use the money wisely, not just to build F-150′s…

Recently, to help slumping sales, Simon Empson of Broadspeed.com launched a BOGOF deal on Dodge Avengers in Europe. He sold out of the autos in 4 hours.

Ah Ha! I knew someone would do something to help flat lining car sales. I suppose the best way to do this here would be to say, “If you buy a new car, you can choose a used car for free!” or “We’ll throw in a Tahoe!!”