http://www.cbc.ca/money/story/2008/10/28/auto-aid.html

General Motors and Cerberus Capital Management, which owns Chrysler, have asked the U.S. government for around $10 billion US in an unprecedented rescue package to support a merger between the two car companies, two sources with direct knowledge of the talks have told Reuters.



I'm no money guy, no idea how much of this is real panic in the auto industry or if this is just the auto industry jumping onto the bank bailout quick money grab bandwagon

*sigh*

 

I think the 10 billion would be a compromise between letting GM and Chry go into bankruptcy and all the jobs that would be lost. The cost of unemployment would probably outweigh the 10 billion in bailout funding. But the big question is why are they going under? Probably because they kept building gas guzzlers and not getting involved with smaller more efficient vehicles sooner.

 

Someone also pointed out to me that the cost of owning a car for new drivers is out of control as well.

It's not the cost of gas, or the car (they can buy used) it's the cost of insurance.

Young drivers can't afford to own a car because they can't afford the insurance.

When I started driving I think it was ~ $5-$600/ year for insurance, I've no idea what it is now as my kids are not driving age yet but i'll find out in about 3 years *gasp*

I called up my broker for an estimate on insurance for a new female new driver, here are the numbers I got.

Basic insurance no add ons : ~2400 / year
Male new driver > $3000 / year

It's less if they are on as an occasional driver on thier parents car. More if they want more comprehensive coverage.

Heck my first vehicle didn't cost that much to buy.

 

The history of gas prices and credit market have not been kind to either company. Although to quote a friend 'they got religion,' it might not have been soon enough to stave off a grim future. There still is a tremendous inventory of large vehicles waiting on buyers who have high enough credit ratings.

It looks like I can pay off the Prius car loan before the insurance is due again in April. This means we can reduce everything to just collision. But for good measure, I'll recompete our car and house insurance.

For good measure, I'll also get an independent house appraisal of our house to reduce our tax position (there are some repairs I've been putting off.)

Knock on wood, we should see a net decrease in expense in 2009.

Bob Wilson

 

If I were the government regulator; I would impose certain conditions prior to handing anything:

1) Not a single penny to subsidize SUV sales.

2) CAFE ratings: The previous 2020 mandate was plain stupid. You should be at 30 MPG within 3 years, 35 MPG within 6 years.

3) Trucks should be no-frills work-types to be excluded from CAFE. You add leather, you add an entertainment system, sunroof or 8 speaker surround sound system, the truck immediately is accounted for in the CAFE statistics.

4) Vehicles that Asian companies private-label for you do not count towards lowering the CAFE. The vehicle has to have significant North American content and labor.

 

"fernado_g" is my hero!

Well said!!

Bob Wilson

 

latest news is that GM is putting the volt on hold. cuts to engineering was one reason mentioned.....sounds like they are using the volt for leverage with the govt.

 

+1 for fernando!

 

"Without government intervention, a significant increase in auto sales or "substantial" proceeds from asset sales, GM said its cash on hand will reach critical levels by the end of 2008, after burning through another $6.9 billion in the September quarter."

"Cost reductions will include further production cuts deeper reductions in its salaried workforce. GM increased its salaried cost reduction target to 30% in Canada and the U.S. up from an early goal of 20%. GM also will extend cuts into the slumping Western European region.
The third-quarter results suggest that GM, in cost-cutting mode since 2005, is running out of options to keep its business afloat amid worsening conditions."

Severe cuts coming at both Ford and GM, not good times to be an auto worker. I think now GM has gone past worrying about the Chrysler deal and is not saying they are on the verge of bankruptcy.

 

With apologies to GM employees and friends, I think that the Volt has *always* been a leverage device. Whether for press coverage, achieving mpg goals, or now (with big bags of cash in sight) to secure bailout funding.

(basically in response to test54)

DAS