Auto Dealerships Need Floorplan Assistance And Access To Credit If they Are Expected To Survive...

The retail auto industry is in the worst financial crisis in its history and the future doesn't look very promising for most auto dealers. In the early 1900's, auto dealers came to the rescue of the auto manufacturers with loans and the ability to purchase more inventory to meet the needs of the fledgling auto industry. That was when local banks and other financial sources could step and assist because of the character and contributions that the local businessman contributed, loans were based on character and importance to the community. The days have changed and have they, auto dealers are in the fight of there life to find adequate sources to fund the purchase of vehicles needed for there businesses.

Dealers have been besieged with letters changing terms of there floor plan agreements and as NADA (National Auto Dealer Association) is putting it, there is a massive pullback from captive lenders, regional banks and others who specialize in lending to auto dealers. The pullback is not subjective as dealers with excellent repayment histories and have great collateral are seeing these lenders making demands that may not be met by the auto dealers.

NADA has taken the case to the Federal Government to intervene on the dealers behalf as it sees a potential for massive closing on the near horizon. They are requesting the government provide a commitment of $1 trillion dollars to increase the issuance and sale of securitized loans for buyers and dealer inventory to stem the tide of dealership closings because of the credit crisis.

The issue stands out because if not the potential for thousands of jobs lost of dealership employees, suppliers and other associated businesses could result in a deepening recession.

With banks continuing to receive aid and it not being circulated through loans and other instruments is confounding, what is the purpose of the banks receiving aid if they will not lend to businesses and individuals. At some point the public has to cry out and tell the government to stop as it really is a waste of taxpayers dollars since they are the ones footing the bill and these funds are not benefiting them or the economy. We are only preserving jobs for the bank executives and other bank employees with these funds and if it is meant to stimulate the economy then lets get the money circulating instead of providing the banks more funds so they can purchase other banks, that truly is a waste of taxpayer money.

The outlook for many dealers remains weak as the lenders are making it very difficult to operate with tight credit restrictions coupled with the already difficult retail marketplace.

Enjoy Today!

That Car Guy

Sphere: Related Content

Why You Should Never Let An Idiot Play With An Airbag

Airbag Explosion <<< View Video

There is a reason that automobile manufacturers securely place airbags behind compartments and attach them to sensors.

Then their is this guy, he didn't need a reason, he just wanted to have fun!

Ouch!

Enjoy Today!

That Car Guy

Sphere: Related Content

SAAB Is The First In A Line Of Manufacturers Who Will Be Forced To Seek Bankruptcy or Reorganization...

BREAKING NEWS! BREAKING NEWS! BREAKING NEWS!

What is sure to be a musical chair game of Auto Manufacturers worldwide who will be seeking bankruptcy protection, Saab the company owned by General Motors has filed for reorganization and bankruptcy protection from the Swedish court system.

Saab is seeking $1 Billion ($793 million euros) from General Motors to become self-financing as it goes through the process of breaking away from General Motors and become a "independent business entity". As it will concentrate its production, it's designing and engineering in Sweden.

GM has been asking the Swedish government for $600 Million Dollars to provide Saab a healthy balance sheet so that it can seek additional outside funding. GM said it would only provide Saab funding to support liquidity not to further support additional projected losses.

Expect Saab to be the first in a line of other automakers and brands to find protection from creditors as the credit crisis worsens. If large, medium and small businesses can't get access to loans for development, inventory and financing of thier products then the only way this mess is going is down, that's why I couldn't support the bailout for the banks and finance companies from the beginning of the meltdown.

Enjoy Today!

That Car Guy

Sphere: Related Content

Sirius Satellite Radio Receives A $530 Million Dollar Loan Bailout from Liberty Media...

A page was taken right out of how free market capitol economies work and was put on full display yesterday when Liberty Media loaned Sirius/XM Satellite Radio $530 Million Dollars. Mel Karmazin working the phones between The Dish Network and Liberty Media to assist in resolving the Satellite Radio company from defaulting on a $175 Million Dollar loan that was due yesterday was dealt some breathing room.

Liberty Media will receive a 40% equity stake in Sirius/XM Radio, which will make it the largest shareholder and receive up to at least three board seats. The money should allow Sirius enough capitol to pay off additional bonds due in May 2009 of $350 Million Dollars. The cash infusion sent Sirius stock up $0.06 cents to $0.16 cents from $0.10 cents, the company still has a long road to impress Wall Street and investors that it is on a path to profitability. The company has never been profitable although it does boast 20 Million subscribers and over $2 Billion Dollars in revenue. It is saddled by huge debt that it is trying to service including another $400 Million Dollars due in December 2009.

The $530 Million Dollar loan comes with a hefty interest rate of 15%, and is being paid in two stages as conditions for the second stage of the loan has certain restrictions that would allow Liberty to back out of the deal. Liberty infused $250 Million Dollars now and the second stage will become due provided that the company doesn't financially collapse in the near term before it is due.

Sirius has some serious restructuring to do to meet its obligations, including overall financial responsibility and looking at its programing and capitalizing on its real opportunity of giving consumers real choices with emerging technologies that would allow the operator to be on the forefront of radio programming as it can do what terrestrial radio cannot because of the capabilities of satellite and its subscriber base.

Enjoy Today!

That Car Guy

Sphere: Related Content

General Motors And Chrysler Are Back To Begging For More Money...

BREAKING NEWS! BREAKING NEWS!

The Big 3 Automakers were back begging for more bailout money from the U.S. Government and filing restructuring plans to support there efforts. Ford it should be noted has not requested any funds to survive, although it says it would need funds if GM or Chrysler should fail.

General Motors has requested $16.6 Billion dollars and Chrysler has submitted a plan calling for $5 Billion dollars and indicate that thousands more jobs will be lost there hands are out.

Chrysler projects the U.S. auto market will sell only 10.1 million vehicles the lowest output in 40 years, which is less than the 11.1 million units that it predicted when they received there first loan from the Treasury. This lower forecast is in line with the reason why they have increased the amount of additional funds that they indicated is need to keep the automaker afloat.

Chrysler also announced that it will eliminate the Chrysler Aspen, Dodge Durango and PT Cruiser models from its line up. In addition it announced that the company will comply with the Federal Governments guidelines in reducing executive compensation and stated that it had eliminated company matching employee 401(k) plans and many other cost cuts.

Chrysler further made proposals to sell over $300 million dollars in "non earning assets" in 2009 and states that it will begin paying back the loan beginning in 2012. The proposal was contained in 199 pages that it submitted to the Treasury and included what the company would due should it face bankruptcy.

General Motors, Ford and Chrysler as indicated by the release of a statement from the UAW union has reached tentative agreements on making changes to the 2007 labor contracts. The UAW also stated that ongoing talks are still going regarding funding retiree health care obligations that the union has agreed that it would take over next year.

General Motors is in desperate need of $16.6 Billion dollars and may need upwards of $30 Billion dollars in government loans as it submitted its restructuring plans to the Treasury Today (2/17/09). The plan includes eliminating 47,000 jobs and closing 5 more U.S. factories. The company is also planning on eliminating or selling its Saturn, Hummer and Saab brands.

Commentary: I see a future in which the U.S. will not be manufacturing any or very very few so-called American brands here in the states, the cost to manufacture vehicles with labor cost and other monetary factors make the cost to high and you can't build a business case to support it, when the U.S. is competing with other countries who's labor cost are considerably less than the U.S.. Any business model that makes since has many factors to consider and importing these vehicles from countries that have lower labor cost and are emerging as industrial centers will become standard within the next 6-10 years.

I will report on the GM plan as I research the plan more thoroughly.

Enjoy Today!

That Car Guy

Sphere: Related Content

President Obama Signs Stimulus Bill into Law...

BREAKING NEWS! BREAKING NEW!

With the stroke of a pen, $787 billion dollars will be spent in the U.S. economy over the next few years. President Barack Obama signed into law Today one of the largest spending measures in the history if the United States.

The President spoke to a large crowd in Denver, CO, stated that Americans to begin "laying claim to a destiny of our own making", before the bill signing ceremony.

The White House also opened up a website http://www.recovery.gov/ that will provide the country a mechanism to keep track of where and how the money from this bill will be spent. This was done as a measure of transparency that President Obama has pledged to maintain.

Even with unprecedented measures to pump money into financial institutions and American automakers, the country is reeling from continued slow growth and massive layoffs. In addition, State governments and municipalities across the country are struggling to meet common services and in some cases refunds to taxpayers.

The country has an unemployment rate is at a 16 year high at 7.6% and Economist and other analyst predict that the overall economy will remain unstable throughout the rest of the year.

The bill includes many measures that provides tax breaks and spending projects that as proposed should put millions of workers back to work.

Enjoy Today!

That Car Guy

Sphere: Related Content

Women Drivers... Oh No She Didn't...

Ok, so this is a litlle sexist, but it's funny!

Enjoy Today!

That Car Guy

Sphere: Related Content

Toyota losses big... and it's not going to get any better!

Toyota Motor Corporation, the newly crowned king of the hill, the world's largest auto manufacturer announced it's first annual (calender) net loss since 1950. With worldwide demand for automobiles plummeting and the strength of the yen doomed the automakers earnings for 2008.

Toyota announced a quarterly loss of 164.7 billion yen ($1.8 billion US) for the October-December 2008 period, down from 458.6 billion yen profit for the same period in 2007, quarterly sales had dropped 28.4 percent in the period from year over year sales.

Toyota expects to announce an even wider loss for its fiscal year ending in March 2009, which it expects to be a net loss of 350 billion yen ($3.85 billion US), which is a dramatic turn of events from its record 1.72 trillion yen profit it had posted the previous year.

In dramatic fashion the company is announcing wide ranging cost cutting measures including, shutting down 11 plants in Japan for 14 days with other plant shutdowns expected, plans are being made to reduce contract workers. The company also is introducing new gas electric hybrid models as part of its turn around strategy and other model changes to strengthen its brand.

One of the biggest steps announced is that Akio Toyoda, a member of the founding family has been tapped as the incoming President of Toyota. Mr. Toyoda who has been a executive Vice President and who at 52 is widely considered young by Japanese standards for heading a major corporation. The move, as indicated by Toyota officials should bring employee ranks, dealerships and other group companies together during the tough times because of the nature of his families heritage with the company.

The outlook as I have reported does not look great for Toyota as the market is changing and they are suffering the same effects of being such a large player in a crowded field, it will take some time to right size the company to meet the slowing demand for automobiles. In addition with every major automaker bringing product to market to challenge Toyota's presence, they will be hard pressed to make the changes necessary over the course of 2009.

When you have a lowered worldwide demand for automobiles and you are the largest player, your business model was geared to producing a lot of vehicles. The product line up for Toyota has been geared towards Trucks and SUV's, and a whining demand for its perpetually popular Prius Hybrid makes for a disastrous recipe for the coming year.

Enjoy Today!

That Car Guy

Sphere: Related Content

There Back! The United States senate voted to make Auto Loan Interest and Sales Tax Deductible on Income Taxes...

BREAKING NEWS! BREAKING NEWS!

The United States Senate voted today to allow automotive loan interest and sales taxes on vehicle purchases deductible on federal income taxes, a move that has not been around since 1986. The proposal that has been pushed forward by the National Automobile dealers Association (NADA) was added to an economic stimulus bill that had been under major debate in the Senate, the final vote tally was 71-26.

This provision that was not in the original version passed in the House bill, that version had more than $800 Billion Dollar package of spending increases and tax cuts.

A conference committee still has to decide whether the provision stays or goes, the bill is a top priority of President Obama's stimulus package. The bill if passed by the House and the Senate will allow deductions on interest and taxes on auto loans for the first time since 1986.

The NADA states that the measure will provide consumers to save on average $1500.00 on a $25,000.00 vehicle.

Enjoy Today!

That Car Guy

Sphere: Related Content