FCA Investigation Finds Inflated Sales/update page 2

NJRVer wrote:
And how many new cars and trucks would unemployed people who would be going into bankruptcy because of no jobs be purchasing from some other company besides GM??......Zero.

Again... gross oversimplification. You are expecting us to believe the following;

#1 The company would not have survived bankruptcy proceedings and would have completely folded and had ZERO value upon folding,

#2 Employees of the defunct GM would have ZERO job skills and not be able to find new employment,

#3 In 2008, GM employed 250,000 people from top to bottom. In 2008 GM sold 8.3 MILLION vehicles. Obviously there are more people buying GM products than the 250K employees... yet your argument seems to be that if a quarter million people all lost their jobs (see unreasonable theory #2), then GM's market share of 8.3 MILLION vehicles would disappear?

#4 Lets pretend you don't believe unreasonable theory #4. Ford, Chrysler, Toyota, Honda, Kia, etc all absorb an equal share of GM's 8.3 MILLION vehicles. You don't seem to think that suppliers for those companies would go out and increase their workforce to handle the influx of 8.3 MILLION vehicles?

Do you see how your theory is overly simplified and unprecedented? Those 8+ million vehicles that GM sold in 2008 wouldn't simply disappear. We aren't in Cuba... people will buy new cars. My sister owned a Saturn at one point, they don't exist anymore, she now owns a Honda. See how that works?

The reality is that people will buy new cars from somewhere else. Those new cars have to be made by someone else. Those companies would have to increase their workforce to be able to handle the increased workload. The increase in workforce is NEW JOBS. The appropriate candidate for that NEW JOB is someone with experience in the field... perhaps a recently displaced GM employee or part supplier.

Its not as simple as you (and others) want people to believe...

spoon059 wrote:

NJRVer wrote:
It's pretty simple.
When a company that size goes belly up and the resulting cascade of other businesses and individual people go belly up with it, how much tax money will the gov't collect from them......$Zero.

How much has everyone paid since they were offered the loan.....I'm sure it would now be in the billions when you figure all the employees and subcontractor suppliers.

That is over simplified. You, amongst others here, seem to think that if GM went belly up, its customer base would never buy another vehicle again, hence the domino theory of out of work suppliers and lack of tax collection.

The reality is that GM buyers would have to simply buy a vehicle from one of the numerous other manufacturers, who would collectively absorb GM's share of the market. Those manufacturers would have to increase their purchase of parts, likely providing work and sales to suppliers or else increasing demand of suppliers enough to cause out of work suppliers to be able to find new employment. The workers would pay taxes, the increased sales from other manufacturers would pay the tax burden, etc.

The end result would be knowledge that proper management of your business is the proper way to ensure you stay in business. It would also be a warning to financially insolvent businesses that poor practices will not be supported.

I agree that there would be some downturn in the economy, some laid off employees and some lost benefits to these employees... but nothing in life is guaranteed except death and taxes.

And how many new cars and trucks would unemployed people who would be going into bankruptcy because of no jobs be purchasing from some other company besides GM??......Zero.

This mess was started 40 years ago because GM converted a couple of gasoline engines to burn diesel fuel.

Also FCA doesn't HAVE to convert all of their cars from Chrysler platforms to Fiat platforms. They simply WANT to. Many times when bigger companies absorb smaller ones, they leave the smaller company's product mostly unchanged, if the product is any good, and focus on management/financial issues to make it profitable. If the product is no good, then by all means, change it.

FCA didn't exist in 2008...

The only reason Ford got their loans was the Ford family members had to put up their personal property to secure Fords loans. Had Ford not been owned by the original founders family Ford would have been the first one "bagging for free bailout money" has some on this board think GM and FCA (Chrysler) got.

BTW what car company has paid every penny back that they where required to pay back and early too? GM and Ford are still paying on their loans. So maybe that has something to do with their profit margin as compared to FCA. Add the fact that FCA has to convert every Chrysler platform over to their vehicle platform and you have yet another reason for our lower margins.

FCA just announced that they are investing 700M into the Toledo Jeep plant and 350M into the Belvidere plant for a total of 1.05B. That is on top of the other investments going on for 2016/2017. So much for TravelNutz and a few others saying Jeeps was moving ALL of their production to China :R . The China plant is building vehicles for the Asian markets only.

Don

spoon059 wrote:
That is over simplified. You, amongst others here, seem to think that if GM went belly up, its customer base would never buy another vehicle again, hence the domino theory of out of work suppliers and lack of tax collection.

The reality is that GM buyers would have to simply buy a vehicle from one of the numerous other manufacturers, who would collectively absorb GM's share of the market. Those manufacturers would have to increase their purchase of parts, likely providing work and sales to suppliers or else increasing demand of suppliers enough to cause out of work suppliers to be able to find new employment. The workers would pay taxes, the increased sales from other manufacturers would pay the tax burden, etc.

The end result would be knowledge that proper management of your business is the proper way to ensure you stay in business. It would also be a warning to financially insolvent businesses that poor practices will not be supported.

Spoon, you are correct that some of the customer base would have still needed to buy cars, (a fair amount of the customer base would have been out of jobs!) and that would have kept the other OEM's going. For those people not in the auto industry, here is some perspective that people may not know or understand.

Prior to the crash in 2008, there was a large part of the auto supply base that was distressed. Several companies were going out of business. Who had to take the slack? Other suppliers, a good thing right? In 2007 in less than 3 weeks my company took over an entire supplier that went bankrupt. Basically the OEM told my company we were taking everything. My company moved everything into their existing facilities and got everything up and running. This didn't come without a cost. To take on that business, we charged the OEM more than the bankrupt supplier was charging them for the parts. We certainly weren't going to take on business that was loosing money!

If GM and Chrysler were allowed to fall, a lot of suppliers would have gone bankrupt. As we know, a fair amount of suppliers don't just supply one OEM. So who was going to take over the business for the OEM's that survived? Stable suppliers, but they certainly weren't going to take it on at a loss either. Part prices for Ford, Toyota, Honda and anyone else were going to go up...thus car prices would have had to increase too. A good thing for an economy tanking? Moving production could have also impacted the other OEM's by delaying parts and causing them to idle plant while the new supplier took over.

goducks10 wrote:
And didn't Ford borrow money to re-tool their small car division to be more competitive, while GM and FCA (Chrysler) needed the money just to keep the doors open?

Yes, they took approximately $5.9 BILLION in low interest loans. Ford DOE Loans

Lets not also forget that if they hadn't mortgaged everything prior to 2008 they probably would have been the first to need a bailout.

NJRVer wrote:

spoon059 wrote:
I don't doubt that the bailouts helped a lot of working families. That's great for them, but where does it end? Poorly managed companies that are spread too thin and not financially able to succeed should not cost the taxpayers. I'm great that you, and others still have jobs, medical and pensions... but i disagree with the idea that the federal govt should bed invoked in private enterprise.

Where does it start, where does it end? My father in law owned his own company. If he details on loans and can't pay, is the govt going to pay his bills? Doubtful, nor should they. There is a process in place for situations like this... its called bankruptcy. I realize you are passionate about it because it directly and positively benefits you. As someone who questions the decisions of our federal govt, i am concerned about the precedent set that bailed out a failing competitive private industry.

It's pretty simple.
When a company that size goes belly up and the resulting cascade of other businesses and individual people go belly up with it, how much tax money will the gov't collect from them......$Zero.

How much has everyone paid since they were offered the loan.....I'm sure it would now be in the billions when you figure all the employees and subcontractor suppliers.

x2. That was my point. Right or wrong or whatever on the bailout GM and FCA were too big to let go. It's not like Evergreen's bankruptcy where only a few 100 workers need to find jobs. I don't like the government bailing out banks and companies anymore than anyone else. But this time seemed like the right time, regardless of how it was done.
And didn't Ford borrow money to re-tool their small car division to be more competitive, while GM and FCA (Chrysler) needed the money just to keep the doors open?

NJRVer wrote:
It's pretty simple.
When a company that size goes belly up and the resulting cascade of other businesses and individual people go belly up with it, how much tax money will the gov't collect from them......$Zero.

How much has everyone paid since they were offered the loan.....I'm sure it would now be in the billions when you figure all the employees and subcontractor suppliers.

That is over simplified. You, amongst others here, seem to think that if GM went belly up, its customer base would never buy another vehicle again, hence the domino theory of out of work suppliers and lack of tax collection.

The reality is that GM buyers would have to simply buy a vehicle from one of the numerous other manufacturers, who would collectively absorb GM's share of the market. Those manufacturers would have to increase their purchase of parts, likely providing work and sales to suppliers or else increasing demand of suppliers enough to cause out of work suppliers to be able to find new employment. The workers would pay taxes, the increased sales from other manufacturers would pay the tax burden, etc.

The end result would be knowledge that proper management of your business is the proper way to ensure you stay in business. It would also be a warning to financially insolvent businesses that poor practices will not be supported.

I agree that there would be some downturn in the economy, some laid off employees and some lost benefits to these employees... but nothing in life is guaranteed except death and taxes.

JALLEN4,

Yes, you are right about the root cause of the financial crisis of 2008. The foundation of the financial bubble burst was the real estate collapse by not only the allowing of sub-prime mortgages, but very loose commercial credit without verifying ability to repay first and using actual property value, and a real biggie - at or nearly 100% mortgages for anyone without going thru the qualifying process of financial and not requiring at least 5%-10% min down payment, not even having a real job at all, not being a legal citizen in the country, not requiring an adequate detailed credit history info, prove the ability to make the monthly payments including insurance and property taxes let alone the financial ability to even reasonably maintain the property's value, not being required to provide a min of 3 years of federal income and state (where required) income tax filed forms. Other normal requirements were relaxed also.

Foreclosures had escalated beyond any ability to control and the lenders/mortgage holders were also handcuffed in legal restraints etc to sell or auction off the now in usually poor condition properties that were way underwater in accrued debt beyond the original mortgage amount. They then had to find ways to keep themselves afloat and many involved unscrupulous dealing and games for their survival. The insane newly enforced lending laws in-acted in 1993 and further enhanced in the following years had resulted in busting the real estate bubble, the financial, and the credit markets/institutions like a quick bursting balloon which then also caused the financial crisis in the automotive, boat, RV, etc industries. Loans became very hard to get and few buyers had cash! Sales plummeted! The ground work for the bubble burst was laid way back in 1993 and nearly ruined or nation which would have brought on a world recession real quick!

Another form of bringing financial/marketplace fraud is the results of inflating actual sales numbers as it alters the investors/stocks real value and causes bad decisions to be made.

What's really sad is that FCA isn't even an American U.S. owned or run corporation. It's Italian owned and run and is being investigated for reeking fraud on our nation, it's financial entities, the dealerships, and it's people! How sick is that?