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GM's Got Problems

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April 08, 2008 – Comments (4) | RELATED TICKERS: GM , F

Last week I wrote a piece on how terrible the auto industry is in the United States right now (Auto Industry Analyst: "current market for light vehicles in the U.S. is about as bad as I have seen it in the past decade.").  A number of interesting articles on the same subject have been published over the past several days.  I came across a good one in Fortune magazine this afternoon titled Rick Wagoner's worst nightmare

Despite making some nice moves recently in terms of cutting costs and improving their quality, it is not at all surprising that GM and Ford are getting hit hard now that sales are beginning to slow.  Chrysler's in even worse shape than they are, but it is no longer a public company...poor Cerberus.  The "Big 3" domestic automakers have been barely treading water during some of the best years ever for the U.S. auto industry.  One of my first selections in CAPS was to short GM and Ford...and this is when auto sales were strong.  In addition to decreased demand caused by low consumer confidence and tight credit, higher raw material costs, and rising gas prices, GM is getting hurt by issues with major suppliers, including Delphi's difficulty in emerging from bankruptcy and the current strike at American Axle.  The General is trying to look past today's problems towards 2010 when its new electric vehicle, the Volt, is scheduled to go on sale and it will begin to realize the full cost savings from the new contracts that it was able to negotiate with the UAW, but the company will likely have to drive down some bumpy roads to get there.

I know that I have been fairly negative in a lot of my posts lately, but I bring good news.  I am working on an article on a new "TMFDeej's Top Pick" which should be ready later this week.  It will be nice to write something positive for a change.  Since the article isn't quite ready for prime time yet, I figured that I would bring joy to the CAPS community in a different way...by attempting to embed my first video.  Let's see if this works.  While it of course isn't as engaging as the billion Ron Paul videos that people keep spamming all over the place, I hope that the following film brings you as much joy and inner peace as it has brought me:

Deej

No position in any automaker, including GM or Ford

P.S. The subject of my rant yesterday (It May be April, but Greenspan's not Fooling Me) made the front page of today's Wall Street Journal.

4 Comments – Post Your Own

#1) On April 08, 2008 at 3:01 PM, FleaBagger (29.53) wrote:

Too much gratuitous cuteness in the video, friend. I agree with the bearishness on GM and Ford, though.

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#2) On April 08, 2008 at 4:20 PM, TMFDeej (99.40) wrote:

Thanks for the comment, Fleabagger.  I guess that sarcasm is tough to convey through the written word.  This video is so disgustingly cute that I personally find it hilarious.  It is about as opposite as can be of all of the gloom and doom housing crisis, Ron Paul, Jim Rogers videos that were good the first time but sooooo annoying now that I see repeatedly plastered all over the place ;).  Plus, I had never embedded a video in a post before, so I wanted to see how it works.

Deej

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#3) On April 08, 2008 at 4:48 PM, DemonDoug (82.19) wrote:

GM's got problems - now there's an understatement.

Hey Deej I think we should start a mutual fund together.  It seems like your investing theses follow along exactly with mine. 

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#4) On April 08, 2008 at 5:16 PM, TMFDeej (99.40) wrote:

Sounds good to me, DemonDoug.  If John Meriwether can find someone to give him money again, I don't see why we wouldn't be able to ;).

Deej

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