Filed under: Daimler, Ford, GM, Earnings/Financials
New study shows U.S. automakers losing money on every car
According to a new study performed by the automotive industry analysts at the Harbour Felax Group, our own Big Two-Point-Five are losing more money, per vehicle, than their Japanese counterparts.
The study examined how much profit each manufacturer made on individual vehicle sales and the results identify deep consumer discounts, such as employee pricing, deeper discounts for fleet sales and an overall lack of focus on design as the primary culprits.
So how much money is GM, Ford and Chrysler losing per car and pickup? For GM, their average loss is $1,271 per vehicle, with Ford behind $451 per unit and Chrysler making a profit of $144 on average.
For comparison, Nissan leads the profitability pack at $2,135 per vehicle, with Toyota and Honda coming in at $1,715 and $1,259 respectively.
Naturally, the rapid increase in the cost of health care and a fluctuation in exchange rates are also to blame, but overall, several factors are in play that the General, FoMoCo and Chrysler actually have control over.
[Source: Reuters via BloggingStocks]
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Reader Comments (Page 1 of 3)
Glenn 9:09AM (10/03/2006)
OK, so this is not new news for those of us who have been watching GM, Ford and DCX spiral in. Just as in an unstable aircraft in an uncontrolled dive, as the dive gets more vertical and the speed increases, it is expotentially more difficult to "pull out" before hitting earth and making a huge fireball (and hole).
Because, let's face it, NO business can continue to keep its doors open while losing money day after day, week after week, month after month, year after year.
Furthermore, look at what Wall Street think of the big 2.5 compared to Toyota and Honda.
http://www.autooninfo.info/NAEd200608FitchCutsFordDebt.htm
Hence, The Truth About Cars has had a GM Deathwatch for over 90 episodes, and a Ford Deathwatch for over 10 episodes, and is considering a Chrysler deathwatch. They're well worth reading if you want to see what a death-spiral looks like in slow motion.
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G. Snyder 9:29AM (10/03/2006)
Talking. Out. Of your ass.
The street actually finds GM very favorable these days, and stock value is coming around nicely. Something tells me that the Wall St. analysts have a better hold on this than most of the arm-chair commentators on this blog.
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Hamud 9:32AM (10/03/2006)
It's easy to see this, just take a look at the number of employees of Toyota and compare to those of Ford/GM, the difference is huge, plus the benefits gave by the big 2.5. That's why Ford and GM are cutting their workforce. Ford has even more employees than GM...
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Oh Brother 9:34AM (10/03/2006)
There's nothing in either article about methodology, so what is this number, overall company profit (or loss) divided by number of units?
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k 9:36AM (10/03/2006)
Aren't the Nippons wonderful! Let's all go out and buy their copycat products that are higher priced (to produce those terrific profits for them), which no longer have better quality than the Domestics and ban GM, Ford and Chrysler, those bastards, from the face of the Earth forever.
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cowboy bob 9:54AM (10/03/2006)
I have many years of memories of past episodes of corporate "restructuring". We used to call it "folding up the tent" back in the '60's. It has always been a point of interest to me that the mistakes of management is always paid for with the lifeblood of the workers. You never see the fellas who were so shortsighted or stupid pay the price. They are comfortable with their underpriced stock options, golden parachutes, insider trading information, and their inflated salaries. Meanwhile the worker guys see their car repo'd and their credit shot to hell when their house goes into forclosure. Just once I would like to see a CEO have to give back every penney he took while he ran a company into ruin. Kodak, Xerox, GM, Ford, Enron, (Yea, some paid a price, but they still kept enough to be rich. The only good thing to come out of that one was Ken Lay's croaking), and on and on. I am surprised that a person who lost everything in one of these hasn't just hunted down one of these guys and gave him a trip to where he needs to go. Hell.
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Peter 10:22AM (10/03/2006)
But they'll make it up in volume, right?
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dave 10:44AM (10/03/2006)
RE: "Aren't the Nippons wonderful!"
Um, k, is this 1943? I'll bet you also think that Hondas "run on rice," or something. Go ahead and stay stuck in the past while you drag your foreign-made GM to the shop one more time, while a smart person drives their made-in-america Toyota or Honda. Automotive nationalism is obsolete, genius.
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Bert 10:50AM (10/03/2006)
No Peter,
They make it up on extra parts and service!
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Ryan 10:54AM (10/03/2006)
"Automotive nationalism is obsolete, genius."
Exactly, we are in a day (and have been) where GENERAL MOTORS is in bed with TOYOTA, Honda,Daewoo (Pontiac Vibe,Saturn Vue, Geo/Chevy Prism).
The Camaro, ya know the American car that sports the "red, white and blue" decal on the front is/was not even made in the USA!
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Ryan 10:54AM (10/03/2006)
Also,
we are in a time where we dont even think twice about the irony of purchaing our fireworks (that are made in china) and above-all do you know how hard it is to find a Made in USA FLAG anymore?!
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Tal D 11:04AM (10/03/2006)
I certainly do not pretend have the knowledge nor the intelligence to develop a solution for the mega problems of GM F and DC. #1 you're right, once the downward spiral begins ,the more difficult it is to pull out no matter what situation or entity is involved. I think the blue collar workers would at least consider concessions to begin eliminating what is said to be huge disporportioned costs to feed the demanding union contracts. Mangement, espcially GM, is said to be so enormous they can't make decisions to keep their industry running at an acceptable,smooth pace without being bogged in a mess of tangled red tape; one person or one committee can''t make a descision with out approval from many, many others and what happens is the decisions that are made are "vanilla" so as to at least please all concerned so no feelings are hurt; everyone is happy but the consumer who , in my opinion, is the ultimate decision maker as to what he wants to purchase, NOT the trash the 3 have decided for at least 60 years as to what the public will buy,"what we give them", not what they think they want. But you know who learned (and still does) from the mistakes of the US auto industry? Those Japanese, Germans and now the Koreans. Their cars were or may have been percieved as inferior to American cars in the beginning(1950s-1960s), but guess what? They apparently listened and still listen to the demanding consumeras well they should. We pay premium $$ for an automobile and deserve nothing more than a premium product. I don't appreciate paying for a mediocre product just to pad the US auto workers premium benefit package. Someone or a lot of someones better wake up before their demanding premium contracts prevent any hope putting the downward spiral
in REVERSE. Enough for now.
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Glen from Hesperia, CA 11:11AM (10/03/2006)
The fact is that nationalism in any industry is long gone. Today, we are in a world economy and every company or corporation has to be competitive in this world economy regardless of their national origin. This is where the UAW has to step up and work with the Big 3 to allow the American Automotive Companies to become competitive in this world economy. If the UAW does not step up and make concessions, the alternative will be more layoffs and there will be more automotive manufacturing facilities built in Mexico to allow the Big 3 to be even more competitive. When there are no more manufacturing facilities in the United States or Canada, who will be paying the union dues. It is time to wake up and realize that nationalism in manufacturing and business is gone and the proper adjustments must be made by the union and the Big 3 to retain jobs and become competitive. Just like Toyota, Honda, and Nissan; the Big 3 of the United States are present throughout the world. Money going to increased employee benefits is money that does not go into design and modernization. I am not anti-union, but I believe there is a need for labot and management to come together to preserve jobs and manufacturing in the United States.
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Rastus 11:17AM (10/03/2006)
GSnyder,
I have some "Qualcomm" for you...which the "Analysts!!!" claim will go to $1000 a share.
Remember??? Oh, you don't? Well, thank God for that, otherwise you'd be destitute!
They are losing money on each car...
Why?
Because that's what LOSERS DO!!!
GM +/- Ford = LOSER
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Anthem 11:27AM (10/03/2006)
Bravo Tal!
My buddies and I (it seems weekly) have the same arguement. I have been saying for years that when you buy an American car you're paying for union contracts, executive egress and medical care for generations of employees. But when you purchase a foreign car (not all, but many) you're paying for research and development, you're paying for technological innovation and (imagine this) QUALITY.
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Lithous 11:43AM (10/03/2006)
First of all these number are from last year...
"General Motors lost an average of $1,271 for vehicles sold in North America last year..."
GM has done a few things since then and Wall Street has reacted to things done by GM do get the healthcare costs down since last year. Do we have to wait until October of next year to see the numbers for this year? Maybe in January they can tell, you know, keep up with the times a bit.
"Exactly, we are in a day (and have been) where GENERAL MOTORS is in bed with TOYOTA, Honda,Daewoo (Pontiac Vibe,Saturn Vue, Geo/Chevy Prism)."
So what? I bought a VUE with a GM engine made in NY in 2006. This isn't a Hitler purity thing is it? Your mind-set on this one is Hitler-esque. Think about it. I don't buy American because I care about purity and don't want a Japanese person touching my vehicle (which is the only reason your reasoning would matter - all or nothing mentality of if it isn't all American than why matter if it is American at all). I know 1) GM and Ford have contributed to this country 100 times more than any Japanese company (paying taxes on earnings and real estate owned in every state for 100 years etc. 2) GM still employs more Americans than Toyota and Honda (and probably Nissan combined) i.e. bang for the buck when I support GM 3) Toyota and Honda use Americans and buy American companies that do things for them. They will consider themselves Japanese companies even though Bodine Aluminum purchased by Toyota saved them $500 per engine. 4) since the Japanese companies don't use unions then if Ford and GM are gone there is no contracts keeping Toyota and Honda here. They will go to China like Apple does to make iPods. If GM and Ford stay around and the union draws a line on what can be made outside of the U.S. we will have more U.S. jobs here. That is one thing the unions do is to contractual force GM and Ford from pulling an Apple and making more of their crap in China. I think I literally see a Toyota commercial everyday about their "American-ness". It is all about the sales and not because they love us. They will leave manufacturing here if there are no American companies who have to make here too.
"The Camaro, ya know the American car that sports the "red, white and blue" decal on the front is/was not even made in the USA!""
I agree that is not great that the pony car can't be made in the U.S. But since there are a dozen cars made in the U.S. by GM I am thankful for that. Cars could be like the Dell boxes I saw the other day with "Made in China" all over them.
"we are in a time where we dont even think twice about the irony of purchaing our fireworks (that are made in china) and above-all do you know how hard it is to find a Made in USA FLAG anymore?!"
It sounds like you are punishing one industry because of the sins of another? Are you trying to state that because you can't get fireworks made here that you shouldn't care where anything is made? If anything that should be more reason to want to support the things that are made here because again it is about jobs and economy and so seeing that fireworks and everything else is not made here should make you want to buy American more where possible and not shun the American stuff that is made here.
"Go ahead and stay stuck in the past while you drag your foreign-made GM to the shop one more time, while a smart person drives their made-in-america Toyota or Honda."
Dave, did you know that GM and Ford still make vehicles here and that both Honda and Toyota suppliment their U.S. assembled vehicles with Japanese and Mexican (Accord) vehicles? That means if you buy and Aura here it is 100% fact that it will be made in the U.S. 100% of the time (same with a Malibu, G6, CTS, Lucerne, Cobalt, STS, Solstice/Sky) and if you buy a Camry or Accord that is not the case, you may get a foreign made one that was imported.
Dave, if you are that uneducated about what is made in by the last two American car companies I can educate you anytime. Just reply back telling me how you had no clue that GM has as many choices assembled here as both Toyota and Honda. I'll give you some more info.
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Robert 11:55AM (10/03/2006)
First, I've noticed an overwhelming bias against domestic automakers. Any positive moves they make is discounted and ignored by their critics. Any mistakes they make are pounced upon as though it were conclusive evidence of total malfeasance on the part of the company.
Those that drive a foreign car act as if they (the person) are somehow better than all of us peasants who choose to drive domestics. They cite problems with reliability as their primary motivation. However, when examined it appears more like outright discrimination and a desire to be “superior” than actual fact.
The fact is: GM has one of the best warranties and is one of the best values on the road. They’ve got multiple vehicles that offer lots of cabin space, good fuel economy, and excellent handling. Their designs and reliability have consistently improved year after year. Yet we still hear the tired ramblings of the “better-than-thou” import car supporters.
What’s so frustrating about this is that they continue to perpetuate lies and half-truths. Yes, domestics lost their lead when they didn’t address quality issues. Yes, domestics dropped the ball on features. However, they’ve made great strides to correct that but few seem to bother to be noticing.
Finally, for the people that keep lambasting domestic management, it’s difficult to compare companies when you look at benefits packages. Overseas, Japan’s government handles their retirement. Here, GM had an extremely generous benefits package that they paid for.
Unions and high labor costs add to that. When car companies talk about reducing labor costs, instantly there is this sudden backlash as though what they’re doing is heresy. We’re going to have to accept that to become competitive that the old model may not work anymore. That might mean unions are going to have to take a backseat… Management should bare the burden too, but they certainly should not be alone in our condemnation.
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timmay 11:56AM (10/03/2006)
Profit of 144 dollars per vehicle DCX would love to hear that. They think that they are going to lose over a billion dollars for some reason
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Lithous 12:17PM (10/03/2006)
" Lithous, nice try on providing info on the Big 3,"
I didn't provide info on the Big 3, I have stated on here for a long time that Chrysler is German.
"Did you know that the Saturn Vue actually had a Honda V-6 engine?"
Is there something wrong, seriously, with your comprehension? I bought a 2006 VUE with an eco-tec 4 cylinder engine made in NY. What about that don't you get? Yes, when shopping for the VUE the parts content sticker on the V6 clearly states country of origin for both the engine and transmission as being Japan and on the 4 cylinder it clearly states U.S. for engine and transmission. Not sure what you are trying to tell me (especially that I didn't know) about the VUE. I know much more about the VUE (and where it's parts are from) than you do. Especially since I have already taken some of it apart to do mods.
But again, you are going into this story about how much foreign content is in a car here or there but GM sells much more cars in America. Sure you are going to find foreign parts in them. I buy the ones that are assembled in U.S. with U.S. engine and so far with U.S. transmissions as well. There are plenty of them and you are diverting from this fact.
"Did you know that the Chrysler Crossfire is made in Germany and uses 90% German parts.."
Did you know Chrysler is German (more % than Mazda is owned by Ford, and more than Renault owns of Nissan)?
" Ford, GM, and DCX all have a strong presence throughout the globe."
Yes, so does every company. But it is about economics. If I can support an American company assembling mostly American parts I will do it. Rome fell because people cared less about the state than they did their pay checks (literally the border guards). Supply and demand. If you send a message that you want a car assembled here with mostly American parts (again, there is no purity thing but I wasnt as many jobs (parts) as reasonably possible) then that is what they will give us. If buyers are buying anything from anywhere then you can't blame a seller for going anywhere eventually. AND if you aren't happy with the offerings from the Big 2 then by all means, this a free country, go start a car company and show us how it is done. You know, like the Americans before us who actually did that.
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Ryan 12:20PM (10/03/2006)
""The Camaro, ya know the American car that sports the "red, white and blue" decal on the front is/was not even made in the USA!""
I agree that is not great that the pony car can't be made in the U.S. But since there are a dozen cars made in the U.S. by GM I am thankful for that.""
-Lithous, how MANY of those dozens of other cars, actually (and here is the sweet irony) sport the red, white and blue vertical stripes with the Chevy badge under it? HINT: It's not the one made in the U.S.A!!!!
Lithious,
GM and Ford really do need people like you. My next car will be "USA" but that does not mean GM and Ford are of in "la la land" right now.
Chevrolet Aveo
"America this is your car" "Our country our car"
LMAO!!!
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