spwolf

holy c*... that sounds awful.

mmarshall

No. Apples and Oranges. 3-4 years from now, it will be a different GM than we had in 2008-2009.

And, living in Europe, your own personal tax money, out of your pocket, was probably not involved......mine was. I say money well spent.

bitkahuna

iTrader: (20)

impending car loan crisis...
impending student loan crisis...
impending obamacare fine/tax crisis...
impending nuclear iran crisis...
impending inflation/debt crisis...
future looks bright

4TehNguyen

iTrader: (1)

and if this company tanks again then what will you say? 96% of loans under credit rating 660 is very bad.

FrankReynoldsCPA

Mike...what happens when lenders make a ton of loans to people with bad credit and an inability to pay?

mmarshall

First predatory loans are illegal under new laws that took effect a few years ago....that will likely, but not totally, prevent a repeat of what happened in 2008. But it is not a predatory loan is someone is simply too irresponsible or lazy to read the contract before he or she signs it. If one is going to sign a contract as an adult, then one has to have the responsibility of an adult....and know when not to bite off more than one can chew.

Second, If dealers are selling or leasing new vehicles to those who basically can't afford them, then that's not the corporation's fault.....that's the fault of the sales managers and business managers at the dealerships who approve the sales. GM and Chrysler can't control that from their corporate headquarters...dealerships are usually privately-run, privately-owned businesses.

And, besides, most of those failures aren't going to affect the corporation as much as the dealership. Once the dealership orders a new car from the factory and pays for it wholesale, the corporation gets its money (and profit) onr the car. Making money on it at the dealership is then the dealer's problem, not the manufacturer's.

gengar

mmarshall already said he is happy with taxpayers losing 9.7 billion dollars to make a couple cars "worth buying". What on earth makes you think he wouldn't be equally happy with taxpayers losing 9.7 billion dollars so that people can own some of those cars?

It's because of delusional thinking like this that the US is 17 trillion+ in debt.

mmarshall

WRONG. I usually vote for Republicans and those who want to curb spending.

In the case of GM and Chrysler, though, the benefits of the spending clearly outweighed the negatives. And those benefits involved more than just some new Chevy/Buick and Dodge/Chrysler/Jeep models.

Haitwun

There needs to be a way to let General Motors die without taking the US economy with it. Since the bailout, they have yet to produce any cars worth buying. GM put up nice displays at the Los Angeles Auto Show and Orange County Auto Show which just further confirms that things are business as usual at the company (Buick Enclave, Chevrolet Cruze, Cadillac XTS, etc). GM has made significant improvements since the 1990's but not good enough to compete against what the rest of the world has to offer.

mmarshall

Well, Consumer Reports has had a low opinion of GM for decades (most of it justified until recently), yet they gave the new 2014 Chevy Impala a 95 out of 100 on their numerical-grade testing......virtually the same as what the Lexus LS460 and Tesla Model S got (99). In my book, that says something. I also found out, when I actually drove and reviewed an Impala, that they were not kidding.

I'll agree that the XTS's road-manners and refinement are disappointing, the small Buick Encore SUV is underpowered, and the Chevy Spark minicar is unimpressive dead-basic transportation. But I would buy almost anything else that GM sells today in the American market......and, trust me...I'm a hard person to please.

FrankReynoldsCPA

Predatory lending may be illegal, but you missed where 96% of GM's borrowers have a score below 660. Yes, people should be adult enough to not enter into stupid contracts. While it's nobody's legal obligation to protect an idiot from himself, I do believe it's irresponsible to be party to a contract where somebody is making a very stupid decision. Should it matter to GM whether or not the buyer can afford the car? YES. That's why credit checks exist. That's why you have to provide proof of income anytime you take out a loan. It's in the interest of the lender to make sure they get paid. I fault both the borrowers and the lenders for the 2008 financial crisis. You don't have to pick one side to blame.


As for corporate policy......yes, the dealership buys the car and then resells it to the buyer. But the dealership is not financing it. If you're not paying in cash or via outside lending, the finance manager will hook you up with a loan through GM Financial....which is owned by GM. As the lender, they set policies and qualifications for loans....the manager is just working on their behalf.

If GM cared at all about responsible lending in their dealerships, they could very well tighten their policies through GM Financial. But why give up an effective marketing technique when Uncle Sugar will guarantee the bad debts?


To be fair, I've driven a few of their post-bailout vehicles and they have improved significantly. I still find Ford to be better IMO.

mmarshall

Respectfully, no, I didn't miss it...I saw the stat. But that's usually not GM's problem....that is primarily a dealer problem. The dealership will usually be the one out to dry if the car gets repo'ed because the buyer couldn't keep up the payments. When you buy or lease a car at a dealership, you formally sign the papers in the dealership's business office, not GM representatives.

Well, it is an obligation now, at least to some extent, not only with Truth-in-Lending laws (which have been around for some time) but also with more recent laws addressing predatory loans. But, however.......I understand your point.


Yes, that's true...if one is financing through GM Financial (actually Ally Financial). More often, though, they don't.....dealerships get their money from local banks.

(BTW, interesting that you mention that. Apparently, the old GMAC (General Motors Acceptance Corporation) which formerly did the corporate-level financing, either went bankrupt with the parent corporation or had the name changed.


The latest-generation Ford Fusion, if you have had a chance to drive one, is especially impressive ...significantly better, IMO, than its more expensive Lincoln MKZ stablemate, which I found disappointing. I haven't sampled the new Mustang yet, but probably will sometimes next year....it will be interesting to see how that new IRS works out in the rear vs. the old live axle.

gengar

Actually, I'd say it is absolutely a legal obligation to protect people from themselves when the result of the behavior of those people is that legislators decide taxpayer money should be used to bail out those people and/or the entities making loans to those people.

mmarshall

So where, then, would you draw the line? GM and Chrysler were certainly not the first companies to receive Federal aid. Lockheed Aerospace got a big loan, back in 1971, before it was Lockheed Martin (I still remember the debate in Congress on that one). Chrysler itself, after Lee Iacocca had moved over from Ford, got one in 1981 when the company was on the verge of bankruptcy (more so than when Fiat bought them out 5-6 years ago). The much-publicized TARP program of 2008 gave many billions to AIG, Citigroup, J.P. Morgan Chase, Bank of America, Morgan-Stanley, Capital One, American Express, Wells Fargo, Goldman Sachs, and others.....and that doesn't even (officially) include what went into Fannie Mae and Freddie Mac. I simply fail to see what is such a big taboo about the money GM got when we, as taxpayers, at least to some extent, footed the bill for all those other buyouts as well.

Anyhow, I don't see a need to keep arguing this. We've both made our points. I'm signing off for New Years' Eve. Have a nice holiday.

Sulu

When financing or leasing a vehicle through the manufacturer's financing arm, the dealership is merely the middleman acting on behalf of the automaker's bank. Defaulted loans or leases will not harm the dealership but will harm the bank holding the loan / lease; the only way the dealership would be harmed is if the bank goes bankrupt and cannot pay the dealers or the automaker goes bankrupt and refuses to pay their dealers.

In fact, the automakers' financing arms likely won't get harmed (much) either in case of a default loan / lease; the automaker likely sells its debts to a larger financing house / bank. That is what happened in the subprime mortgage crisis of 2007 / 2008. Mortgage providers sold them to banks, so the small mortgage providers got their money while the large banks that bought the debts were left holding the defaulted loans. Its only when the crisis really hit and it started to snowball that everybody got hurt.

If both automakers and buyers get greedy and the numbers of subprime loans skyrockets, I could foresee being hit with the same problem as 6-7 years ago (but likely on a smaller scale). If the economy slows down (it still has not regained the strength of the pre-recession times) and borrowers start to default, we could see financial institutions getting into trouble and the automaker(s) in trouble as they suddenly find themselves with endless parking lots filled with repossessed cars and unsold new cars.

I am not entirely convinced that the New GM has learned anything from its old ways. It is still churning out new cars and then relying on incentives (and now subprime loans) to sell those unsold cars. After teaching the car-buying public (like Pavlov's Dogs) to expect huge incentives or low-rate loans on cars, they will not buy until these discounts are made available. This will be a never-ending cycle until GM says STOP.