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Some of you may know John McElroy from Detroit Public television. If not, he's also on Autoblog, and he just wrote an article about how the big 3 will come back, and needless to say, I agree with him 100%.

How The Big Three Will Come Roaring Back

Way back in 1979 when Chrysler needed government help, there was a political cartoon that perfectly captured the situation. If featured an old Plymouth Fury with giant tail fins teetering halfway over a cliff, with a tow truck parked nearby. A bystander wearing a shirt labeled U.S. Taxpayer was staring at the car on the cliff. The tow truck driver was nonchalantly picking his teeth and telling the taxpayer, "I can tow it out, or push it over the cliff, but either way it's going to cost you."

And so here we are again, only this time it's not just Chrysler. Now GM and Ford need to get towed back onto solid ground, too. And while there are plenty of people saying, "Let them die," the reality is that it'll be cheaper to bail them out.

While it's frustrating to see that Chrysler needs help again, it's important to remember what happened after the government bailout of 30 years ago. Not only did Chrysler come roaring back and pay off the loans seven years early, Uncle Sam made a $350 million profit on the whole deal. Investors who stuck with the company made a fortune, too. Chrysler stock shot from $3 a share to over $30, a 1,000% return in just a few years time.

Most people seem to miss the fact that they are on the verge of a massive turnaround.

If the Big Three get a government bailout this time, I see history repeating itself. Most people seem to miss the fact that they are on the verge of a massive turnaround. I'm not trying to be a rah-rah cheerleader here. I'm persuaded simply by the facts.

Last year's UAW contract was truly historic in that it will completely remove the health care cost burden off the Big Three. Though they have to give the union the money to assume this burden, they're paying 40% less than it would otherwise cost them. After 2010 they stop paying billions in health care every year and start dropping that money to the bottom line.

Moreover, there will no longer be any pensions for new hires. They'll get 401k's instead. Again, massive cost savings going forward.

On top of that the UAW workforce takes big pay cuts, and new hires come in at a wage rate that is roughly the same that Toyota, Honda, Nissan, et al, are paying their American workers. In other words, the Big Three can finally compete with the transplants from a labor cost standpoint. That means they can now make small cars in America without losing money on every one they make.

The Big Three can finally compete with the transplants from a labor cost standpoint.

Another benefit of that new labor contract is that the Big Three are no longer pressured to keep building cars and trucks in the face of weak demand. Under the old labor contract it was cheaper to build cars and slap big incentives on them than it was to not build them in the first place. Now, they can build to actual demand, and they're running on much tighter inventory.

That means they'll be able to slash their incentives. Every $1,000 that General Motors cuts from incentives will drop roughly $4 billion to the bottom line. And GM has an average of $3,500 in incentives!

Plus, the Big Three are taking out a huge amount of overcapacity, roughly two million units. To fulfill demand in the future their plants will have to run at full capacity, and that's when car companies literally become cash machines.

What this means is that when the economy finally starts to recover and the car market begins to grow again, GM, Ford and Chrysler will be in an extremely competitive position, one they haven't been in for more than 40 years.

And that's why those who say giving them a bailout is just throwing good money after bad are dead wrong. The Big Three are not only on the verge of a roaring comeback, I predict that in the next decade they'll go on to hit record profits.
 

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:patriot:A-MEN BRUDDAH:patriot:
 

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TAKE THAT...all you doom and gloom, sky is falling nay-sayers:nutkick::nutkick::nutkick::nutkick:

and add on to that...THE 5TH GEN is 4 months away from production.:bat:
 

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I had a positive attitude up until now, but I now have a SUPER-DUPER POSITIVE attitude! :roxor:
 

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GM is not going to make a comeback as long as Rick Wagoner is "leading" them. If there is any justice in the world, Red Ink Rick will be kicked to the curb, disgruntled shareholders will sue for every illbegotten cent he swindled from GM, and he'll be forced to work in a soup kitchen for the rest of his life.

At lease one Congressman thinks so, too.
Why he's lumping Alan Mulally in there, though, baffles me, since Ford actually has a plan for a turnaround...
 

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OMG, someone just had to piss in our post toasties.

Thanks for the Good Post Torrent.

Thanks for nothing ferrariman.....
 

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OMG, someone just had to piss in our post toasties.

Thanks for the Good Post Torrent.

Thanks for nothing ferrariman.....
If you really think GM's current management can engineer a turnaround, I need to call the cops, because what you're smoking CAN'T be legal. Denial's not just a river in Egypt...
 

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Denial's not just a river in Egypt...
I just looked at my world atlas and never found Denial River in Egypt... In fact, I didn't find a river with that name any where in Africa, or for that matter, the world. Perhaps its us who should call the cops on YOU because what you're smoking definitely isn't legal.
 

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Just took some of the money saved up for the car to purchase 500 shares of stock in GM! Might as well invest in them. If stock goes back to where it was last year I could get rid of some payments!!:roxor:
 

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BK is the best answer. It will allow them to shed the UAW which is keeping them from being profitable and competitive.

Some major changes are needed.
 

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Just took some of the money saved up for the car to purchase 500 shares of stock in GM! Might as well invest in them. If stock goes back to where it was last year I could get rid of some payments!!:roxor:
I bought some as well...unfortunately, it looks like it's gonna take a while...that's more of a long term investment.:rolleyes::cool:
 

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Car market making a come back? Not in the US, atleast not by old standards. There are over 900 vehicles for every 1000 licensed US drivers today. That is HUNDREDS more per 1K drivers than pretty much ANYWHERE else in the world, including the most technilogicaly advanced countries. That leaves a very small demand for the need of new cars here in the US. If the "big 3" are to survive, they will have to focus more on the international market than what lies in the US.
 

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Thankyou Torrent for that post. I have been away for awhile because of all the negative stories. I want to focus on the positive, something the newsmedia in this country finds "un-newsworthy". I have faith that the US car companies will come back. It would also help if people would stop buying foreign junk...errrr...cars. BUY AMERICAN.:patriot: This message brought to you by a "Chicken Little" hater.
 

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Thankyou Torrent for that post. I have been away for awhile because of all the negative stories. I want to focus on the positive, something the newsmedia in this country finds "un-newsworthy". I have faith that the US car companies will come back. It would also help if people would stop buying foreign junk...errrr...cars. BUY AMERICAN.:patriot: This message brought to you by a "Chicken Little" hater.
Did you happen to see the meeting on Capital Hill today with the CEO's from the so called "Big 3". If so, you'd know for a FACT, they're ALL in deep ****. Ford is the only one of the three not ready to file Chapter 11 here shortly.

You better wake up and realize just what the hell is going on with the automakers. Not sure what you mean by foreign junk either, checked resale value on those foreign vehicles lately?.......................

Q: What car has "more" parts outsourced? 1. Ford Mustang
2. Toyota Camary



.............think hard.............:confused:



The Bush adminstration has these 3 companies by the balls right now. I saw more side-stepping tonight by the CEO's , than what I saw visiting the bullfights in Mazatlan, Mexico.
 
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