CEO says BMW in “biggest crisis in its history"

[akraptor]

CEO says BMW in “biggest crisis in its history;” rivals have similar concerns

BMW, which has seen it sales double since 1999, is now in the “biggest crisis in its history,” CEO Norbert Reithofer told Germany’s Spiegel. Like all automakers, BMW’s sales have been hit hard by the financial crisis, but the company’s reliance on leasing for a large percentage puts it in an even more vulnerable position.

Reithofer isn’t alone in his sentiment. Daimler boss Dieter Zetsche admitted the situation could easily be the “worst crisis since World War II.” If that’s the case, expect more job cuts and production slowdowns at Mercedes and BMW.

Even Volkswagen, which has a much broader brand and model mix, is concerned about its future. “We have never before seen this kind of a crisis,” chairman Martin Winterkorn said. He said it would be impossible for his company to avoid “difficult cuts” and “painful” measures.

According to the New York Times, luxury cars from BMW and Mercedes are beginning to pile up at U.S. ports. But they aren’t the only ones. Literally thousands of Toyota and Nissan models have filled acres of land at the port in Long Beach, California. In fact, Mercedes, Toyota and Nissan have requested to lease additional space at a 160-acre lot to park their slow-selling cars.

Recently, Toyota Executive Vice President Mitsuo Kinoshita characterized the current situation as “an emergency, of a magnitude we have never seen before.”

So is any automaker immune to the economic collapse in America, Europe, and Asia? Simply put: no. After all, Mercedes, BMW, VW, and Toyota are usually thought of as the most stable automakers in the world. Their survival will depend entirely on their ability to quickly adapt to slowing sales. Without the same rigid union and legacy costs of the Detroit Three, we’re hopeful they’ll all pull through.

http://www.leftlanenews.com/ceo-says...-concerns.html

[chuck92103]

No surprise. Most BMW's were leased. Most of the consumers leasing shouldn't. Mass layoffs, high consumer debt, etc. What we are seeing is a correction just like housing. It is called living within your means.

We will go back to the day when a young couple saved for a home for 5-10 years or more. The "I got to have the bimmer and a big house when I am 23" mentality will be gone.

How much can I afford? will replace "how much can I qualify for".

[akraptor]

I think it's time for BMW to cut the prices, if they want to sell the tens of thousands of cars that pile up in dockyards. It's always better to get some money back, rather than nothing. Mercedes should do the same, and all automakers that charge premium prices. BMW has enough R&D done for the next 10 years, so they should cut costs there, first.

The BMW official dealer here has the HQ parking lot crammed with at least 50-100 units of Series 3, 5. .. and yesterday they started running an add on TV stating that if you buy a 3 now, you are elligible for the big prize: an X6!!! So, shit is getting bigger if they offer an X6 for free, , as the big prize!!

[akraptor]

If they don't cut prices FAST, the more we go into the crisis, more crap will unfold from the market, and the BMW potential clients that are still not that scared, they will postpone their acquisition plans till 2011 maybe.

[chuck92103]

Originally Posted by akraptor

If they don't cut prices FAST, the more we go into the crisis, more crap will unfold from the market, and the BMW potential clients that are still not that scared, they will postpone their acquisition plans till 2011 maybe.

I think we will see dealers from most makes with new cars that are 2-3 years old. This has been the case with motorcycles for as long as I can remember.

BMW will make less, but more expensive cars. I would not be surprised if the free maintenance went away as well. This is more of a selling point for the less affluent.

[akraptor]

On the contrary, five years free basic maintenance will be a strong selling point, even more, from now on. . .my 2 cents.

Who knows, maybe they will too start offering an extra free bimmer, if you buy one.

[dmlgc]

Originally Posted by chuck92103

No surprise. Most BMW's were leased. Most of the consumers leasing shouldn't. Mass layoffs, high consumer debt, etc. What we are seeing is a correction just like housing. It is called living within your means.

We will go back to the day when a young couple saved for a home for 5-10 years or more. The "I got to have the bimmer and a big house when I am 23" mentality will be gone.

How much can I afford? will replace "how much can I qualify for".

+++1
a lot of people have been living beyond there means as a way of life.
We actually pay cash for our cars, it drives our financial adviser nuts but our view is helps keep us centered where we are in life.

A market correction has been coming since the dot bomb days, there should have been one then but it was stunted by low interest credit manufactured by the government (ya greenspan didn't know anything about it, just happen to quit his job before the sh*# hit the fan).

The entire world wide auto industry is in for a correction, they have been selling cars to people who just plain couldn't afford them. It's a sign of the times, everyone wants to move directly into the McMansion and drive a Ferrari instead of starting out in a townhouse driving a VW and working your way up (how we started).

Somehow we got into this "everyone is entitled to a house and a car,etc" and if they can't afford it the government will provide the means for them to have it. Socialism doesn't work.

[dmlgc]

Originally Posted by chuck92103

I think we will see dealers from most makes with new cars that are 2-3 years old. This has been the case with motorcycles for as long as I can remember.

BMW will make less, but more expensive cars. I would not be surprised if the free maintenance went away as well. This is more of a selling point for the less affluent.

Agree, I think BMW will go back to the "pull" model rather than the "push" they have been using. There will be less BMWs around and they will be expensive(back to being premium brand).

[Deda]

lets wait and see..i think that nothing big will happend..i am an optimist!

[Puka]

In my opinion this is all American Politics and nothing big will happen. But if something big happens let's hope that it will have an end. I am an optimist too!!

[akraptor]

The declarations of Daimler and BMW CEO's are not American politics!! They both live in Germany in their castles. They just take the heat from scums like Madoff. . like everybody else.

[Suzie's Dad]

I am amazed at how slowly most of the auto companies are reacting. They should already have shuttered 50% of their assembly plants and laid off half their workforce. Nasty medicine and very very tough on those who get laid off, but if it is a matter of survival, you gotta do what you gotta do. More low credit won't work; who is going to buy a new car at any price and with any terms if they aren't sure whether they will even have a job next month? I agree with chuck92103 and dmlgc: at some point the chickens come home to roost and you have to start buying what you can afford. Many young Americans seem to think a four-bedroom detached house with a BMW in the driveway is a God-given right rather than something you save for. There will be many more rude awakenings before this mess is all over.

[chuck92103]

Originally Posted by Suzie's Dad

I am amazed at how slowly most of the auto companies are reacting. They should already have shuttered 50% of their assembly plants and laid off half their workforce. Nasty medicine and very very tough on those who get laid off, but if it is a matter of survival, you gotta do what you gotta do. More low credit won't work; who is going to buy a new car at any price and with any terms if they aren't sure whether they will even have a job next month? I agree with chuck92103 and dmlgc: at some point the chickens come home to roost and you have to start buying what you can afford. Many young Americans seem to think a four-bedroom detached house with a BMW in the driveway is a God-given right rather than something you save for. There will be many more rude awakenings before this mess is all over.

I think the small 3 in Detroit cannot be fast and nimble like their competitors due to unions.

For example, did you know that if a union employee gets laid off from GM, they get something like 80% of their salary. And if they go back to work within a certain amount of time, they get all their back pay.

A friend of mine works at AT&T. he is union. It is written in the Union contract that they cannot lay off period.

When unions paralyze the company, they cannot effectively change as business conditions warrant. This is why I believe the unions have outlived their usefulness and are slowly turning the remaining companies with unions into social programs.

The sad thing is how uneducated the GM/Ford/Chrysler assembly workers are when interviewed on TV. They are doing a $30/hour job and with full benefits they are getting paid $76-$150/hour or more. This is more money than the Governor of most states.

I don't see any of the small 3 being around in a few years. Not unless they bust the unions. Otherwise they will die along with the rediculous pensions.

[akraptor]

I am sorry, since when unions prevent management of the failing three, to invest more in R&D?! In more reliable equipment? In better design? In more gas-efficient cars?! And to APPLY FASTER the new stuff into production vehicles. . .not just prototypes that never make it into production. .."Hey, see how smart we are?. .but we cannot built it in mass production"> . If unions prevent management to build better, more reliable, much better designed, more fuel-efficient, more everything, cars, why is the government not hammering down these unions, for anything else than workers' rights to job safety and compensation? After all, all the above issues I raised about cars, is bringing more job stability to the auto industry workers isn't it?! I understand that everybody needs a job. But preventing the wide spreading of automation, just in time systems, kanbans, better technology, better design, all at lower costs. . .is like the government even is interested in the prosperity of the US car industry or what? Or they just didn't care till now that the management of the 3's got what they wanted (tons of money and benefits) using an antiquated manufacturing system, while the sales of a majority of car models dropped dramatically? Aaah, the easy billions they got until now in credits were sufficient, doesn't matter the output of assembly lines. "Since we get easy money everytime we need it, why bother making better cars?" Lee Iacocca used to do a good job. . too bad that episode is gone forever.

The billions. . .easy to ask, easy to get. . after all is fake money, inflation, more and more debt, that finally the regular people are obliged to pay, at the end. . .but never will.

[dmlgc]

Originally Posted by akraptor

I am sorry, since when unions prevent management of the failing three, to invest more in R&D?! In more reliable equipment? In better design? In more gas-efficient cars?! And to APPLY FASTER the new stuff into production vehicles. . .not just prototypes that never make it into production. .."Hey, see how smart we are?. .but we cannot built it in mass production"> . If unions prevent management to build better, more reliable, much better designed, more fuel-efficient, more everything, cars, why is the government not hammering down these unions, for anything else than workers' rights to job safety and compensation? After all, all the above issues I raised about cars, is bringing more job stability to the auto industry workers isn't it?! I understand that everybody needs a job. But preventing the wide spreading of automation, just in time systems, kanbans, better technology, better design, all at lower costs. . .is like the government even is interested in the prosperity of the US car industry or what? Or they just didn't care till now that the management of the 3's got what they wanted (tons of money and benefits) using an antiquated manufacturing system, while the sales of a majority of car models dropped dramatically? Aaah, the easy billions they got until now in credits were sufficient, doesn't matter the output of assembly lines. "Since we get easy money everytime we need it, why bother making better cars?" Lee Iacocca used to do a good job. . too bad that episode is gone forever.

The billions. . .easy to ask, easy to get. . after all is fake money, inflation, more and more debt, that finally the regular people are obliged to pay, at the end. . .but never will.

The problem with the big three is they are not automobile manufacturers anymore, they are health care and social welfare organizations. The UAW represents what the worst of what a union can look like. The bail out in the senate failed because the UAW wasn't willing to make any concessions, in the long run it will cause more of their union members to be permanently unemployed.

With the cost structure of the UAW not likely the big 3 will survive intact, maybe Ford. The potential money they are going to get will only hold them a quarter at the most , the downturn for the auto industry will be 3-4 years and will never be as it was.

[Deda]

....as darwin said :natural selection,only best will survive!

[Suzie's Dad]

Originally Posted by akraptor

I am sorry, since when unions prevent management of the failing three, to invest more in R&D?! In more reliable equipment? In better design? In more gas-efficient cars?! And to APPLY FASTER the new stuff into production vehicles. . .

Actually, the auto unions have a long history of opposing technological innovation. Only in the last decade or so have they seemed to resign themselves to the fact that robotic manufacturing is a reality and that opposing it is just hiding one's head in the sand.

Originally Posted by akraptor

If unions prevent management to build better, more reliable, much better designed, more fuel-efficient, more everything, cars, why is the government not hammering down these unions, for anything else than workers' rights to job safety and compensation?

Why on earth would the government 'hammer down' the unions? Every union member is a voter. Every auto executive is a voter. There are tens of thousands more of the former than of the latter. Politicians go where the votes are.

Originally Posted by akraptor

. . .is like the government even is interested in the prosperity of the US car industry or what? Or they just didn't care till now that the management of the 3's got what they wanted (tons of money and benefits) using an antiquated manufacturing system, while the sales of a majority of car models dropped dramatically? Aaah, the easy billions they got until now in credits were sufficient, doesn't matter the output of assembly lines.

It wasn't the car manufacturers who got easy credit, it was the car buyers. And sales only dropped dramatically in the last few months -- for every manufacturer, not just the Big Three. (I see in today's newspaper that sales of the Prius are down almost 50% from last year. But isn't it the example people keep quoting of what car makers "ought" to be building?)

Originally Posted by akraptor

The billions. . .easy to ask, easy to get. . after all is fake money, inflation, more and more debt, that finally the regular people are obliged to pay, at the end. . .but never will.

The regular people will pay. Anybody under about 35 will pay. Our kids will pay, through "inflation" (ie: rising prices, which actually are not inflation but the result of inflation; inflation is what governments are all doing now to 'stimulate' the economy.) There is no free lunch. If you build a road, somebody somewhere sometime has to pay for it. If you bail out a loser, someone has to pay. Somebody will.

[akraptor]

Chrysler will shut down 30 plants starting tomorrow, while Ford will shut down from 9-15 plants.

http://www.bloomberg.com/apps/news?p...rU8&refer=home

[dmlgc]

Originally Posted by akraptor

Chrysler will shut down 30 plants starting tomorrow, while Ford will shut down from 9-15 plants.

http://www.bloomberg.com/apps/news?p...rU8&refer=home

Plants are normally shutdown over the Christmas/New Year holidays.

[Suzie's Dad]

Originally Posted by dmlgc

Plants are normally shutdown over the Christmas/New Year holidays.

This time they are shutting down for three months!

[xDrive50i]

Originally Posted by Suzie's Dad

This time they are shutting down for three months!

This time around, IF they re-open, they need to dust off the 'new' parts to get them ready for assembly ...

This really does NOT help these companies either. I mean, who would want to buy a car from a company that may not be around in a year or so. What good is a warranty if the company is going out of business???

[dmlgc]

Originally Posted by Suzie's Dad

This time they are shutting down for three months!

"The carmakers have announced extended holiday shutdowns. Chrysler is closing all 30 of its North American manufacturing plants for four weeks because of slumping sales; Ford will shut 10 North American assembly plants for an extra week in January, and General Motors will temporarily close 20 factories — many for the entire month of January — to cut vehicle production."