Posted on 08/25/2005 9:23:42 AM PDT by snowsislander
General Motors Corp. and Ford Motor Co. took another hit as Moody's Investors Service downgraded the corporate debt of both auto companies to junk status, following similar moves by Standard & Poor's Corp.
The moves come as the top two U.S. auto makers by market share struggle with intense competition, high costs and the decline in sales of their biggest and most profitable sport-utility vehicles. Moody's downgrades, affecting about $150 billion of debt, will ratchet up pressure on GM and Ford to confront their cost problems in the U.S. before contract talks with the United Auto Workers union are to begin in 2007.
Over time, the downgrades to high-yield, or junk, status will make borrowing money more expensive for GM and Ford. The downgrades affect the auto makers and their big finance operations, although Moody's kept Ford's Ford Motor Credit Co. unit at investment-grade status.
A GM spokesman said the company is disappointed with Moody's decision and is committed to improving its performance. Still, he added, "we're starting to see signs of progress" on the company's recovery, including new products and successful marketing and sales campaigns.
In a statement, Ford Chief Financial Officer Don Leclair called Moody's decision "disappointing" and said the company is responding with actions to cut costs and strengthen the balance sheet. The auto maker said Tuesday that its Volvo Car Corp. subsidiary will slash between 1,000 and 1,500 jobs in an effort to save $130 million in 2005.
GM and Ford face a crucial test in coming weeks as they roll out their new models for the 2006 model year. Sales of GM and Ford cars and trucks surged over the summer as they -- along with DaimlerChrysler AG's healthier Chrysler Group -- offered to consumers the same discount they offer to their employees.[...]
(Excerpt) Read more at wsj.com ...
LOL! Now GM and Ford's corporate debt share the same status as their cars.
LOL
My husband works for GM. We drive GM cars. I have one which has gone 200,000 miles. You know GM is in trouble partly because of the unfair trading policies that resulted from global trading-far from a level playing field. How nice for you to take such delight in an American company's problems. Keep buying your foreign junk but when someday you are affected by Nafta, Cafta or whatever I hope you think about your careless statement.
The running trim on the driver's side is falling off, lights are failing, and our entire brake system needed replacing. It's got less than 60,000 miles on it and all this started immediately after it hit the 50,000 mark--right when GM was no longer responsible.
If GM wants to win me back, they'd better start producing better vehicles. At this point, I wouldn't care if the entire company faded away--and my brother works for a subsidiary of them.
I always drove foreign cars. In 2000, I needed a pickup an bought a Ford. Piece of junk. Just recently went back to japanese. There is simply no comparison in the quality between a japanese and American car.
I know a lot of the American car companies are touting their high intital quality surveys. Initial quality, yeah, that's nice. But I am more concerned about that think falling part after 60K miles than I am with the initial quality, where anything will be fixed for free.
Have owned 6 GM's, never a problem with any of them (passenger cars, sports cars, and 1 truck).
Perhaps quality or design was an issue years ago, the cars I've owned in the last 20 years have all been great.
Car biz ping.
So, you really think a Chevy Malibu is a better car than an Accord or a Camry?
GM's problem is poor management and an inconsistent product. Ford's problem is that they just suck.
Which policies?
My parents used to buy American only cars, but they had hosts of problems and their GM car was a lemon, which they replaced by another GM Lemon.
They eventually switched over to japanese made cars, and have been doing fine ever since.
That also said....I just don't think I could ever bring myself to buy a foreign car, I'm willing to bite the bullet, but I do understand why alot of people hate Ford and GM cars.
Blaming CAFTA, NAFTA (and those are not perfect bills and are quite far from it) because Americans want cheaper cars and better quality is akin to blaming someone for saying "Darn it, I just want a can opener that works, I don't care where its from".
Personally, I think Ford and GM's problems come from giving in to much to its unions.
Oops, 8 was for newgeezer.
Yeah, if only the goobermint would punish those successful Japanese imports with tariffs so GM/Ford's junk cars can be protected in the market.
How nice for you to take such delight in an American company's problems.
You damn right I'm laughing. It ain't my fault that GM/Ford is overpaying union thugs and don't know how to manage their respective companies.
Keep buying your foreign junk but when someday you are affected by Nafta, Cafta or whatever I hope you think about your careless statement.
You have a narrow definition of what "foreign" is. Toyota, Honda, and Nissan all have production facilities in the U.S. It doesn't have anything to do with NAFTA or "unfair" trade. Just that Detroit is getting a nice, overdue asskicking from competition.
Funny thing is, I bought a 1999 Chev Cavalier 5 speed, and it has been an excellent car.
I put over 70,000 miles on the original tires, brakes and struts.
The only thing I've done on a regular basis is change the oil. It's now due for some more maintenance, but after 100K miles, I don't think I can really complain.
Just remember: at one time MCI and Sprint were "junk" rated, and Latin American bonds that went bankrupt were AAA. Meaningless.
I just bought my 8th car. I've owned 5 Fords, a Mercury, a Chevy, and a Toyota. The Toyota was a piece of trash compared to any of the American cars.
Heh heh. Yeah, let's see, how many people do I know that own a Honda and say, "this car is a piece of junk"?
Just because your husband works for GM doesn't mean that GM makes better cars than the Japanese. Sorry, but the Japanese just plain crush Detroit. There's no comparison at all. The only thing that is keeping Ford and GM afloat is that the Japanese really haven't been building full-size pickups for very long. Now they are beginning to come here with those, too. I'm afraid it won't be long until it's curtains for Detroit.
Yeah--My brother also has had some success with his TrailBlazer. GM needs to cut out the hit-and-miss attitude of its line workers, and perhaps the overal quality will go up. It's the unions that are killing it.
The new Toyota Tundras absolutely makes the Ford F250 look like a little red wagon.
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