Automobile Crisis


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Presentation highlighting the crisis undergone by automobile dealers

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Automobile Crisis

  1. 1. US Automobile Crisis <br />
  2. 2. Start of the Automobile Crisis<br />By August 1929 Just Prior to Great Depression Car Crisis Begins<br />From 1930 to 1932 Sales dropped 73.2 percent<br />Similar to Our Crisis Because People Stopped Buying Cars Due to Extremely Poor Economy<br />1970 “Gas Scare” triggers another American Car Crisis<br />Large American Cars Ineffective <br />Majority of Cars on Production Line were larger cars<br />Smaller Cars receive large demand<br />
  3. 3. Common Cars Built Through 1950-1970<br />1953-Chevrolet Builds Corvette and BelAir<br />1955- Ford Designs Classic Thunderbird<br />1959- Chevrolet introduces the Corvair and the El Camino<br />Both Cars had V-8 engines<br />1960- Ford Builds Falcon<br />1960- Chrysler Designs Valiant<br />1964- Chrysler Builds Barracuda<br />1965- Ford Introduces popular Mustang<br />1966- GM introduces classic American muscle cars<br />Pontiac Firebird and Chevrolet Camaro<br />
  4. 4. 1960’s Model Ford Mustang<br />1960’s Model Chevy Corvette<br />
  5. 5. Recent History:Three Reasons for Auto Crisis<br />Health Care<br />GM spends $5 Billion on Health Care Annually <br />Ford and Chrysler have health care obligations of $90 Billion <br />Auto Industry can be described as a “health insurance provider that happens to make cars.”<br />Credit Crunch<br />Lack of Good Credit for Potential Cars Buyers<br />Cannot Get Loans to cover loss of car sales <br />Low Efficiency Cars <br />Gas Guzzlers Commonly Purchased Car<br />
  6. 6. Fall Of Production<br />
  7. 7. Fall Of Production<br />
  8. 8. Tough Competition<br />Honda and Chery Motor Corp. on Rise<br />Honda Posts 17% Sales Increase Since Beginning of 2009<br />Honda Accord Posts 38% Sales Increase<br />Chery’s Six Sigma Production Systems<br />Struggling Toyota Still Manages Better Than Detroit Motors<br />Sales Worldwide Better Than GM, Ford, and Chrysler<br />Toyota Leads US Sales For First Time in History<br />However Toyota Still Asks For Aid<br />
  9. 9. Original Bailouts<br />General Motors and Chrysler Seek Bailouts From Federal Government<br />$15 Billion Bailout Proposed by Congress<br />December 10th House passes the bailout bill to GM and Chrysler<br />Bill Fails due to majority vote<br />TARP (Troubled Asset Relief Program) to the rescue<br />Car Czar<br />By January General Motors And Chrysler Receive Government Aid Of $17.7 Billion<br />
  10. 10. Future Bailouts<br />GM Request $16.6 Billion More in US Aid<br />GM to cut Saturn, Hummer, and SAAB Lines From Business<br />Pontiac On Verge of Being Cut<br />Also Laying Off 47,000 Jobs<br /> GM and Chrysler Must Submit Recovery Plans to Receive Government Aid By 31st March Or Face Having To Return Any Aid Received To Date And The Possibility Of filing For Bankruptcy<br />
  11. 11. The Chrysler Situation<br />Taken Off NYSE Following Take Over By Daimler In 1998<br />Private Equity Firm Ceberus Buy 80.1% And Take Control In 2007<br />Daimler Continues To Hold 19.9% Stake<br />Ceberus Is A Hedge Fund Who Holds Controlling Or Significant Minority Interests In Many Large Commpanies<br />
  12. 12. Chrysler And Fiat<br />Fiat Are Currently In Talks With Chrysler Over The Possibility Of Gaining a 35% Stake<br />Deal Would Allow Fiat Access To US Dealer Network<br />It Would Also Give Chrysler Access To Platforms For Smaller More Efficient Cars And Access To Fiats Global Distribution Network<br />
  13. 13. GM’s Options<br />
  14. 14. Ford Strays From Pack<br />Ford Receives No Government Aid<br />Ford Remortgaged Plants To Raise $26Billion Cash In 2006<br />Able to Use This Cash to Help Through Recession <br />Volvo on Verge of Being Sold Which May Raise Up To $30Billion<br />If Turnaround Plans Fall Through…<br />GM and Chrysler May Be Forced to Declare Bankruptcy<br />Ford Has More Options and Flexibility Available<br />
  15. 15. Others Effected By Auto Industry Crisis<br />Delphi Corp. Declares Chapter 11 Bankruptcy<br />Parts Division Supplier to GM, Chrysler And Many Others<br />Daimler Post Huge Losses Due to Chrysler<br />50,000 People Laid Off and Counting in Detroit<br />
  16. 16. Other Governments Effected<br />GM Would Sell Opel Stakes to Get Aid From Europe<br />Sale of Opel, the GM unit in Europe, would rewarded GM in $4.18 Billion from Germany<br />Sale of Volvo Could Grant Ford Approximately $30 Billion From Chinese Company<br />