Notice a trend? GMAC back at the trough while Ford gains market share
ByFord refused to allow itself to be eaten up by the federal government. So it comes as no surprise that things are looking up for Ford. The Wall Street Journal reported the news Monday.
Now some analysts think the company has turned the corner so far it could report break-even results for its core North American operations or even an overall profit when it releases third-quarter earnings Nov. 2.
At the heart of Ford’s relative success has been its ability to minimize its year-over-year sales declines while taking advantage of its competitors’ weakness and grabbing market share.
According to CNW Marketing Research, Ford gained more than five percentage points of U.S. retail market share in the third quarter compared with the same period of 2008, while Detroit rivals General Motors Co. and Chrysler Group LLC lost ground.
“The Ford story is that they have taken advantage of the fact that they were sole domestic brand not to take a government bailout and not to file for bankruptcy,” said Efraim Levy, an auto-industry stock analyst at Standard and Poors. “But those benefits will fade in 2010 as the weaker competitors distance themselves from the bankruptcy filings and start to introduce some fresh product.” …
We’ll see about the weaker competitors turning things around next year. How will they introduce some fresh product if there’s no financing for the stale products? Oh yeah, GMAC will head back to the government trough to steal some more money from our kids. The Wall Street Journal reported Tuesday that GMAC needs another bailout. What a surprise.
The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said. The latest infusion would come in the form of preferred stock. The government’s 35.4% stake in the company could increase if existing shares eventually are converted into common equity.
The willingness by Treasury officials to deepen taxpayer exposure to GMAC reflects the troubled company’s importance to the revival of the auto industry. Founded in 1919, GMAC has $181 billion in assets and is a major financier for 15 million borrowers and thousands of General Motors and Chrysler car dealerships.
The new capital would help firm up GMAC’s balance sheet and solidify its auto-loan business. GMAC provides the vast majority of wholesale financing for GM dealerships across the country, meaning thousands would be unable to bring new vehicles onto their lots if GMAC were to collapse. …
Does anyone notice a trend? Private enterprises always do better than government enterprises. Government enterprises suck at the taxpayer teet to ensure their very survival.
Just a little something to keep in mind while contemplating a government takeover of health care in America. Why on earth would anyone expect it to end well?
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