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      11-29-2008, 08:25 AM   #1
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Arrow BMW worst crisis in history

Car makers that had seemed in a strong position to weather the global economic storm have publicly admitted a 'crisis' as sales continue to slow down.

BMW's boss Norbert Reithofer yesterday described the situation to Germany's Spiegel magazine as "the worst crisis BMW has faced in its history".

Despite the slow sales, it is the German giant's reliance on leasing that has put it in a very vulnerable position.

Meanwhile Daimler boss Deiter Zetsche assessed the current conditions as "the worst crisis since World War II".

Martin Winterkorn, boss of Volkswagen, told reporters: "We have never before seen this kind of crisis" adding that "difficult cuts" maybe unavoidable.

But it's not just the German's who are talking openly about serious problems.

Previously stable Japanese giant manufacturers like Honda and Toyota are also publicly airing grave concerns.

Toyota's vice president Mitsuo Kinoshita described the situations as "an emergency of a magnitude we have never seen before".

Honda has also admitted that it will be "very difficult" to meets its full-year profit forecast and is scaling back production by some 40,000 units in Japan.

Industry experts say the most flexible car makers, which can adjust quickly to falling demand, will be best placed in the months to come.
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      11-29-2008, 08:34 AM   #2
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Add Ford, GM and others to that list as well!
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      11-29-2008, 09:17 AM   #3
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oh well. It's not like we haven't been heere before, eh? In 70s and 80s manufacturers would go bust, others were on the brink. some luxury car makers pulled out of crap by introducing cheap mass level models. I imagine BMW can start selling more Minis and Isettas ...

Porsche was all but gone till early 90s when Boxter was introduced. Has been a turnaround story since.

Probelm for BMW is that their cars are not really luxury enough to be in demand by the elite rich who will keep buying Porsches and Lambos. BMW is a mass market luxury car, therefore it WILL suffer from the drop in demand. So expect factory closures, cost cutting, quality going a bit down. all the good stuffˇ. I imagine that quality wise, E46 would remain as best made 3 series for a while.
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      11-29-2008, 10:21 AM   #4
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The companies which aren't held over a barrel by the unions and thus scale back production and manpower should cope with this ever changing market and will be in a better position to gain from other ones misfortunes. I wouldn't be surprised to see the number of manufacturers drop by more than a third. And in the future see even more product co-development among bitter rivals.
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      11-29-2008, 01:00 PM   #5
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Every car manufacturer is in the same relative boat...
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      11-29-2008, 01:37 PM   #6
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The main problem is that people are not buying things. Get out there and SPEND!
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      11-29-2008, 06:17 PM   #7
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"BMW has been doing its best to catch up to Mercedes in recent years. But doing so has meant exposing itself by offering cheap financing. That strategy may come back to haunt the company."
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      11-29-2008, 07:59 PM   #8
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Originally Posted by Subw00er View Post
The main problem is that people are not buying things.
And as long as people continue NOT to buy, retail suffers.

This is only the beginning of the mess.
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      11-29-2008, 08:26 PM   #9
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Spending is no fun when your portfolio is losing $10k a month. People want to hold on to cash. Assets are depreciating. You don't go out and blow money when your own money is blowing out the window. What do you expect?
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      11-29-2008, 08:31 PM   #10
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Quote:
Originally Posted by stickypaws View Post
Spending is no fun when your portfolio is losing $10k a month. People want to hold on to cash. Assets are depreciating. You don't go out and blow money when your own money is blowing out the window. What do you expect?
great point. I imaging this crisis lasting for the next 14 to 16 months and that's being very optimistic. We'll see where it leads us..
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      11-29-2008, 09:35 PM   #11
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Source of article?
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      11-29-2008, 10:37 PM   #12
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Quote:
Originally Posted by Subw00er View Post
The main problem is that people are not buying things. Get out there and SPEND!
No, we need to save THEN spend. I'm pi$$ed off w/ this faux 'I'm rich because I can leverage myself until my nose bleeds' B/S. It's in a major part how we got ourselves into this present shit storm.

The US was THE creditor nation coming out of WW I and that undergirded our economic rise - guess which country is our primary creditor nation now?
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      11-29-2008, 10:40 PM   #13
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Originally Posted by lkn View Post
great point. I imaging this crisis lasting for the next 14 to 16 months and that's being very optimistic. We'll see where it leads us..
I posted here last year that we had some economic issues coming - and got slammed. We're in for sub-trend growth for at least 2 years. That's what a major deleveraging event will do.

I've been emailing w/ a CA in discussion to do a deal and he's in fantasy land, "no issues w/ inventory .. pricing ..." - may be true currently but the data I am seeing shows some major pain coming down the pike. Fine, I will keep my money until I see some realism on the CA's part.... no, actually I will just go shopping elsewhere.

BTW the above does not mean I think investments wont pay off in this environment. Lots of damage has been discounted in risk assets already.

As an aside, why pay hedgies 2/20 when just buying T-notes this year would have paid off 8-9% with no upside capture? Nor downside to principal unless the US really is going into a deep ditch economically.

Back OT: BMW AG is clearly examining their business model. Cancelling the CS shows that they are hunkering down. BMW's finance arm - like all of the autos' - are being whacked by dislocated credit markets (= onerous ABS spreads) and residuals that question the viability of the leasing model.

BMW AG has decent cashflow and a compelling brand, so the company will survive, just w/ compressed margins whole this tumult lasts - and with a renewed focus on less powerful (ie, less 'thirsty') models.

The 2002 made absolute sense in its time and was, and is, a blast. Back to the future.
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Last edited by Voltigeur; 11-30-2008 at 12:10 AM.
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      11-30-2008, 12:54 AM   #14
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Quote:
Originally Posted by stickypaws View Post
Spending is no fun when your portfolio is losing $10k a month. People want to hold on to cash. Assets are depreciating. You don't go out and blow money when your own money is blowing out the window. What do you expect?
yup i got no money left to spend
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      11-30-2008, 01:08 AM   #15
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Source of article?
I posted the article the OP is referring to on this forum several days ago. You can link to it here: http://www.e90post.com/forums/showthread.php?t=189138
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      11-30-2008, 01:26 AM   #16
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Originally Posted by Subw00er View Post
The main problem is that people are not buying things. Get out there and SPEND!
Wrong. We need to stop spending! Overspending is what got us here. We need savings and production not spending, borrowing, and consuming.

Quote:
Originally Posted by Voltigeur View Post
No, we need to save THEN spend. I'm pi$$ed off w/ this faux 'I'm rich because I can leverage myself until my nose bleeds' B/S. It's in a major part how we got ourselves into this present shit storm.

The US was THE creditor nation coming out of WW I and that undergirded our economic rise - guess which country is our primary creditor nation now?
Agreed 100%.
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      11-30-2008, 01:41 AM   #17
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Not putting s**t on the young but 9 -14 year olds's who are now 10 years older have had a booming 10 years. They have never seen bad times, only there parents have.

No different here in Australia, unemployment running at under 4%, everybody had a job, credit & cash to burn, they thought money grew on trees. Then one day in Sept they looked out the window and saw the tree had died.

Man, you think it's tough now, wait till after Christmas. The next 12-18 months is going to be bad. No different than in the animal kingdom, survival of the fittest, this case the smartest & ones who have a job or some sort of income.

There is one thing to look forward too, the next boom will be bigger & better than the last one, always is. The next one will be my third and I am gearing up for it now! the deeper the bust, the bigger the boom!

Man, its like a rollercoaster ride, frightening on the way down, hairy of the way up, it's just part of life, another curve ball so to speak! Good luck everyone and see you on the otherside!
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      11-30-2008, 08:50 AM   #18
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Quote:
Originally Posted by Bobby_Light View Post
Wrong. We need to stop spending! Overspending is what got us here. We need savings and production not spending, borrowing, and consuming.
Yes, but why will companies produce if products are not selling? Lack of production means loss of jobs. Its a vicious cycle, eh?!
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      11-30-2008, 10:48 AM   #19
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everything is going to be just fine!
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      11-30-2008, 02:52 PM   #20
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it"s just as an offical information

sourece is BMW AG GROUP
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      11-30-2008, 03:23 PM   #21
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Quote:
Originally Posted by watrob View Post
Not putting s**t on the young but 9 -14 year olds's who are now 10 years older have had a booming 10 years. They have never seen bad times, only there parents have.

No different here in Australia, unemployment running at under 4%, everybody had a job, credit & cash to burn, they thought money grew on trees. Then one day in Sept they looked out the window and saw the tree had died.

Man, you think it's tough now, wait till after Christmas. The next 12-18 months is going to be bad. No different than in the animal kingdom, survival of the fittest, this case the smartest & ones who have a job or some sort of income.

There is one thing to look forward too, the next boom will be bigger & better than the last one, always is. The next one will be my third and I am gearing up for it now! the deeper the bust, the bigger the boom!

Man, its like a rollercoaster ride, frightening on the way down, hairy of the way up, it's just part of life, another curve ball so to speak! Good luck everyone and see you on the otherside!

For once I agree with you!!
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      11-30-2008, 08:16 PM   #22
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Quote:
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Yes, but why will companies produce if products are not selling? Lack of production means loss of jobs. Its a vicious cycle, eh?!
That's the thing. The US doesn't produce anything anymore. We buy imported goods - largely from Asia. You can buy stuff, but you're not supporting the US; you're supporting foreigners in most cases. China is the new US. They will be reaping the benefits of their efforts in the 21st century much like the US did in the 20th century.
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