Comments on: A state loan won’t help an ailing car company

By: bridging loan

bridging loan — Tue, 07 Apr 2009 11:41:16 +0000

Help for banks, cars companies etc but who will help us ?!?! They already earned enough and now we must pay even more?!?

By: Company founder

Company founder — Thu, 12 Mar 2009 07:36:32 +0000

Hi, I can

By: Krystina

Krystina — Thu, 25 Dec 2008 04:24:44 +0000

Great tips, thanks!

By: alastair harris

alastair harris — Tue, 23 Dec 2008 21:43:27 +0000

don’t think you have the economics of the car industry quite right. The industry is competitive, and the brands have to be strong – they spend most of their cash on developing and maintaining their brands, and some of this cost is R&D for new models, and some is for global marketing – such as F1, and I would imagine for most a tidy sum is spent on the costs of hodling stock! Some might turn off the production lines for an extended period over Christmas, but surely that is more about reducing stockpiles than saving pennies on staff costs.

For many of the big players cutting off part of their production permanently is simply not an option. Maintaining the volumes is critical.

Jaguars problem is that it is small niche player, and its brand is not particularly strong compared to its competitors. And whilst its owner is probably able to continue with it, it is playing a political game to get its hands on some of Gordon’s largesse.

Perhaps not quite the same problem that the big 3 in America are facing. For them bringing Maggie out of retirement is probably their only hope.

By: Robert

Robert — Tue, 23 Dec 2008 21:39:23 +0000

Brian, I think you are ‘on the button’, the major car companies have consistently over produced and survived primarily by credit based incentives, now the music has stopped on that wheeze the inventory build is now of himalayan proportions!

By: Lola

Lola — Mon, 22 Dec 2008 22:37:58 +0000

True, Mr Redwood, very true. But assuming that the car businesses have done all this and because the downturn is so severe, that is there are no customers at all, what else can they do? Are circumstances so exceptional that help is appropriate? And why should banks deserve lots of our cash – and they’ve genuinely made stupid mistakes – when manufacturers don’t?

reply: Remember I opposed share capital from the state for the banks for the same reasons.
The banks do need to be able to borrow from the Bank of England, their bank, just as car companeis need to be able to borrow from their banks, the commercial banks. Each case should be a commercial matter, with the Bank and banks taking proper security.

By: rugfish

rugfish — Mon, 22 Dec 2008 18:17:52 +0000

Hahaha, I hadn’t thought of that as it’s too ‘obvious’ an answer.
I mean I must be thick or something so I’m regressing to the sound of Distant Drums by Jim Reeves on YouTube until January !

Have a good Christmas everyone, ( and the folks at Jaguar, Woolies, MFI et al ).

By: mikestallard

mikestallard — Mon, 22 Dec 2008 17:30:57 +0000

Votes.
For Mr Brown.
Because he is a genius and he alone can save the United Kingdom from bankruptcy.

By: mikestallard

mikestallard — Mon, 22 Dec 2008 16:57:28 +0000

If only the government would do what car firms are having to do: cut jobs; cut back on pensions; cut back on everything to balance the books.
But, no, being professional politicians who have never been in business, the army, or in anything except politics and the law, they do the wrong thing: more spin, more money poured down the black hole.
Do I really have to list British Leyland, de Lorean and the motor cycle industry again?

By: rugfish

rugfish — Mon, 22 Dec 2008 16:12:56 +0000

I might be asking the obvious here, but in a business which has no sales, exactly what will the workforce be making, for whom, and why ?

The second question here is obviously rhetorical for government, or it can be a statement for those who actually have a brain in their head, and it’s this :-

Why is it ‘fair’ for the taxpayers to subsidise the average weekly wages of staff, executives and directors of car manufacturers on anything higher than the unemployed non-subsidised businesses which the government let go to the wall in an environment without customers ?

The simple equation is = Demand equals customers, product equals satisfied customers, good service equals more customers and more sales, but it has to start with CUSTOMERS with a demand and there isn’t any.

No amount of money piled against a wall will create customers and no business can survive without them.

Now what is the answer to the first question please ?

By: Bazman

Bazman — Mon, 22 Dec 2008 16:01:24 +0000

Not to mention that they did not invest any of their profits from the no defunct SUV market and spent more time and money on mergers than concentrating on the business they are in. Designing and building cars people want. The private jets for the Directors in real terms is probably not much, is symbolic of their attitude.

By: DBC Reed

DBC Reed — Mon, 22 Dec 2008 10:02:46 +0000

The Guv has to wait till house prices bottom out,slap on a tax to stop them rising again ( best LVT) then bash out the cheap credit so people can buy Jaguars and what have you. In the present “system” such spending would be crowded out by eye-watering mortgage repayments. The firms have to be tided over till the house price bubble is deflated and will rise no more( with an LVT stake through its black heart).

By: Acorn

Acorn — Mon, 22 Dec 2008 09:25:36 +0000

Interesting piece in the Captain’s Log. Scroll down to “Why Detroit Can’t Compete”.

http://www.financialsense.com/captain/log.html

By: Brian Tomkinson

Brian Tomkinson — Mon, 22 Dec 2008 09:24:24 +0000

Much of the demand for cars was based on unsustainable consumer borrowing encouraged by government. At the same time government was literally trying to price motorists off the road by a multitude of taxes and charges. Now the bubble has burst and the demand dropped, the government is scrambling around to see how it can give taxpayers’ money to a foreign owned car manufacturer for political considerations viz. fear of losing MPs’ seats in the Midlands. What a way to ru(i)n an economy.

By: Paul

Paul — Mon, 22 Dec 2008 08:38:39 +0000

I don’t understand why the Government just don’t suspend the tax on company cars for three years? Or even better scrap it all together?

I get £850 a month car allowance. If I used it to get a car even in the mid range of my car list it would cost me over £250 per month in tax. So I do what a lot of other people do, I take the cash and buy a new car every five years.

If they even just charged me income tax on the allowance as I pay now I would order a company car in the morning.

In fact I only know of less than a dozen people still in the company car scheme once the tax rules where changed.

Changing the company car tax scheme to make it a lot cheaper would shift more product, much better I think than wasting my taxes on cars no one is buying.

By: Obnoxio The Clown

Obnoxio The Clown — Mon, 22 Dec 2008 08:17:46 +0000

It's a pity that this simple truth will be spun to show how uncaring and do-nothing the Tories are. The truth is that doing nothing to prop up inefficient foreign-owned companies when the government coffers are empty is not only an option, it is the option.