:slap: hey, we keep that to ourselves.

;)

So the guy that totally overinflates the possible death rate disregards the economic impact. Your politics shine through in everything.


I can not speak to other industries but for automotive this is not just going to "come and go". It isn't a matter of just eating into savings but a complete and total lack of cash flow. When the industry does start up again it will be with largely slashed work forces. Those that do get to come back are facing 20% and even 30% wage cuts for the next several years. The impact of this will be far reaching and completely change the industry.

The death total was based on projections from scientists if people failed to take action. People took action. You can call it overinflation, but that would have been our reality. We prevented it.

You’re making a false comparison is what I’m saying. You’re using one metric to gauge the economy. I’m suggesting the 2008 recession, or we could talk about the depression, were based on deep seeded systemic problems in the financial structure. Someone could make an argument that there is subprime lending in the auto industry, high student loan debt and a more stable, but nevertheless, housing bubble that could cause investors to gain a loss in confidence in the midst of this pandemic, and those things could be problematic, but I think the situation is far less dire, and the end of the pandemic is a light at the end of the tunnel for investors.

The Dow gained 800 yesterday or something. We will see, but again, I believe the situations are false comparisons.

Investors and stock market are NOT the auto industry.

To be fair, I used the metric as a visual representation of how this is different than the 2008 recession, not Tcoat. Perhaps I illustrated his point ineffectually, but I trust his observations and conclusions over armchair generalizations by someone who is not in the automotive production industry.

No your illustration of the point is accurate. The point isn't whether all those people are receiving full benefits or returning to work soon but the simple fact that NOTHING beyond essentials is being made.
The impact goes well beyond the obvious.


The 2008 recession permanently closed hundreds of smaller parts suppliers. This shifted the power base in the industry from the car companies to the remaining parts suppliers. The car companies could no longer run rough shod over the parts companies since they could not just go next door and get the same thing. One of the results of the situation was the common contract clause that parts ordered were paid for if delivered or not. As I have said too many times now the only way the car companies could get out of those were if there was a disaster that prevented them making cars. That would have little impact on the overall industry if one plant burned to the ground and they could not build a certain model or two. The impact when it is all plants in the world is beyond imagination. The trickle down from this extends to the parts manufacturers, the people that make the components for those parts, the people that refine the materials to make the parts for the parts and the people that mine the minerals that start it all. It is not just the assembly plants involved here.


Now, on this whole "it will just eat into profits" thought process. Profits are not what makes a company run. Cash flow is. There is NO cash flow in the whole industry right now. None. Nada. Zip. This will kill places no matter what their end of year profit is or would have been. In order to stop the cash bleed there will be massive cuts in those areas that do not create flow. Areas such as R&D, new product launch, low volume/profit products are going to be shelved indefinably. Even when things start up again these areas are going to remain on that shelf since THEN they will be looking at profit.


I wish I could share much of what is discussed by the very high level industry leaders on our calls but I simply can't. I will just say that what is going to happen has never occurred before and it will be deep and long term. All this is not going to just go away when things return to "normal" even if the stock market soars and other industries hardly get touched.

I get that it was your graph, but he drew the same conclusion.

The short term changes in cash flow should be managed with stimulus, loans and savings. Obviously, there are less people and dealerships buying cars right now, but that shouldn't persist because people will return to work. There could be a sling-shot effect with a dip in purchases then a boost/surge in purchases. It all depends on how everything goes.

I think the big difference between 2008 is that there were massive number of home foreclosures that wiped out people's savings, uprooted them from their homes, altered the market, resulted in long term job loses, etc. Those foreclosures killed the cash flow of the banks, which fundamentally changed their ability to lend and bla bla bla. The long term purchasing power of the market was deeply impacted. I just disagree that the 2008 recession was "a little blip compared to this".

Don't assume everyone is just going to return to work. This has more or less crashed my industry. Many have already filed for bankruptcy. We are established enough to survive but it is changing our company in a way that will last for a long time.

The 2008 recession was a boom for us.

You don't get it at all do you? I am talking that to the AUTO INDUSTRY 2008 was a blip. We were more than happy to keep making cars then there were just few costumers.
It isn't a matter of sales returning. The damage is already done. Even if everybody runs out and buys a new car as soon as they can there will be none to buy. In the mean time the cash is just pissing out on the ground as the companies try and scrabble to stop it.

Cash for clunkers probably won't help this time around.

I'll bet anyone that the Tesla comes out of this faster than the big 3. More flexible infrastructure and greater ability to adapt.

I'm sure it will have long term ramifications for many people and industries. I just think it is too soon to suggest the situation is worse than the 2008 recession. It definitely could be.

It is a boom for many people right now.

I suppose the industry could have sustained such a huge impact in sales that the disruption is more permanent, but the thought was that if sales dropped from 17 million to 11 million then rebounded temporarily to 23 million (in an ideal situation) then recovery would be swift. Even if supply couldn't meet demand, then new car prices would go up, as well as, used car prices. We will have to see how it goes.

Well, they are more of a technology company than just a car company like how Samsung is more than an electronics company vs Apple.

BUT, the caveat is that Tesla has many fingers in luxury items, so solar will take a hit, luxury cars will take a hit and investing in grid storage will take a hit, but it is also possible they are positioned better because of it. Often times the ones who get hit the hardest are the lower class workers, as a percentage of their incomes and their ability to recover as fast or at all, so maybe luxury sales won't take as large a hit. Who knows?

https://www.ncbi.nlm.nih.gov/pubmed/25332508

See that is just it. They are not going to be able to make the cars to make the jump. Even if everybody ramped up tomorrow (which they are not) and people had money to buy them (which they don't) there will still be a drop in production of about 20 million units this year. By the time they can run at anything even close to capacity the worldwide production will be lucky to hit 50% of last years. You are still focusing on sales which are meaningless at this point when the only cars to sell are already on the lots. The companies have to still be in business to make the parts to build the cars. Forget what you think you know about past situations the rules have changed and that is that.
The whole purpose of my original statement was that if you want a new Twin you better buy one soon because in all probability what ones already exist are the end of them. I really hope that I am wrong but I highly doubt I am.