Ford and GM have long been dominating players in the automobile space. However, over the past few decades, the automakers have piled up hundreds of billions of dollars in debt, and with their slow electrification, the automakers may very well go bankrupt soon. In this video, I cover Ford and GM's $302 Billion debt crisis.
Please consider becoming a channel member by clicking the "join" button or becoming a Patreon at https://patreon.com/casgains
Soundtracks provided by LCS and Buck UK
Copyright Disclaimer Under Section 107 of the Copyright Act 1976: All rights belong to their respective owners
Please consider becoming a channel member by clicking the "join" button or becoming a Patreon at https://patreon.com/casgains
Soundtracks provided by LCS and Buck UK
Copyright Disclaimer Under Section 107 of the Copyright Act 1976: All rights belong to their respective owners
Ford and gm have long been standing players in the automobile market, they've revolutionized vehicles in the 1900s under powerful leaders like henry ford and alfred sloane jr stylish annual model changes and cars themselves have all been invented under ford and gm. Yet, under the management of risk-averse ceos that refuse radical change, ford and gm may very well go bankrupt in as little as the next year in this video we're going to take a look at the billions of debt that both ford and gm have and determine whether The companies will go bankrupt and, if so, when welcome to cash gains academy, if you're new to the channel, please consider subscribing for more content like this and let's get right into it before we get into the finances. It's important to understand that this is actually a huge deal. Ford and gm have piled up so much debt that their bankruptcies would shake the stock and bond market by a substantial amount.
Four journalists, jesse columbo, has stated that ford and gm going bankrupt could create a quote-unquote downward spiral. Now out of both ford and gm ford has a far worse balance sheet. Ford's total debt currently stands at 175.7 billion dollars, which the put into perspective is greater than the gdp of sri lanka. Serbia and iceland combined ford, could literally pay each and every one of his employees 921 thousand dollars right now, if it had as much cash as debt.
Not only that, but ford only has 30 billion dollars worth of cash in cash equivalents, leading ford's net debt to be a whopping 144 billion dollars. Ford going bankrupt is not just an old company dying off if ford went bankrupt right now, each adult in the us would have to pay 689 just to pay off ford's debt. That's right! If tax money was evenly distributed, you have to give the government almost 700 right now if ford went bankrupt, not only that, but ford's margins have been sliding tremendously even before the pandemic. In the fourth quarter of 2019, ford's u.s margin dropped, some 8.8 percent to 2.8 percent and its margin in china dropped to minus 21.5 percent.
These losses have worsened even more. In the first quarter of 2020, ford lost 2 billion dollars and surprisingly, ford was able to turn a 1 billion dollar profit in the second quarter, despite revenue being down 53 percent year over year. However, don't be fooled because ford has some talented accountants at hand. For example, one question to ask is what do you consider a profit, because the gap profit does not include loan interest? According to guru, focus ford is paying on average 1.05 percent interest per year on his 175.7 billion dollars of debt, which totals to an amount of 2.6 billion dollars a year.
In addition, forest delayed 450 million dollars worth of interest in the second quarter of 2020. To the next quarter, which just exposes the short-term accounting magic going on at ford, now that we know that ford is in big trouble, we can quickly skim through gm's finances and see the desperation going on gm recently struck a deal with the fraud that is nikola Motors which truly shows how desperate the automaker is now don't get me wrong. Gm side of the deal made sense trevor milton agreed to give away two billion dollars worth of stock, just so that nikola could get the right to buy gm's batteries and hydrogen fuel cells. Yet to associate your company with the fraud shows how desperate the automaker and, more specifically the gm ceo mary barra is. Gm has 127 billion dollars worth of total debt and 98 billion dollars worth of net debt. The automaker is also burning through money, despite having talented accountants like ford in the second quarter of 2020. Gm lost 758 million dollars which isn't as much as ford but is still a loss nonetheless, with the levels of debt that ford and gm. Have it's not a question of if ford and gm will go bankrupt, but rather it's a question of when both automakers are piling on debt every single quarter, and it's no secret that this debt bubble will eventually have to pop.
In the past six months, ford has added 19 billion dollars of debt, and gm has added 23 billion dollars of debt, given the existing debt pile. It's no surprise that this debt is at an extremely high interest. Ford's credit rating recently got downgraded to junk status, which literally means that their bonds are junk. If you buy ford bonds, chances are that you'll never see that money ever again.
Ford's first series of bonds was worth 3.5 billion dollars and had an interest rate of 8.5 percent per year. As you can guess, gm is in the same situation as the automaker also got downgraded to junk and ended up selling 4 billion dollars with the bonds. At an interest rate of 6.25 per year, this clue not only points to ford and gm's terrible finances, but also upcoming. Bankruptcies, ford and gm's reluctance to go all in on electric vehicles is leading to serious issues.
Internal combustion engines are great, they've, helped fuel the global economy and improve transportation all around the world. However, they have reached a point of slowing innovation. On the other hand, electric vehicles are becoming better and better with the improvement of thermal regulations of batteries and increasing battery energy density out of both ford and gm, the first bankruptcy is likely going to be ford. Ford has had awful dna within its management.
They've built a team of managers who have refused to accept change. Take a look at an interview with ford's former ceo mark fields, who was fired one year after this interview does elon musk? Does he keep you awake at night? I mean not not directly, i mean, but i mean yeah, you know. Does he they always ask me the question: what keeps you up at night? Nothing. I am dead tired by the time i get to bed um, because i love what i do.
But you know clearly when you we, we take all of our competitors very very seriously and actually, when you look at the level of competition that we have in the in the industry, from our traditional competitors and when you look at these competitors and non-traditional competitors, we're Embracing that it's extremely exciting for us, we're not looking at it as a threat, but he does seem to have something of a head start here i mean so he announces last week this new model, two hundred thousand immediately people signed up for it. Even you know, 18 months, at least before it's even available. I mean that's but he's well down this track in a way that ford and well general motors and others are not right. I would disagree with that. I think uh elan what he's done with uh with tesla has been pretty amazing and i think the the biggest benefit that he's done for for the market is just raise the awareness of electrified vehicles now up to date, his company has catered to a very affluent Consumer, our approach, we have one of the largest selections of electrified vehicles, conventional hybrids, plug-in hybrids and battery electric vehicles, as i said, we're number two seller in the u.s and electrified and number one on plug-in hybrids. We have a lot of experience here. This is a man that has built the management and team at ford, he's not scared of the competition in the electric vehicle space and refuses to admit that tesla has a lead in the space. Given that you can probably guess that ford's new ceo, jim hackett, has had a horrible time operating the company he's, arguably even worse than mark, as he went on a cnn interview to state that elon is competing with henry ford, not himself so elon musk.
For his part said - and i quote, there's a good chance that ford doesn't make it in the next recession makes you smile lights, a fire, i'm sure he's claiming their truck is going to be as powerful as yours, but it's going to drive like a porsche 911. What tells you tesla and elon musk won't win. Well, let's, let's balance that, because it meets the criteria. What we talked at the beginning, which is there's a disrupter coming, i happen to compete with a rocket scientist, who's really smart.
I respect that about him and yet he's competing with the ultimate disrupter in henry ford. So when you go seven miles from here and you see the rouge complex henry bet the company, he goes bankrupt yep, because there's no industrial model in the world that has a hundred thousand people working in it. That one did to claim that elon is competing with henry ford is quite ridiculous, and i'm not saying that to disrespect henry ford. Jim is using henry as the competitor of musk.
In order for him to set the blame away from him. Jim hackett is 65 years old and has enough money to retire he's simply just collecting his annual salary of 17.5 million dollars until he gets fired when it comes to gm. The story is the same. Gm ceo, mary barra, has constantly emphasized that electric cars are the future, yet her actions don't meet up with her words. Gm has this huge eevee lineup coming soon, but what are the specs? How much will they cost with such slow electrification? It's just a matter of time before both gm and ford go bankrupt. Ultimately, the turning point for both ford and gm is when the tesla cyber truck is officially in production. Ford's prized vehicle, the f-150 is ford's, most profitable vehicle and if tesla is able to secure just five percent of the market share, this would hurt ford's profitability substantially. This is no different for gm, as in 2018, gm revealed that the automaker makes 17 000 in pre-tax profit for every full-size pickup truck sold with over 750 000 pre-orders.
The tesla cyber truck is bound to steal some of the profits from legacy auto, which could leave ford and gm lagging on their loan interest payments, and sooner or later, leaving both automakers going bankrupt. The cyber truck is expected to go into production in late 2021. So this could leave ford and gm bankrupt by 2022 or 2023. Let me know if and if so, when you believe ford and gm will go bankrupt.
Do you agree with the estimates that it laid out, or do you believe that ford and gm will go bankrupt before or after my estimates? If you enjoyed this video, please hit the like button and subscribe and i'll see you in the next one.
All trucks, no cars, and ungodly amounts paid to executives, administrators, and major stockholders are at fault.
OK so here is the challenge Gasgains; Your program is so extremely biased and very shallow in terms of its depth and breadth of knowledge of economics, finance, accounting and production management Do the same analysis as this but on Toyota, over the last 4 decades! There is no transparency available about Toyota and its "Window Economic B/S". This is Propaganda, Ford's electric and hybrid vehicles are fantastic, most of the US Police vehicles are Ford hybrids and the go like stink, or cut cats as we say in New Zealand! Here in New Zealand all the Cop cars are GM!
Go Ford, Tesla, GM, VW, BMW, Mercedes, Hyundai, Mitsubishi But stuff Subaru as Subaru is the worst brand of car I have ever owned by a long shot! Toyota; yes reliable like your ugly female cousin who should have been a bloke! And it (I have owned 2 Toyotas), they both handled like a donkey!
I am sure that Toyota spends a great deal of money on financing programs like this!
Japanese Banks etc and their "Window of Economics strategy" was to fund Toyota, Nissan, Mitsubishi, Honda etc to become major Market Players through an unlimited cash flow; Japans banks, bankrolled their companies to buy Market Share in the USA over 4-5 decades now. Meanwhile GM, Ford, Crysler had to report dividends to shareholders etc on a quarterly basis! The Japanese just kept on buying market share by being able to do so.
Japan applied this economic theory combined with the continuous improvement programs they learnt from the FPP (Ford Production Process) and Deming, the master of Improvement processes! Deming was sent to Japan to help them recover after WW2.
Japan slowly used the PDCA and I add in the Review part to the process. Japan took the process a step forward; they would take a product like a fishing reel made in the USA and they would take it back to Japan and their bankers would fund the R&D to make a far better fishing reel than the USA and then they would launch their better fishing reel on the US Market at a cheaper price than the US company could because the Japanese had manipulated their currency so they could always out compete the US on price!
This "Window of Economic" practice has gone on for decades in Japan; Brands like Toyota, Nissan, Sony, Toshiba Panasonic, etc have all done well. Ripping Market share from the USA and China has copied Japan with its "Window Economic Approach"
Japan and China have paid big money for Markets Shares in their different segments, all buying a place in the Market Share of the USA, India, Canada, Mexico, EU, South Africa, South Korea, Taiwan, Australia and New Zealand!
How long can Toyota keep paying for their market share, same with Nissan, Panasonic, Sony! And now China is following the same path! Japan has had 4 decades of Stag-deflation and China is about to hit the same demographic and economic cliff face!
Toyota, and Nissan etc are going to fail, Teslar, Ford, GM, and the Germans are going to win the Automobile war; however we need to keep Japan and South Korea in the club!
At 9th Aug 21, FORD share price $13.80, GM share price $55.02, Tesla share price $700, LoLzzzzz.
People are not dumb. Ford and GM are playing the creative obsolesence game, and have been for a long time. Their dealers get rich through their service departments. Everyboy knows it. Ford and GM and their independent dealerships are incapable of changing business models. A powervul stainless steel Tesla truck that sells for less and costs one fifth as much in energy costs per mile, and does not need servicing is going to sell well. So Ford and GM will go belly up. They will put up a mean, dirty, nasty fight but they are going down. The Ford and GM leadership just wants to postpone the demise for as long as possible to keep their high pay and bonuses coming. And everyone know that as well. It is over except for the screaming.
Ford & GM has screwed over more Americans than any other car company. They had a rich past but now they are a cancer to Americans. No more golden parachute for these failing companies. Bury Ford & GM to pave the way for newer companies that strive to survive rather than survive to thrive off government bailouts. Darwinism at its best.
Believe NOTHING that comes out on social media , I would not believe one word of this until it was backed up with the true independent financial report , the stock market price is a good indicator and the people involved in that area would be the ones I would listen too as they price everything according to risk , is the stock price factoring this news in or is this complete rubbish ??????
do you know how many other companies would fail if they both went bankrupt and jobs lost??? woowww
An update to this video would be nice like our there balance sheets getting worse or better
Ford and GM have to improve their dealership experience for their customers. I just took my wife’s 2005 Ford Escape to repair the driver’s side door handle. I had to miss two days of work due to not being offered a loaner. To make things worse, the cost to be able to get into and out of my wife’s car is nearly $900 for the repair. Ford offered me 10% off parts which still leaves me a bill of nearly $879. At no time was I offered a discounted rental or further discount on the repairs. I’m not looking for a handout, but a smart dealership would recognize that my wife and I are nearing the end of our ownership of a 2005 vehicle. This last experience has now made us consider potentially buying another American manufacturer Tesla. We hear that Tesla has great customer satisfaction considering they don’t have dealerships. I don’t know how they can do it, but it certainly has peaked our interest!!! We love all American manufacturers, but their dealership experiences needs improvement.
Gm and Honda should merge and Ford and Toyota should merge and let Toyota make the company better like Honda fixes gm
Yeah I agree with you on GM's Nikola deal.. That was a good deal for Nikola. GM had everything to gain and nothing to lose.
This right here is why Tesla is valued do high. Sure Ford makes more cars, and has more earning. They are in a hole they could never climb out of. Tesla on the other hand has no debt.
It’s time for them to go away and new companies start up. Tesla is so far ahead they can’t catch up!
What did he say — "…GAAP profit does not include interest…"? The interest expense is reported "lower down" on the income statement, not within COGS (cost of goods sold)…the interest expense is in the EBITDA number, not gross profit/gross margin
As soon as the beginning of the Obama administration the American auto makers went to Washington to beg for bailouts. WTF ?
🔴🔴🔴🔴🔴 This was written 9 months ago and Ford is doing just great.
🔴🔴🔴🔴🔴 It's shares have more than doubled, and it is heading to the moon. 🚀🚀🚀🚀
🔴🔴🔴🔴🔴 So you were dead wrong,, just like the other losers that agreed with you. Its no wonder why 90% of people don't know how to invest. Tesla and Bitcoin doen the toilet. Watch.
Ford didn't get a bailout last time and did fine. Does anything that is said on this channel actually happen?
Ev is a pipe dream as the electricity can't sustain its growth. Most peak electricity comes from natural gas burning plants. As nuclear plants are being shutdown, you now have rolling blackouts and green energy can't meet demand.
Nobody but some spike-haired punk rocker from the 1980s will buy Tesla's E-truck. The Ford e-truck F150 will easily crush Tesla's offering. As for Ford high debt, it's because most of that debt is held by Ford's credit arm, in other words, it's loans to their customers. In theory, Ford could repossess all the trucks bought on credit and resell them, eliminating this debt. More realistically, slowly, if the economy improves, their customers will pay off their car loans and Ford's debt will decrease. Long F, short TSLA.
they still make vehicles? I thought they died off a couple of years ago, you hardly see them on the road and when you do the body styles are old looking.. well at lest here in California. sounds like they need to get ride of their CEO's. that will boost their bottom line and probably allow them to pay off all their debt in a year of so with those outrages salaries. they are a huge drain on the bank account with 0% benefits. they should of been making 100% eclectic vehicles 10 years ago.. not thinking about in maybe a few years.
Uncle Sam to the rescue. Every 8 to 12 years in the down spiral of the Capitalist system corporate welfare pick up the tab. We are far more socialist than China.
Fords new pick up is to be renamed to the Ford Fuckup. Named after their generational decision making from their BOD.
You try to sell overpriced trucks and quit selling affordable cars you are doomed to fail.
Ford on their bounce sheet has 260 billion in assets and 226 billion in liabilities and debt. Where the hell did you get your numbers
Ford and gm will just see a government bailout and gm can barely be considered a car company as they have been transitioning into stocks to increase profits.
why do the citizen have to pay if they go bankrupt??????
The greedy AUTO UNOIN killed them!
Unions are parasites feeding of those that have succeeded until they bleed them dry/
remember how we have to bail them out while they have "job banks" for people that don't have work at a plant?!?!?!
They are too big to fail. Bet they get a bailout by this administration if they agree to cease ICE production and make EVs only.
The refusal to look seriously at electric cars and the pandemic issues look like the final straws. That fake laugh at difficult questions talking about “electrified vehicles” just shows how narrow-minded they are.
What wrong with all that debt? The U.S government is broke is well and they seems to be functioning just fine.
Ford can’t even say electric. They can only say electfied and talk of hybrids. They sound like Toyota and Honda
Is it me, or does Tesla's truck look like the entrance portal to some kind of underground concrete bunker?
Great video, but you're assuming the federal gov't won't bail out Ford and GM again. They've been going bankrupt for a long time, and get bailed out because they're "too big to fail". They have too many employees to be allowed to fail, apparently.
Biden will bail them out so union will be saved temporarily….
Garbage leadership is the issues at Ford and GM the bail out will only delay this
It will go under it’s just when
Watch "The Osborne Effect" in Youtube. You will see why all these Legacy automakers are in trouble in relation to the new EV market disruption .