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Politics : Formerly About Applied Materials

AMAT 230.17

-1.4%

Nov 7 9:30 AM EST

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To: Katherine Derbyshire who wrote (50632)	8/16/2001 12:10:59 AM
From: robert b furman	of 70976

Hi Katherine, And: an incredibly high frequency of product safety recalls - a natural byproduct of outsourcing (too much with out 9001 iso inspection processes). The next bombshell unknown, except to those of us in the industry: a credit rating reduction of the FoMoCo division. Ford inflated residuals of entry level vehicles - escort,focus,ranger so that 24 month Red Carpet Option (lease plan) was equivalent to 60 month conventional financing AND 36 month lease was equivalent to 72 month conventional financing. These programs were administered under the horizon - good for 30-40 days Impossible for GM to respond to - not sure they would've wanted to at any rate. One month our local ford dealer leased/sold 15 mustangs was at least a 3-4 month sales rate. If you don't qualify for a regular loan - let me show you what you can buy kind of thing. These tactics are just now coming home to roost.BIG losses on leases-but on low margin vehicles - OUCH The real story behind talk about Ford losing their credit rating - they bought their sales market share and now must pay the piper. It seldom pays to take risk on low margin products with low credit people. Sort of like paying too much for a high flyer on margin - disaster recipe. Full disclosure - I'm a GM Dealer and Chrysler as well. Rumors are swurling about Chrysler 's cash flow problems - may ask non chrysler floorplan dealers to find an additional credit source for other products(non Chrysler). Gm went thru this squeeze in about 89-90. Chrysler could be hunkering down seeing a luxury car contraction in the US and a slowdown 6 months behind US occurring in Europe - Don't forget they have bled Billions with the repurchase agreemants on International HD Truck. It isn't all real pretty - auto manufacturers are about to consolidate again. Koreans have all gone broke - Kia, Daewoo, Hyundai is the strongest(unless you count their DRAM chip losses). If the dollar got weak - it would take a 30% currency advantage in price off the Japanese and Nissan would fall first. Toyota is like GM - the bank. I ramble but I knew you were watching. Just rumors from the dealers perspective. Bob

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