Wednesday, December 28, 2005

Warren Buffett on Auto industry outlook (especially GM)

- GM bonds are currently selling at B spreads

- Auto industry is a very tough business

- In the 60's GM had over 50% of the US car market...people thought they were impenetrable

- GM did dumb labor deals when the accounting didn't require accruals for costs

- GM is now a terrible life/health benefits company with an auto business attached
  • Auto business is well managed, but labor issues are just killer

- 2000 auto companies were started after Henry Ford - there are now 3 left in the US - no money has been really made over time

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