How about some help? BMW also received assistance from the US gov't

Danny Tse

From Bloomberg....

Bayerische Motoren Werke AG, the world’s largest maker of luxury cars, secured funds from the U.S. Federal Reserve during the financial crisis to boost liquidity as other sources dried up.

BMW’s largest transaction under the Fed’s Commercial Paper Funding Facility was for $3.62 billion on Jan. 30, 2009, according to data released yesterday. BMW made “intermittent” use of the Fed program for refinancing at a time when other forms of credit were frozen, Mathias Schmidt, a spokesman for the Munich-based automaker, said today.

“We tapped into this program in 2008 and 2009 during the financial crisis like other companies,” said Schmidt. “It supported our financial profile and offered us an additional funding source, especially at times when the money markets and capital markets did not function properly and efficiently.”

The maker of BMW, Mini, and Rolls-Royce autos spent $750 million to expand its factory in South Carolina to assemble the X3 sport-utility vehicle. The plant, which also makes the X5 and X6 SUV models, exports vehicles to more than 120 countries, including Germany and China. Last year, the U.S. was BMW’s second-largest market after Germany, accounting for 19 percent of deliveries.

“The BMW Group weathered the economic and financial crisis very successfully,” and even generated positive free cash flow in 2009, “when most other auto companies suffered a lot,” said Schmidt. “The diversified and international treasury operations helped to deal with these challenges.”

BMW recorded an adjusted free cash flow of nearly 1.5 billion euros ($2 billion) last year, as net income declined to 204 million euros, its lowest profit in a decade.

Jstas

Really? This again?

Funding commercial papers to allow car dealers to secure consumer lines of credit for buyers so they can actually buy a car is not a bailout. The banks that typically secured those commercial papers went belly up and were not there to provide the liquidity in the credit market to create those commercial papers to sell so they could create bonds to raise funds from investors.

Since the banks dropped the ball, the government stepped in and backed the commercial papers so that the business who were damaged by the gross mismanagement of the banks could continue to sell product and maintain some level of cash flow, even if it was at a loss. If the government hadn't done thise, ALL the car companies looking to secure the funding wouldn't be able to sell cars to 80% of the customers looking to purchase them and they all would have failed.

Out of all the money thrown around trying to rescue the failing companies, this pile of cash going to secure commercials papers was probably the only one that did anything good and/or positive.

Granted, BMW probably abused it a bit using it to fund development and build manufacturing facilities but it wasn't outside the permitted uses. It did create jobs during a time when most companies were hemorrhaging them so the small and not illegal indiscretion could probably be overlooked for the benefit provided.

Besides, BMW wasn't the only one who borrowed commercial paper funding. Toyota, GM, Ford, VW and pretty much every other auto company looking to sell cars in the United States did. But all the money borrowed has been paid back already, with interest.

madmax

To the tune of 3.3 trillion overall I heard... Lets give it all away, having wealth is a hassle anyway.

tonyb

Out of all the money thrown around trying to rescue the failing companies

Kinda the point John, is everyone too big to fail ? I know they don't give a rats **** if I do. Where do you draw the line ? Either you save everyone or noone. They are picking and choosing the winners and losers. Whats next ? Are we going to bail out KFC if they get in trouble ? They employ quit a few. Probably not,their non-union.:rolleyes: