Since the General Motors Death Watch began, GM employees, dealers and customers have emailed me their perspective on the General’s general degradation. Obviously, financial analysts are important (and confidential) contributors to this mix. While their info provides invaluable insight on the automaker’s slide into bankruptcy, their language can be daunting. So when I read this simple declarative statement in a recent investor briefing, I was shocked. “GM and Ford retail sales should continue their precipitous decline."
The numbers are bad. The Wall Street firm reckons GM’s February sales are set to drop 11%. That would leave the world’s largest automaker with a relatively paltry 23% share of the domestic market. Small, and unsustainable. According to The Detroit News, GM is currently losing $1300 on every vehicle it sells in the North American market. Toyota is making $2100.
The numbers suck, but the word is worse. “Precipitous;" as in “over a precipice.” As in free fall. Indeed, despite an endless stream of new product hype, the question is finally beginning to be asked: when and where will GM’s domestic misery end?
Although Rick Wagoner is the head of one of the world’s largest publicly held companies, GM's CEO has been stonewalling on this question since June 2005, when he announced the first round of production cutbacks and employee pay-offs buy outs. Unlike Carlos Ghosn, who set hard targets for Nissan’s turnaround, Wagoner has refused to commit to a defined– and thus measurable– corrective course. In other words, he’s completely unaccountable.
The American people aren't bothered. In fact, they're clueless. While amateur and professional pundits busy themselves debating GM’s fate, the average GM buyer doesn’t know/care about their transportation provider’s financial woes. They remain oblivious to the seismic rumbles foreshadowing the yawning chasm that’s about to open up and swallow GM’s business. At least that’s how things stood until last week.
Last week, the automotive press went slightly crazy. The possibility that GM would buy Chrysler unleashed a torrent of speculation about The Big 1.5. Aside from the frightening fact that Rabid Rick’s ego could be stroked with sufficient skill to get him to even contemplate such a preposterous move, and the millions in consultants’ and bankers’ fees paid to the strokers, the “GM wants Chrysler” media feeding frenzy was nothing more than a feeble distraction from a looming catastrophe.
The real action was going down at Daytona. During the Daytona 500 pre-race show, Toyota’s entry into NASCAR was a hot topic. Commentator Darrell Waltrip, who runs a Toyota truck in the Craftsman series, whose brother Michael operates a team that races Camrys in the Bush and Nextel series, was ready with a reply.
"Don't forget: the Camry is the only car of the four [Camry, Fusion, Monte Carlo and Charger] that's built in America. The Monte Carlo and Dodge are built in Canada and the Ford is built in Mexico. There are seven thousand people in Georgetown, Kentucky who build over three hundred thousand Camrys a year."
It was a defining moment in GM’s history. At a single stroke, the carmaker’s ability to wrap itself in the American flag was dealt a telling blow– in front of the very people to whom it matters most. By a man they respect and admire. This is our truck, this is our country. Uh-huh. Now tell me again what the Hell you boys are doing building Montes in Canada? Never underestimate the damage a company suffers when it breaks faith with its customers’ deeply held beliefs.
GM’s very own perception gap– the difference between the idea that they’re the home team and the company’s willingness to outsource automotive production abroad– is headed for extinction. It’s only a matter of time before GM is just another car company, just another once proud old line American business that couldn’t compete with faster, sharper and more intelligent competition.
The loss of patriotic identification is simply the continuation of a longstanding trend: GM’s diminishing stature. Fire Sale for All. Toe Tag Sale. Anyone with a pulse financing. Cash back. Imported Monte Carlos. At some point soon, the “average” GM customer’s understanding of GM’s place within the automotive firmament will evolve, from mighty power to beleaguered underdog to loser.
No wonder GM chose to pretend (perhaps even to itself) that’s it’s in a position to “buy” Chrysler (straight stock swap more like). Lest we forget, General Motors was formed by swallowing up smaller car companies. But this, well, this is a sad echo of a once great dynastic power’s ability to mow down all before it. The “Chrysler deal” is one last chance for GM’s power players to pretend that they’re calling the shots in the U.S. automotive market, rather than fighting a losing rearguard action against the barbarians inside the gates.
Unlike Carlos Ghosn, who set hard targets for Nissan’s turnaround, Wagoner has refused to commit to a defined– and thus measurable– corrective course. In other words, he’s completely unaccountable. Didn't he also publicly state that he will resign if the goals were not met? That's leadership. Lutz and Wagoner? Corporate America at its worst.
How much further does GM have to fall before someone acquires it? It is certainly worth acquiring given the right kind of deal. And let’s suppose the acquiring firm were a Japanese, Korean or other Asian company.
What would they do to correct the problems?
How long would it be before Wagoner was out the door?
Which brands and models would they kill?
Asian companies have been buying US firms for some time. GM could well be on a short list of US firms to buy when conditions are right.
Do those NASCAR racers have anything to do with the brands they are supposed to rent. I am pretty sure that the chasis must be different as you would never build a front driver for oval track racing. And I have to believe that the motors have little to do with the 4s and 6s that they brands sport. Who builds the racers, and out of what?
Return to Greatness is the answer to GMS market share free fall. This comprehensive plan will actually serve to lower expenses while increasing sales. The only obstacles to it's implementation are within the confines of the Ren Cen. Red Ink Rick serves at the discretion of the banker controlled board. They are well along with their paln to milk the company of assets and capital. Soon we will see the carcass picked over by Cerberus and the other Hedges.
Just as a car is worth more in parts than whole, Cerebus & the other private equity firms look like they’re lining up for an early Thanksgiving with the turkey named Chrysler.
Sounds like the overseas DCX shareholders are all for it, could be a dress rehearsal for an even bigger main course. To quote Waltrip, “Boogity, boogity, boogity!”
Why on God’s Green Earth would GM want to inherit the problems of another domestic automaker? While in theory GM could shut down all Chrysler plants and re-badge Chevys as Chrysler/Dodge products (in a non-UAW and non-legally-protected-dealer-network fantasyland world), the GM/Chrysler merger reeks of another deck-chair rearranging project while the ship continues to sink…
Well, just know one thing:
When an executive at one of these companies STILL cannot stop pushing his/her vehicles onto family members (elderly ones at that!!), then you KNOW something is mighty wrong!!
That’s a fact, Jack.
“Don’t forget: the Camry is the only car of the four [Camry, Fusion, Monte Carlo and Charger] that’s built in America. The Monte Carlo and Dodge are built in Canada and the Ford is built in Mexico. There are seven thousand people in Georgetown, Kentucky who build over three hundred thousand Camrys a year.” — Darrell Waltrip
pwned
I think the barbarians have been INSIDE the gates at GM for well over a decade. They are the ones that gutted a car company and transformed it in into a Truck/SUV company.
Trucks have their purpose, but being a general purpose vehicle isn’t one of them. $2.50 a gallon and up isn’t going to help either… but how long has it been?? Five+ years now.
Toyota provides choices to consumers. GM provides a choice between crappy rental-fleet quality cars, or body-on-frame trucks… and they haven’t been able to pull out of that rut since sometime early in the Clinton era.
–chuck
I’d be surprised if the GM Board and key investors could be sold on a buyout of Chrysler. But I did hear Hyundai was interested, and that makes a lot more sense. To Be Continued…
I am pretty sure that the chasis must be different as you would never build a front driver for oval track racing. And I have to believe that the motors have little to do with the 4s and 6s that they brands sport.
Well, obviously, you are completely right.
Point is, Toyota must have been looking into the possible outcomes of entering NASCAR for decades to make this move. Either that or they are really brave/stupid. Think of all the things that could go wrong and all the bad publicity this would yield them. (I’m thinking of those who nearly killed the TopGear cast/crew in the recent America special)
So you might wonder why they would make the move at this point, particularly whether or not it has anything to do with their strong presence (like factories) in (Southern) America and the general state of the Big 2.5 (1.5!?!)…
Not only are Toyota responsible for a lot of American jobs, Toyota might think they aren’t destroying the big 2.5 in the eyes of the public anymore by entering NASCAR, because they think the big 2.5 have already destroyed themselves.
All this of course isn’t really relevant unless they ever start winning. In F1 they still get owned by the Europeans and Honda (last year 6th behind Renault, Ferrari, McLaren-Mercedes, Honda and BMW). Then again, F1 IS the pinnacle of serious racing…
In NASCAR you can win a race from 42nd on the grid while having a smoke and being well over 40 years old.
Nuff said.
From wardsauto.com:
http://wardsauto.com/home/gm_idle_plants/
No, imagine…sitting around the dinner table…when conversation turns to how you NEED a new car!!
These are the WORST of times, my friends…they are hurting and bleeding like a stuck pig!!!
As Alice in Chains one sang, Name your God and Bleed the Freak!
;)
willbodine:
Hyundai’s out as well. Just about all major automakers besides GM have publicly said no to Chrysler.
On the other hand, Apollo Management, the Blackstone Group, Carlyle Group and Cerberus Capital Management as well as European private equity firms have reportedly expressed an interest.
GM is currently losing $1300 on every vehicle it sells in the North American market.
And as they improve their produces by spending more money on them, this number will just get bigger.
“Don’t forget: the Camry is the only car of the four [Camry, Fusion, Monte Carlo and Charger] that’s built in America. The Monte Carlo and Dodge are built in Canada and the Ford is built in Mexico.
Geeezzz… Thats gotta hurt. Gotta. Toyota could not have bought better advertising for their new Tundra than this statement from Waltrip.
How much further does GM have to fall before someone acquires it?
With nearly $300B of debt, how much would anybody pay for GM? Receivership is the only viable alternative to a turn-around-and-around-and-around-we-go. Again, thats gotta hurt.
Dont worry… The Labor Unions to the rescue….
http://www.lewrockwell.com/vuk/vuk13.html
Buying Chrysler is a swell plan, we need PT Barnum to find more investors ( suckers ) or pray Dr.Z donate the lock stock n barrel to GM. Like a Doctor pat you on your shoulder and say " Good Luck buddy" Or 30 yrs later Laetrile would have been more refined by now.
Dunno. Sounds like Studebaker/Packard redux. And we know how successful that merger was.
Unlike 15 years ago, the current Nascar cars have nothing to do with the stickers on the front, and will have even less with the “Car of Tomorrow”. See Autoextremist for comments about the ridiculous nature of Nascar sponsorship by the 2.5.
With gas rumored to be pushing $3 a gallon again this summer, how much cash will GM have to put on the hood to move the 900GMT? Maybe Astras will be flying out the door, but is that a good thing? Frankly, the best bet is that sometime over the next couple of months, look for GM to renege on that “getting out of fleet sales” plan in order to dump some serious inventory problems. I might note that your previous test was on the Caliber, a vehicle that represented about half of all the rentals I saw in Kauai late last fall. Maybe that is their great sales? Rental fodder to replace the late, great Taurus?
If DX is not interested in guaranteeing some of the pension/health care costs of the de-merged C, I am not certain how the Wall Street boys can take a good flyer on it. Buying it to go straight into Ch.11 is a little aggressive even for them. But they get paid a lot of money to figure that stuff out, so nothing would surprise me.
Where can I buy an 800hp rear wheel drive camry? Cuz I want one!
Robert Schwartz:
Do those NASCAR racers have anything to do with the brands they are supposed to rent. I am pretty sure that the chasis must be different as you would never build a front driver for oval track racing. And I have to believe that the motors have little to do with the 4s and 6s that they brands sport. Who builds the racers, and out of what?
The “stock” cars in NASCAR have practically nothing in common with the cars they’re supposed to represent, and once the “car of tomorrow” comes on line they’ll have even less. The standard NASCAR configuration is a 2-door body shell over a chassis/frame made from steel tubing, rear wheel drive, and a carburated pushrod V8 – hardly what you’ll find at any Ford, Chevy, Dodge, or Toyota showroom
The cars are built from the ground up to NASCAR specs by a few companies (e.g. Hendrick Motorsports, Rousch Fenway Racing, Michael Waltrip Racing) for their racing teams, using engines from the respective manufacturers. The manufacturers pour millions into NASCAR every year. Even poor penniless Ford is reported to be sinking almost $100 million (including marketing) into their NASCAR program this year.
JJ
Point is, Toyota must have been looking into the possible outcomes of entering NASCAR for decades to make this move.
Toyota has been in NASCAR since 2004 – in the Craftsman Truck series. The Tundra was the winner last season, and in the race at Daytona last week, Toyota had 5 trucks in the top 10 finishers.
All this Camry kerfuffle will die down in a season or two just like it did with the Tundra. It just takes bubba a while to accept change and shift his paradigms.
svensk:
Where can I buy an 800hp rear wheel drive camry? Cuz I want one!
Contact:
Michael Waltrip Racing
20310 Chartwell Center Drive
Cornelius, NC 28031
(704) 655-9550
I’m sure they’ll be happy to fix you right up (for a nominal fee).
RE: Chrysler, I would expect a private equity group with no interest in making cars to eventually end up with it. It seems to me you could easily end up profitable on the deal with just a few steps:
1) Buy chrysler, have all workers working full shifts + overtime and build inventory levels.
2) When UAW contract expires, fire all workers (buyout free) and sell & ship the toolings for the cars to China, possibly to Geely or Chery.
3) Sell dealer network and built up inventory (to tide over dealers until chinese lines get going) to Same buyer.
4) Issue big dividend to Private equity group, declare bankruptcy on any remaining liabilities (pensions, etc).
RF, they race the Impalla SS now, not the Monte, still made in Canada, just wanted to state that.
I also think Rick is a great leader for GM, Lutz is something else I will not comment on, the only person I think may be better then Rick would be Penske. I would like to see anyone here take Ricks job and do 1/2 as well as he has. He is stuck between a rock and a hard place, I know I would not want that job. He is in a loose loose situation.
Toyota is in a win win situation, they drape the American flag on themselves by entering Nascar and building plants, while the big 1.75 close theres to meet market demand. Toyota looks good, GM looks bad but GM is still paying for more people that are retired then the “American Toyota” is paying to work.
tones03:
RF, they race the Impalla SS now, not the Monte, still made in Canada, just wanted to state that.
The Impala SS will be phased in gradually as they bring the Car of Tomorrow on line, but it hasn’t raced yet. It will will be raced in sixteen races in 2007, but only at tracks less than a mile and a half in length, the road courses and the second Talladega race. Chevy ran Monte Carlos at Daytona.
(BTW, the only thing that makes it an Impala vs. a Monte Carlo are the stickers that mimic the lights and grille, and the name stuck on the front of the car.)
FW, thanks for the info. Did not know that.
Yeah factory sponorship in Nascar is dumb, the cars are all the same besides stickers, they need to go back to when cars they raced were actually cars and not cookie cutters.
That whole kerfluffle about GM buying Chrysler was stupefying. Here we have a “buyer” with too many amorphous brands supposedly getting ready to buy…more amorphous brands!
Here we have a “buyer” with too much production capacity for its market share getting ready to buy…more production capacity!
Here we have “buyer” who is burning through a limited cash cushion at Saturn V launch rates who’s getting ready to pay big money to add another money-losing enterprise to the stable.
Just what gives here, anyway?
I second that, jerseydevil.
The Waltrip statement about the Camry being the only one built in the US is damn painful (for the big 2.37), despite the fact that NASCAR vehicles have had NOTHING to do with their on-road counterparts for over 25 years.
Sure, GM and the rest of the “domestic” mfgs are paying for more retirees than Toyota/Honda/Nissan employ. Think about how long GM has been in the US vs. how long Toyota has been in the US. Who CARES what nationality owns the factories, as long as their workers get paid well and are respected (without unionizing).
Frank Williams:
February 23rd, 2007 at 3:55 pm
svensk:
Where can I buy an 800hp rear wheel drive camry? Cuz I want one!
Contact:
Michael Waltrip Racing
…
I’m sure they’ll be happy to fix you right up (for a nominal fee).
Might as well buy a 800hp supra and stick a camry badge on it. It’d be a lot closer to a camry than the nascar version.
AlanW
Sure, GM and the rest of the “domestic” mfgs are paying for more retirees than Toyota/Honda/Nissan employ. Think about how long GM has been in the US vs. how long Toyota has been in the US. Who CARES what nationality owns the factories, as long as their workers get paid well and are respected (without unionizing).
Because there is more to a car then the factory that builds them, their is the engineering, design, and marketing. There is the suppliers, then the suppliers engineering design and marketing. That is where the majority of the workers come from. So a plant has 3000 employees, how many employees does it take to get it from a designers paper to your driveway. ALOT more then 3000. Do the big 1.75 do more of that in the US then the “imports?” I would bet yes, and that is why it matters who owns the company. You go buy your “american” camry that helps employ 5000 americans, I will go buy an Aura that will help employ 10000 americans and actually have a car that looks good.
Tones03: … go back to when cars they raced…
I’m quite sure the domestic auto manufacturers are quite happy the way things are. Otherwise, instead of a fake Toyota coming in 22nd, a REAL Toyota (or, more likely, Honda) would be kicking their asses.
However, for the record, I agree with you.
Carburetors?!! For the love of God!
Set a displacement limit (2.0L, maybe) and make them use regular unleaded gas. Leave everything else up to the manufacturer.
No… better yet… give each team an allowance of 15 gallons of regular gas to complete the race and leave everything else up to the manufacturers.
Many thanks to you, tones03, from the US Auto Repair industry.
Your “loyalty” to the local grease-monkey (who probably makes more than you do), means EVERYTHING!!
Now, once we take care of THAT problem, let us tackle the plight of the “family farm”.
Willie Nelson, anyone? Additional tax-payer subsidies??
Where will it end? Not in my lifetime…not in my lifetime…
I sort of quit watching Nascar when they put restrictor plates on the carbs to slow them down on super speedways. Now they just bunch up two feet apart from each other without the ability to pass. It isn’t racing it is practically homicide.
Tones03:
Because there is more to a car then the factory that builds them, their is the engineering, design, and marketing. There is the suppliers, then the suppliers engineering design and marketing. That is where the majority of the workers come from. So a plant has 3000 employees, how many employees does it take to get it from a designers paper to your driveway. ALOT more then 3000. Do the big 1.75 do more of that in the US then the “imports?” I would bet yes, and that is why it matters who owns the company. You go buy your “american” camry that helps employ 5000 americans, I will go buy an Aura that will help employ 10000 americans and actually have a car that looks good.
You don’t make a bad point, but the foreign manufacturers (be it German or Japanese) do use some American suppliers with American workers for their American-built vehicles. That way they can get their domestic content percentages up. Let’s not delude ourselves into thinking that they want high US content in their vehicles to benefit the American people. Those percentages are important for marketing and tax purposes.
And yet GM/Ford/Chrysler drape themselves in the flag but build their cars elsewhere. Like Germany, where the Aura was designed AND built, to use your example.
I personally would rather buy a car built in the US, by a company that is investing back into this country, not outsourcing their production to other countries to lower their costs.
I am not one to better another man’s Latin, but might not Morituri te salutant be more fitting?
Mitch Hedburg (RIP) said it best:
“I want to be a race car passenger: just a guy who bugs the driver. Say man, can I turn on the radio? You should slow down. Why do we gotta keep going in circles? Can I put my feet out the window? Man, you really like Tide…”
NASCAR: I ignore the first 400 laps, watch the last 50. Find out who wins.
Formula 1: Watch the first couple of laps, find out who wins, ignore the rest.
NASCAR’s “stock cars” have NOTHING in common with the cars they represent. They are stickers on a common body. Oh, the manufacturers design the motors, but that’s all. And as has already been said, The Car of Tomorrow means a purely common body, with no relation to a production car at all. Even worse.
I’m at a loss to explain why the Big 2.5 still pour money into NASCAR. It hasn’t helped sales of the Taurus/Fusion/ Monte Carlo/Charger. If Ford, GM, or DCX bails, does anyone really think it’ll hurt their sales? I doubt a NASCAR bubba really says, “Hey, the Fusion won again. I think we need one of them thangs, Jolene. They’re winning lots of races with ’em.”
NASCAR doesn’t even promote the cars, they’ve learned that the drivers are the draw. Why do you think that Jimmie Johnson, Junior, and the rest are household names? The press release doesn’t say, “A Dodge Charger won at Talledega yesterday. Kasey Kahne drove”. Nope. It says, “Kahne wins at Talledega.” Oh, he gives props to the Laughing Clown Malt Liquor Trojan Condoms Dodge in the interview, but HE’s the star, not the car.
Pushrod V-8’s with carburetors. 9″ Ford rear-ends. Jericho 4-speeds. Oh, yeah, LOTS in common with a Fusion/Charger/Monte/Camry.
NASCAR –> Formula 1
WWE –> The Olympics
One is entertainment, the other is actual sport.
Actually, even better than F1 is WRC… those guys race cars that are VERY MUCH based on production cars, and they do it with a navigator in some of the most insane conditions… snow, ice, mud, rain, switchback mountain roads, spectators in the streets… THAT is exciting motorsport.
But back to the subject at hand…
This was a very insightful and incisive article, and i’m also very impressed with the comments. How is it that GM is so lost when there are so many smart people who seem to know what to do? (And i’m not saying that sarcastically.)
GM has been clinging to the past for far too long. “GM” as an entity means absolutely nothing to people, because it’s been investing for too long in their archaic brand architecture that simply isn’t working. Why do they build three or four variants of the same car? They spread their R&D, engineering and manufacturing resources too thin in order to satisfy the needs of their imaginary market segments that are increasingly meaningless.
There’s very little value in any of GM’s brands. About the only ones that hold any prestige any more are Cadillac and Corvette. Kill off everything else and build ONE best-of-class vehicle in each clearly-defined market segment. Let the customer choose whether they want the “econo”, “sport” or “luxury” version of the same vehicle, but [i]keep it the same vehicle[/i] to save on tooling and parts.
GM has the ability to do this… some of their newer offerings are quite good. But they’ve been competing with themselves in the marketplace for so long, they’re finally winning… or losing.
the complete NASCAR disconnect from reality is also why you will probably NEVER see Honda in Nascar…
Toyota is viewing racing as an advertising expense. Honda views racing as an R&D expense. Thus Honda will compete in F1, LeMans racing, and (attempt to) totally dominate MotoGP.
nweaver,
Excellent point. Wasn’t the NSX built by Honda engineers during free time? ;)
Wasn’t the NSX built by Honda engineers during free time?
No, I think the HondaJet was though.
There is a reason the domestics don’t build anymore than they have to in the United States – the reason begins with the initials U-A-W.
I read somewhere that an analyst expects 90% of GM’s blue collar workers in the United States to be out of a job by 2011.
I’ve also heard UAW guys say they’ll take the company down before they will make any concessions.
Hey, maybe all of these domestic haters have more in common with the UAW mentality than you think!
There’s very little value in any of GM’s brands. About the only ones that hold any prestige any more are Cadillac and Corvette. Kill off everything else and build ONE best-of-class vehicle in each clearly-defined market segment. Let the customer choose whether they want the “econo”, “sport” or “luxury” version of the same vehicle, but keep it the same vehicle to save on tooling and parts.
Exactly..the “domestic” brands are trying too hard to cover every base and they can’t afford to keep it up. Somebody smart needs to examine the battlefield and decide which objectives are worth pursuing and which objectives will just leading to more badly spent dollars marching off to their death.
Might be prime time to buy a Pontiac G8 when the next round-o-rebates comes along!
Is there any hope for GM?
The new Malibu looks promising, but there’s also a new Accord due this fall. You have to worry that once again GM will have benchmarked the current generation Honda/Toyota only to be immediately leapfroged when the new generation arrives.
The G8 also looks promising but gas is inching up again spelling trouble. It would probably cost me $2000 a year to drive a V-8 GT vs. my 2004 Maxima (which doesn’t REQUIRE premium gas). Ouch.
Same with the Lambdas, which may be GM’s most impressive product (aside from the CTS). But they’re big and they’ll use lots of gas. With options, they’re also more expensive than a Pilot.
The trucks look world class, but the new Tunda is too.
Areitu sums up my feeling about GM. I’m interested in the G8 as well, but only once it hits fire sale prices.
“gas is inching up again spelling trouble”
I dunno, I am not sure inching is the word you are looking for, at least not here (Toronto). As little as a couple of weeks ago, gas had dipped to 69.9/L at some stations. Last night, it went from 92 to 94.8 cents a litre (3.8 Litres to a US gallon). Ow!
Even if I think Pontiacs are a good value (which clearly I do not, based on my previous experience) I still would not buy one. Why? ’cause the people are packed like sardines in a very small crowded area around one coffee table while they wait on their oil changes/whatever. I mean it is like a WWII submarine but worse; in a WWII sub everybody smells just as bad so nobody takes notice, in this Pontiac/Nissan dealership everybody’s body odor co-mingles.
I don’t know what financial gurus you are talking to Robert, but the market disagrees with them big time.
GM’s Credit Default Swaps are the cheapest they’ve been since before you started this never-ending series. For those of you unfamiliar with Credit Default Swaps, they are insurance people purchase on GM’s debt in case of Bankruptcy.
Translation: According to the global credit markets GM’s chances of bankruptcy are the lowest they’ve been in over 2 years.
On average, the big 2.5 supply 2.5 times more US jobs per car sold in the US than foreign based car companies.
I really hate to confuse the anti big 2.5 cult members with facts and data. Honda is the best of the major transplants, and even latecomer Nissan is better than Toyota, ouch!
http://www.freep.com/apps/pbcs.dll/article?AID=/20070118/BUSINESS01/701180357/1002
http://www.levelfieldinstitute.org/docs/LF_uly_Study_Rls_Final.pdf
Alan W Wrote:
And yet GM/Ford/Chrysler drape themselves in the flag but build their cars elsewhere. Like Germany, where the Aura was designed AND built, to use your example.
Were you thinking of the future Astra? The Aura is made in Kansas.
Oh please, the Level Field Institute!
That’s one objective outfit!
Reminds me of the early 80s when Lee Iacocca was always taunting the Asians about “leveling the playing field,” daring them to build their product here.
Well, be careful of what you wish for!
BTW, when this “institute” calculates auto-related jobs, do they count employees of suppliers, dealers, independent repair and body shops, auction houses, rental agencies, insurance companies, crash testing facilities, freight haulers, etc?
“and a carburated pushrod V8”
I did not know that any vehicle still used carburetors. I know that GM and Chrysler still make pushrod engines, but I did not imagine that anyone would use one in a purpose built race car.
“I would like to see anyone here take Ricks job and do 1/2 as well as he has. He is stuck between a rock and a hard place, I know I would not want that job. He is in a loose loose situation.”
Oh, come on. The guy is clueless. All he is doing is avoiding the inevitable Chapter 11 and the show down with the UAW and the dealers.
Now let’s talk fudging the numbers like Toyota’s sudden drop of 20% of their touted EPA numbers. Or Edumnd’s expose on the Kelly Blue Book being fictional.
Who’s fudging numbers? The EPA set up the testing regimen, and they’re changing them now to better reflect real-world driving. It’s about time, but no one’s getting a free ride — everyone’s mileage ratings are dropping.
What Edmunds’ “expose?” I read that site every day. Car salemen posting there freely admit that the Kelley and NADA guides give unrealistically high trade-in values and say that auction values are more realistic. Me? I haven’t traded a car in since 1978 — I always manage to sell mine privately.
210delray:
February 23rd, 2007 at 10:02 pm
Oh please, the Level Field Institute!
That’s one objective outfit!
Reminds me of the early 80s when Lee Iacocca was always taunting the Asians about “leveling the playing field,” daring them to build their product here.
Well, be careful of what you wish for!
BTW, when this “institute” calculates auto-related jobs, do they count employees of suppliers, dealers, independent repair and body shops, auction houses, rental agencies, insurance companies, crash testing facilities, freight haulers, etc?
They use actual numbers from the companies themselves.
For the “multiplier” effect on downstream jobs, they use TOYOTA’S multiplier!!
Robert Schwartz:
February 23rd, 2007 at 10:07 pm
Oh, come on. The guy is clueless. All he is doing is avoiding the inevitable Chapter 11 and the show down with the UAW and the dealers.
Your answer, like Mr. Farago’s is to give up, surrender, admit defeat and declare chapter 11. Which, by the way you can’t just do because you want to. With GM’s cash hoard, any application for bankruptcy would be rejected by the courts.
I’m glad you and most TTAC readers weren’t Generals in WW II. If you had been, we’d be writing this in German or Japanese today. You would fit in better in the French Army, since their recent history involves much surrender like you advocate for GM.
Perhaps what is really needed here is a UAW death watch.
Looked at closely, the trend away from union worker manufactured automobiles and components is much, much stronger than the trend away from the big 2.5.
My friend recently bought a Silverado. Nice truck at a bargain price, and Hencho en Mexico.
Ford’s decent selling Fusion is a Japanese base design built in Mexico. How is that “American”?
GM and Ford are going to continue closing US factories as fast as they can and replacing them with offshore factories. Toyota and Honda will continue expanding their manufacturing AND engineering AND design facilties in the US. Toyota and Honda can add non-union jobs in the US with ease. The 2.5 cannot do it. The Dodge Sprinter was originally sold in the US as the Freightliner Sprinter in order to get around the UAW.
The private equity funds may indeed be the ones who become the temporary owners of the traditionally us based car companies, and in so doing will be the guys who turn what is left of the carcasses into steaks, hamburgers and fertilizer.
Let the UAW deathwatch begin, for they are going to loose it all.
When you just mention nascar you can fill twenty blogs. But the drift from the above seems to be that it is the most overated spending on the planet for car companies. It;s the driver stupid, how can it not be when the car he wins in is not remotely connected to anything you can buy (or would want to). In years gone by a stock car was just that a stock car. When we could see how a chrysler 300 did against say a chevy or ford on the track. Take that away and I have no interest in it. As for the American companies, daimler benz must finally be realizing there is no fix to selling low price cars in the U.S. Whe the Koreans and the Chinese get done with this market, no one will make a dime on anything except luxury and performance cars.
The real question is:
Someone tell me why they’re building “Montes” period?
why isn't Karesh correcting those who think the Aura is so German? He has stated in the past that it is much more G6 than it is German. GM should just slap an Aura sticker on one, Malibu on another and G6 sticker on still another. Then remind the Waltrips that Baja California is in Mexico (Tacoma anyone? where tens of thousands of the Tacomas are made and all their truck beds, you know, the bed, the thing that makes the truck a truck?). BTW, the Silverado is made in 4 or 5 factories in North America. I believe 3 in U.S. and 1 in Canada and 1 in Mexico. Since the build close to a million Silverado/Sierras it isn't unusual. The Camry at 450K was made in Kentucky and Japan and now/soon Indiana. Personally, if it was me, I'd examine the VIN before I brought it home and would have told them bring me in a VIN starting with a "1" thank you very much. Isn't the Texas Tundra factory only capable of 200K trucks? Again, GM makes over 900K Silverado/Sierras so does that mean Tundra is supplemented with foreign trucks or are they just going to sell 200K for a while?
airglow:
Were you thinking of the future Astra? The Aura is made in Kansas.
You’re right, i got confused. But the Aura is a rebadged Opel Vectra. So the whole design infrastructure is still based in Europe (which was part of the original argument).
You’re right, i got confused. But the Aura is a rebadged Opel Vectra. So the whole design infrastructure is still based in Europe (which was part of the original argument). Wrong, more G6 than Vectra. Also, the whole design structure of 99.9% of all Japanese cars is based in not-America. And oh yeah, GM has owned Opel for more than 80 years. I'm sure no American has ever been sent over there to work in 80 years. Import fan: GM doesn't know how to be global company. And then: GM designed that car in Europe. Nice lose-lose situation you put GM in isn't it?
Rastus
If what you mean by supporting local “grease monkey” by getting my routine maintence done then yes. I have very few problems with my domestics and I am on my second one with over 200k, how miles are on your toyota and i dont care how much they make, what does that have to do with anything. Because you make 6 figures you are better then the person that will fix your car or change your oil. Grow up and quit putting down people because of what they make. They can be on welfare but they probably know 100 times more then you EVER will about cars, all makes and models.
My local patriosm is to a company that has its WORLD headquarters in America, not Japan, or Germany or where ever else. WHy you ask, because I live in America and that is how I was raised, if you want to bash me for it, go ahead. I wont buy a car that is assembled in Mexico or Germany tho, I check the VIN’s and make sure they are made in NA and I also research them to see who did most of the engineering so when I buy the car I know my money is going back into America. So excuse me for being a patriot, yes you may be too, because your ugly Camry is built in Kentucky, but where does the $2300 that toyota makes on every car go????
I read in another post that Rastus has a GMC truck of some sort. How many miles on it?
Who cares if it is a rebadged Opel, they dont sell Opels in America so you wont know the difference if it wasnt for the internet and you are the one to buy a old Bimmer for that European feel. Built in America is the Saturn Sky, oops I mean Opel GT, goes both ways, it is called being GLOBAL. Plenty of imports offer the same thing, but when GM tries it, they are criticized.
tones03,
I agree with you mostly except for two things, I look for U.S. VINs instead of NA VINs and the design part isn’t as important to me. Mostly from a jobs point of view. It may take only 10 or 20 designers for a car but hundreds or thousands of assemblers. I’d trade the 20 jobs for latter any day. Though, one advantage of having good designers is that you don’t have to rely on some other company for your design. That said, GM has owned Opel for many decades do I really don’t see it as a huge negative (though I will still say U.S. design on top of U.S. assembly is a bonus).
But we do agree about the flip flop of import fans. Your statement about them matches mine a post or two above but also, it is amazing how twenty-five years ago when probably 90% of import brand’s U.S. sold vehicles were made elsewhere those import fans didn’t seem to care as much about buying American as they do today (well, when the import is GM or Ford).
“I’d trade the 20 jobs for latter any day” means: I’d give up 20 design jobs for the hundreds or thousands of assembly jobs any day. Though having both are optimal.
“With GM’s cash hoard, any application for bankruptcy would be rejected by the courts.”
Have ever participated in a Chapter 11 proceeding? Have you ever studied the Bankruptcy code?
Having operating cash on hand is not a disqualification for a Ch 11 filing. It is an absolute necessity. Delaying filing until a business runs out of cash is a major reason why companies that file can not emerge from proceedings.
Your WWII metaphor is also way off. Ch. 11 is a strategic weapon that Companies can use to remove obligations that are holding them back such as contracts debts and other obligations. The failure to use it would be more like HST refusing to drop the A-Bomb on Japan.
I understand, and so should you, that Ch. 11 will not make the company’s cars worth buying, and it won’t make anybody rich but the lawyers, but it is a valuable tool, that management should use when necessary.
but where does the $2300 that toyota makes on every car go????
Japan I suppose!
So what. GM/Ford/Chrysler have been selling cars in Europe and elsewhere for years. Where do those profits go?
Everyone has their own definition of what constitutes a ‘domestic’ car and whether a vehicle is one or not:
It’s wherever the Company’s Head Office is.
It’s where the car is assembled.
It’s wherever the sheet metal is sourced.
It’s wherever it was designed.
It’s wherever………………………ad nauseum.
Some people don’t make a distinction if the ‘American’ car is built in Mexico or Canada and some do.
The fact is all car companies are multi-national corporations so it really becomes a meaningless argument IMO.
I drive a Corolla (don’t laugh), it was made in Cambridge Ontario by Canadians as was it’s power train. It has seats made by an American Company (for whom I work) in Ontario. As far as I am concerned it’s a domestic car. But the Corolla is also made in half a dozen other countries so it’s a foreign car. This is getting confusing.
It’s sheet metal was sourced in Canada so it’s a domestic car! no wait, it was designed in the US so it’s an American car.
The very same confusion surrounds many vehicles such as Aveo, Camry, Accord, Silverado, Monte Carlo, Impala, Fusion, Edge, Pilot, Ridgeline, Caravan and many more.
They are all either made inside the US or both inside and outside the US or strictly outside the US from parts made in every place you can imagine. So what are they?
I dunno, world cars perhaps!
tones03, su ohtil: If the Eurpoeans were only supporting the home team, then GM wouldn’t sell any Opels, would they? That would be a big chunk of profit gone, wouldn’t it?
Do whatever you like. But I’m going to buy the car that works best and is most cost-effective for me. My Toyotas have not yet needed any repairs. Toyota is buying my allegiance in a way that works for me. GM failed to do that. Ford had its chance and blew it, big time.
The company I work for makes stuff here and all over the world. Where we give people a compelling reason to buy our product (cost, features, durability, spec, support, salesmanship), it sells well all over the world. Where we screw up, it doesn’t. If people all over the world were only supporting the home team in our markets, I wouldn’t make as much money and people all over the rest of the world would be suffering with inferior product in a lot of cases.
@ oboylepr
I agree with you on your points.
I will take a third tack and just say that I have a few favourite car companies, which don’t have much to do with any of the well-rehearsed reasons.
@Kixstart
Doesn’t that pretty much sum it up? “Do whatever you like”. I can’t make you try out another GM or Ford product just like no one can force me to buy something I don’t care for. In my case, I happen to like big vehicles. Could somebody convince me into a subcompact? Not likely.
And so it goes.
but where does the $2300 that toyota makes on every car go????
Japan I suppose!
Actually it goes to the risk-taking owners of Toyota aka Human Shareholders. “Japan” is just the name of a land mass surrounded by a political border that has no use for money nor does it know what money is since it is an inanimate object (dirt and rock) that does not possess consciousness or opposable thumbs…. I digress.
Nationalism is so 19th century. The entire concept of “Country” is like a barnyard for human cattle. The borders are political not actual. Borders are in your own mind reinforced by 12 years of Gov’t-run indoctrination camps…err…schools and TeeVee. I consider myself a citizen of planet Earth only because SpaceShipOne is not fully commercialized and has a very limited range right now… But I do pack a towel anyway… I digress again.
Only build cars in Mexico, Canada, and China? Import cars from Europe? Shut down US manufacturing operations? Cancel certain non selling vehicle models immediately? Bring the Camaro to market this month? Desperate times call for desperate measures. Do something drastic and shake things up a bit.
Every time a new vehicle comes out, the computer that drives the fuel injection is new or different. It’s different in all the models is it not? Why not use this already developed open source system? The parts cost a couple hundred bucks, or an already assembled unit costs just a bit more. Put this in every vehicle made.
http://www.megasquirt.info/
It’s a great deal compared to aftermarket programmable fuel injection units($1,000+).
Bring all the concept cars to market?
Traditional forms of marketing do not work anymore. People don’t watch advertisements. They turn the channel! People don’t listen to ads on the radio. They turn the station. I’ve been on the net for so many years that I no longer “see” the ad banners. I know they are there. But I don’t actually see them to the point that I read/identify what is being displayed on them. Same with ads in magazines. I turn the page and “know” it’s an ad and turn the page again all without reading or actually seeing what was being advertised. Same goes for billboards. I notice that it is indeed a billboard, but I don’t read it or actually see what’s being shown(because I don’t actually look at it).
I know a lot of people these days that drive Civics, Accords, and Camry’s. They never talk about these cars. They just drive them. They bought them because they have a known reputation as being reliable. Everyones got one so they must be good?
Some guy at work today asked this girl if her Civic had 160hp. She didn’t know how much hp it had. He asked her how she liked her Civic. She shrugged and said it was OK, it was just a commuter. She seemed indifferent and impartial to it. Pure utility to her.
My truck makes for a poor highway commuter. Every time I take an off ramp and have to slow down, I think “if I took it any faster, it would probably be up on two wheels”. Just gets old.
I’ve been thinking about getting a `92-`00 Civic or a `94-01 Integra. I won’t pay more then $1,000 for it. It doesn’t need to be running. I’ll strip it down 100% to the unibody. Put it on an auto rotisserie. Inspect it and paint it inside and out and underneath using the color of my choice. Then clean up all the parts and only install what I want from them. Build up a motor and aim for ~600hp(turbo). Widest tires I can fit in the front (13×8 wheels with drag radials?) and 15×4 wheels in the back(hardcore)(see how it handles and might get a pair of wider ones if needed(additional weight, rolling resistance, and expense though compared to the narrow ones)). Should be fun. Show ’em how it’s done. 9’s in the 1/4 or “only” 10’s?
If you own a Honda or Acura; get on eBay and get a turbo kit for it. They are only about ~$1,000.
When I bought my last ride, I checked to see if the vin starts with J for japanese made. Why? because I wanted a japanese vehicle made by locals. Well, the model was made only in japan so there was no choice really. BTW, I live in Canada so Big 2.5 are as alien to me as japanese vehicles that are made here.
tones03,
BTW, perhaps japan should stop buying boeing aeroplanes huh? ‘Cause the profit goes to US?
Luther,
Thanks for the rational analysis of nationalism. Some people seem to be stuck in WW2.
When I bought my last car, I didn’t look at the VIN for country of origin. But I made sure it had an H in front, so I can be assured the profits go to me, an American and Honda shareholder.
RTZ,
Please don’t write that you don’t see banner ads – if Robert can’t pay the bills, TTAC dies, and none of us want that. Maybe you don’t see banner ads on other sites, but here you can’t miss that dude made of tires, right?
I think non american car companies (ex asian) need to pay their workers better in the U.S. to bring them up to par with the big 3 workers!
dont you think they deserve better pay and benefits? I heard that the big 3 workers make about $50,000 a year… shouldn’t these other workers make the same money for the same work?
power to the people
stike if you dont get what you want
money talks…. bulls*&% walks!
Also I read a story a couple of days ago that stated that Toyota was afraid of the backlash if one of the big 3 went belly up! anyone else hear this?
Inside the plant info–talked to a fairly high uaw staffer about uaw decline/non-competitive wage rates—-
he thinks the uaw international is going accept “two-tier” wages this fall in the big 2.5 plants, (they already have, thousands of “temps” at GM have been working since last spring for $18/hr & no benes)—-they would rather have a membership working at $16-$18 & some benes than the work be in nonunion plants here or overseas. The old guys won’t object much & are going to be eased out with more buyouts, and for most part the new young kids coming in are ecstatic–best job they ever had–its tough out there with no degree nowadays. Lower wage rates than toyota pays—by 2011 most the old guys will be gone. (what will be the GM excuse then?) It also will mean the survival of solidarity house………….
rtz: bring the camaro to production this month. Do you have any idea what it takes to bring a car from concept to production. 3-4 years is amazing. They built the camaro and soltice to judge the public then they decide. Sometimes they buidl the concept and are already working on making it production or parts of it production, but bringing from purely concept to production is a very daunting task. Each part needs to be designed and then approved by some sort of management, then they need to figure out how to assemble to vehicle in some sort of logical fashion. I skipped a bunch of parts but it is a lot harder then most people think to build a car.
su ohtil:
Agree on the Opel thing and I partialy think that is why GM keeps the name Opel or Holden because it is a local name for where they sell it. Smart thinking if I am correct (I could be way off here) Also while I like you make sure it is assembled in the US, there are a lot more then 10-20 people to design a car and get it to production, and that is at the OEM. Either way jobs in the US is good and we need all of them we can get. I am very passionate about this subject because over 1/2 of my family works for the big 1.75 and I have a couple that work for Toyota (they still bys GM tho, I think it is in his blood.) I enjoy these editorials every week, they do get me fired up and I know RF doesnt always appreciate my comments, it is still fun.
dbear937:
February 24th, 2007 at 12:10 pm
Inside the plant info–talked to a fairly high uaw staffer about uaw decline/non-competitive wage rates—-
he thinks the uaw international is going accept “two-tier” wages this fall in the big 2.5 plants, (they already have, thousands of “temps” at GM have been working since last spring for $18/hr & no benes)—-they would rather have a membership working at $16-$18 & some benes than the work be in nonunion plants here or overseas. The old guys won’t object much & are going to be eased out with more buyouts, and for most part the new young kids coming in are ecstatic–best job they ever had–its tough out there with no degree nowadays. Lower wage rates than toyota pays—by 2011 most the old guys will be gone. (what will be the GM excuse then?) It also will mean the survival of solidarity house………….
Don’t you mean what is Toyota’s excuse now?
[I]cykickspy:
I think non american car companies (ex asian) need to pay their workers better in the U.S. to bring them up to par with the big 3 workers!
dont you think they deserve better pay and benefits? I heard that the big 3 workers make about $50,000 a year… shouldn’t these other workers make the same money for the same work?
power to the people
stike if you dont get what you want
money talks…. bulls*&% walks!
Also I read a story a couple of days ago that stated that Toyota was afraid of the backlash if one of the big 3 went belly up! anyone else hear this?[/I]
Why do you think they locate in the south? In that labor market, the pay and benefits are well above average. That sais, there was also a recent story on the auto web sites that the pay/benefits of Toyota/Honda workers was equivalent to that of GM, Ford or Chysler.
It will be interesting, however, to see the effects of Nissan’s plans to buyout workers at two of its US plants. How best to avoid legacy costs if you get rid of the workers before they retire?
rtz wrote: Traditional forms of marketing do not work anymore… .. .
First, a quick friendly reminder. I would like to amplify what
SherbornSean wrote about the banner ads at TTAC.
But I have to agree with you on your theme. I do not have a subscription to the local paper. Too many useless ads, too much paper bulk; totally unnecessary and now obsolete use of paper and human resources. I get the classifieds and the news and local events of the local paper on the net.
(When the local paper comes knocking on my door about a subscription I always tell them I am illiterate. That ends their sales pitch instantly. Also, when they give me a free sample delivery on any given sunday it goes straight into the garbage, still in its plastic sleeve/wrapper. I do not bother with their free sample because I am now estranged with the handling of such a unwielding and cumbersome paper monstrosity.)
So the car dealerships may want to adjust the scope and reach of their advertising accordingly.
I’m finding myself to be very interested in the Pontiac G8.
Is this wrong?
Is it a risky proposition?
Should I stay with my Nissan even though I can’t a manual transmission anymore?
It seems to that there really is no hope for GM, and that goes for the other 1.124 as well.
These companies have structural and union problems that they ultimately cannot resolve, as well as a broken, bureaucratic culture.
There is no hope for GM, they will continue to lose market share and money, and neither rabid Rick nor Lutz nor anyone else can fix what ails them.
It is just a matter of how long can they stagger on.
Replying to noley:
How much further does GM have to fall before someone acquires it? It is certainly worth acquiring given the right kind of deal. And let’s suppose the acquiring firm were a Japanese, Korean or other Asian company.
The right kind of deal? “NO UAW” is the deal.
It’s very simple in term of business operation. File Chapter 11. Fire every single worker in North America. Move headquater to Shanghai of China. Export Chinese/Korean made GM cars to the North American at whatever the remaining demand level. Return to profit in 1 year. Common shares jump 500% in 1 year.
Of course, it’s suicide in term of politics. The lawsuits will never end and the government will forbid this.
Seth:
BTW, I live in Canada so Big 2.5 are as alien to me as japanese vehicles that are made here.
Same here. But it’s downright funny when some Canadians call the big 2.5 domestic. I guess they work for CAW.
Power to the People ? Yea right. Go ahead and strike and watch the “evil” company that pays you a fairly decent wage close up and move to a third world country. Whether you like it or not, It’s a global economy and there are millions of other people just as capable of doing your job for a hell of a lot less money.
The UAW and the big 2.5 cant provide the buying public with a quality product at an affordable price. So GM cant make money selling $15,000 Cobalts ? Maybe without global competition, you’d be paying $25,000 for that same Cobalt and it would be built with the same quality that defined American cars of the 70’s. The party is over for the domestic manufacturers. They had 30 years to get it together since Honda, Datsun and Toyota showed up.
Hopefully the current Monte wasn’t designed in Canada, something I don’t think anyone would want to admit to, I’m almost embarrassed that it’s built in Canada.
I find it amusing how we Canadians are “foreigners” when it’s mfg production we supply USA but “neighbors” when it’s our that oil we supply.
Not likely that most USA’ers have ever been to Canada but if you did, you’d quickly see that, unfortunately, USA built cars almost seem to be a preferred method of travel here.
The irony of this latest death watch is too rich. On the one hand, farago says he gets a lot of his info from analysts and worse, believes them. Then he gets all over GM for nothing more than rumors that GM “wants” to buy Chrysler. I don’t remember GM saying that. I DO however remember reading quote after quote from analysts saying not only is it true but it’s a great idea. So which is it Farago? Do you trust the analysts or not? or do you selectively trust them to meet your editorial needs? personally i stopped reading their quotes years ago
rainking:
I never said I believe ALL the information I’m given. I communicate with plenty of “experts” whose opinions seem, at best, misguided.
If you read the article carefully, you’ll see that I attributed the “GM wants to buy Chrysler” story to a media feeding frenzy (hence the quotation marks).
In any case, the fact that GM has formed an committee to explore the possibility gives the idea more than a little credence.
So the answer to your questions is yes, guilty as charged: I use the experts’ opinions selectively.
On the whole, I think that’s a more defensible position than believing them all, or, as you do, believing none of them.
Robert: I couldn’t agree with you more that it would be a complete an utter disaster for GM to touch Chrysler. I guess my (poorly made) point is that i think it’s being blown way out of proportion. and i don’t think it’s true GM “pretended” to be interested. as for whether i believe the analysts: I will start buying in to their garbage when two things happen: One, they stop contradicting themselves every few weeks and two, they actually start driving cars, instead of riding in the back of yellow ones.
“but where does the $2300 that toyota makes on every car go????”
Well, if you bought some Toyota stock, then part of that profit is going to you, wherever you are.
And by the same measure, when foreign investors buy American car company stocks, then those foreign investors are sharing in the loss that GM/Ford takes on every car they sell.
…unless you are concerned about the welfare of the 2.5’s upper executives. I guess they don’t make out so well. But then, they could buy Toyota stock as well I guess ;-)
Steve_S:
February 26th, 2007 at 1:57 pm Edit This
The US government will not allow the US auto inductry to just disappear. Now I said US government not G Dub-yah. In two years you will have a democratic president or a moderate republican president. Ford, Chevy, Dodge, Jeep are all icons of America’s past that won’t be left to die on their own. There is too much pork-barrell in the congress to let them go without a fight.
Some laws will get changed , some contracts will get made but somehow it will get done.
Even though my families last four cars have been Japanese I’d still put money down that Ford and GM will be around in the next 10 years.
Some random thoughts:
First, it was just announced today that TXU Corp,. the largest power producer in Texas, has agreed to a $45 billion private equity buyout by Kohlberg Kravis Roberts & Co. and Texas Pacific Group. If completed, the deal will be the largest private-equity buyout in history. If anyone had any doubts about how easy it would be for private equity to step in and buy GM, Ford or Chrysler for cash, they should be erased completely and immediately.
Second, some readers may misunderstand what Robert is saying when he appears to be cheering for bankruptcy declarations by the Big 2.5. I suspect he has mixed feelings about this. On one hand, he seems to be saying (at least to me) that product mistakes by the U.S. automakers are rather obvious and that if these companies want to avoid bankruptcy, they need to be building better vehicles. On the other hand, he may honestly feel bankruptcy or leveraged buyouts may be the only way the U.S. auto industry can get out from under its current cost structure. I don’t think he wants them to just “give up” or to fail completely.
Third, it makes me laugh when some speak of Canadian-built cars are being “foreign.” The Canadian auto industry – for all it means both good and bad – is indeed a part of the domestic auto industry. And the CAW is an offshoot of the UAW, whose workers earn about the same standard of living as their U.S. counterparts. It is also interesting to note that, whenever I travel to Canada, that U.S.-branded cars and trucks comprise about 90 percent of the vehicles you’ll see on the road. Say what you will about the car itself, a Chevy Monte Carlo built in Canada (just as the last-generation Camaro was) is a still an “American” car. It’s also, whatever its faults, more interesting than a Toyota Camry. Relax guys, the Canadians really are our friends.
And, finally, that “perception gap” continues to be Detroit’s biggest problem. Granted, Chrysler’s Caliber/Compass and Avenger/Sebring efforts are disappointing to say the least. But I personally find the latest efforts from GM and Ford to be pretty decent. If the next generation of products improves by a great a margin as the current slate of new vehicles has, they should be on a par with the competition. I just hope Detroit has enoguh time and money to make it that far.
And, finally, that “perception gap” continues to be Detroit’s biggest problem.
No, it doesn’t. Unless you mean the perception gap where some folks don’t realize that those of us who drive imports still get to try domestics every single time we’re on a business trip and have to rent a car.
I would say comparing all of the big 1.75 cars they make to the crap people drive on rental trips is a little unfair. It gives a look at some their products, still doesnt give all, and I know that every rental car is beat to sh!t and not taken care of, including the non big 1.75.
Great article about what I was arguing above, take it as you wish.
http://www.thecarconnection.com/index.asp?DID=RSS&n=192&sid=192&article=11981&pg=1
tones03, The US-based company I work for makes things in Japan and exports things we make in the US and elsewhere to Japan. And we make money doing it. If an organization is not competing in Japan, it is because their product is not as good, does not offer the same value or does not address product needs of the Japanese market. Period.
KixStart, I dont know everything about the situation in Japan but I hear from every source I read that japan taxes vehicles to the max to make it a very unfair advantage for the Japanese automakers. I may be wrong but this is what I read over and over again.
According to Mr Farago, GM is “fighting a losing rearguard action against the barbarians inside the gates”. Actually, the barbarians are headquartered outside the gates, protected at home by $420 BILLION in low interest loans over the last five years from the Japanese government aimed at keeping the value of the Yen down.
http://www.senate.gov/~levin/newsroom/release.cfm?id=251708
“Faster, sharper and more intelligent”? How about opportunistic, xenophobic and miserly, for words that more accurately describe Toyota. Perhaps you have never tried to solicit engineering contracts from their US offices. You should. Then tell me how you feel when they respond “we don’t do that sort of work, we rely on our first tier suppliers for that…” Sure …. a top-flight company all the way through.