“Rich people don’t care [about high gas prices].” Bob Lutz’ statement– made during the launch of GM’s new SUV’s in August 2005– encapsulates the automaker’s history of arrogance, ignorance and self-delusion. Then again, what else could GM’s Car Czar have said? Whether or not GM should have seen the gas crunch coming, the die was cast. Now, as gas prices crest $4 a gallon, as Delphi and GMAC teeter on the abyss, as GM’s stock price hits a historic low, GM’s slide into Chapter 11 is beginning to assume the mantle of inevitability. And why not? There is no Plan B.
Clearly, GM’s Plan A– make better SUVs and pickups– was a non-starter. Not to belabor the obvious, but soaring gas prices gored GM’s cash cow. Year-to-date, the General’s high-profit SUV and truck sales tumbled 22 percent. In April, GM’s truck sales fell by 27 percent. Sales of the once all-conquering Chevy TrailBlazer fell 73 percent. Despite the Chevy Silverado’s perch on America’s top ten list, despite their new CUVs, the company that made billions on high-profit light trucks is making billions no more.
A new charge of the light truck brigade is not a possibility. Even if U.S. gas prices suddenly descended to $3 a gallon, American consumers will continue to approach gas guzzlers with a ten-foot pole. It would take a good year of relatively low– or at least stable– gas prices to lure buyers back to… no. Actually not. Once backwards, twice shy. And if that doesn’t send the pickup and SUVs genres back to their original, pre-90’s market share, federal regulations and fashion will.
What GM needs right now– and for the foreseeable future– is six brands' worth of class-leading, fuel-efficient automobiles that will, at the very least, stop SUV refugees from jumping ship. That it ain’t got. Not now, and not a year from now.
Meanwhile, American new car sales in general, and The General’s share in specific, continue to crater. Cadillac, Chevrolet, Buick, GMC, Hummer, Pontiac, Saab and Saturn are ALL losing market share in an American new car market that shows no signs of recovery. Inventories are piling-up; every single GM light truck has more than 100 days supply. Despite the obvious light truck glut, GM’s outdated business model is forcing the company to restart truck and SUV production. As it does so, GM’s prospect for its unspecified “turnaround” move from bleak to non-existent.
Contrary to popular belief, foreign profits can’t staunch the arterial spray of red ink; the carmaker’s losses in the North American market are too deep and too broad. GM has assured the markets that it has adequate liquidity to weather the storm. On March 31, GM reported a $24b cash pile. That's $6b less than six months ago. No one knows how much that cash pile lives stateside. And given that GM’s accounts are [officially] unreliable, there’s no exact way of knowing what additional calls will be made on that cash. There will be many…
Delphi’s restructuring plan is, once again, in tatters. Given GM’s ongoing reliance on Delphi for parts, the chances are high that this sinkhole will claim even more of GM’s money. By the same token, an unknown number of GM suppliers have hit/are about to hit/will hit the wall. As the American Axle strike and Plastech bankruptcy prove, GM’s only as strong as its weakest supplier. When Chrysler goes down… It’s only a matter of time before other parts makers suck-up GM’s cash.
At the same time, GM’s part-owned ResCap mortgage unit needs $600m to stay afloat; co-owner Cerberus won’t be ponying-up the funds. If ResCap files, it could well take all of GMAC down with it. If GMAC files, GM won’t be far behind… The General will open its wallet to stave-off that eventuality.
In the midst of all this, the central question bedeviling RenCen has now become: what can we do to hold out until the U.S. market recovers? The obvious answer: nothing. There is nothing GM can do in the short to medium term to bank enough profits to save itself from Chapter 11. U.S. franchise laws and GM’s depleted financial reserves make it impossible for GM to do what needs doing: jettison excess dealers and dead brands (everything save Chevrolet and Cadillac) to trim itself down to a sustainable, indeed, profitable level.
Surely GM CEO Rick Wagoner knows this. Logic suggests that if Wagoner knew for certain that GM was condemned to file for Chapter 11, he would unfurl his golden parachute and float off to some exotic tax haven, leaving someone else to suffer the final ignominy. And surely presidential candidate Hillary Clinton knows that only a stroke of fate (so to speak) could propel her to the White House.
The truth is that GM’s refusal to admit the possibility of defeat doomed it from the start.
I have to disagree that there was no Plan B. Plan B consisted of the Aura and Daewoo. Not much of a plan, as it turns out, probably not even as good as Plan A.
All the hype surrounding the Volt seems to serve as the foundation for Plan C, by casting a halo on the other products. At this point, Plans A and B are starting to sound pretty good…
GM doesn’t really have any options. Ride the train to its’ ultimate train wreck while hoping that the Volt or cheap gas will save it. I don’t consider either of these two options realistic. Maybe the government will come in after GM files and keep the foreign companies from buying up all the goodies. Greed and mismanagement have pretty much sealed GM’s fate. And nothing can be done about it.
At some point don’t they legally have to publicly admit to this. If they go CH 11 after proclaiming everything is fine how is that going to look? Does anyone know if the board of bystanders is even remotely aware of the condition of GM?
I guess they don’t teach plan B tactics at the Harvard Business School.
cheezeweggie,
They also do not teach automotive design and engineering at Harvard Business School.
Finance and accounting guys, not engineers, run GM – that is the real reason GM will fail.
-ted
The question is will GMs next gen products get here fast enough and be good enough to save them from the truck crash. I am thinking no..
This could explain GM’s insistance on a 2010 launch date for the Volt.
They don’t expect to be around to have to explain it.
Bunter
All the hype surrounding the Volt seems to serve as the foundation for Plan C
More distraction than plan. When a company the size of GM cannot point to anything it is currently doing, and instead has to point to the next big thing (coming 2010, promise!), it speaks volumes. The cupboard is bare, and the wolves are at the door…
At some point don’t they legally have to publicly admit to this. If they go CH 11 after proclaiming everything is fine how is that going to look? Does anyone know if the board of bystanders is even remotely aware of the condition of GM?
They never have to admit anything was wrong. They can just loudly say “Well, gee, we thought it was the right decision.”
And it’s up the shareholders to prove that it wasn’t, not up to the board to prove that it was. Even if it’s obvious to you and me, that’s a lot different than being proven in a court of law.
GM does need fresh management and I mean a complete overhaul. It does make me wonder why there hasn’t been a shareholder revolt. In the UK Vodafone posted a £14.9 billion loss and 10% of shareholders wanted the CEO’s (Arun Sarin) head. So why hasn’t there been a similar reaction at GM when their stocks are at their lowest since 1982?
Another problem GM has is they are so low in the public eye that they are realeasing press statements about technologies which they should be keeping quiet about unti, they perfected it. A good example is HCCI. If GM can do it, then it’ll be great for GM, but the bit which is spoken about less often is that Volkswagen, Ford, Toyota and Nissan have been working on HCCI also, they just didn’t shout about it. Which gives one an idea of how desperate GM are to stay in the public eye for the right reasons.
Contrary to popular belief, foreign profits can’t staunch the arterial spray of red ink
Unfortunately, GM are losing this bastion, too. GM Europe posted a £126 million loss in 2007.
Mind you, GM are getting their house in order. They are starting to make Chevrolet and Cadiallac their core brands. In europe, GM has put Chevrolet in direction competition with Vauxhall/Opel. I believe that GM will let Chevrolet cannibalise sales from Vauxhall/Opel and eventually retire those brands. Likwise, Cadillac is doing the same, but with less successful results.
For every successful step forward GM make, Lutz, Wagoner and Henderson drag the company back two….
More distraction than plan.
I should have put “plan” in quotes. Because as Mr. Farago points out, there was never much of a plan to begin with.
Referring to any of these bad moves as a “plan” is to give either A, B or C far too much credit.
The Wagoner “turnaround” (see those pesky quotes again) has been based upon building versions of the same trucks in 2007 that pulled GM from the brink in 1997. That was never much of a plan to begin with.
I’d say that GM’s stock price is foreshadowing the coming decline of oil prices. (You knew that I’d work that into this.) For a bit of time here, we had a GM stock bubble, based upon speculation that GM might pull out of its nosedive.
The only problem with this was that such a leap of faith required the intrepid speculator to ignore most of the indicators. Now, the market is waking up — there is no product to make a turnaround happen. Even the bright spots, such as the Malibu, can’t possibly sell well enough to overcome all of the problems.
Now, they’re just living on borrowed time, their cash reserves. Without profits or credit, the only thing left is burn rate, and the burn is just about as good as it’s going to get.
Put simply, if GM waits too long to file 11, they have to go 7.
Katie – GM’s transitioned from a company that makes cars and truck to one that makes press releases. Cheaper, faster, easier method!
Don’t forget one of the HCCI front runners as Honda has several working prototypes and test vehicles plodding around.
for eight years I’ve been trying to convince them of the errors in their ways. having met with the top of the top at GM, all I found was arrogance, self righteousness, and was subjected to ridicule. three years ago I tried distributing a copy of my plan “Return to Greatness” at the shareholder meeting. Red Ink Rick had security threaten to remove me from the premises.
does the possibility exist that he and his banker cohorts have planned this all along? blow it into oblivion and privatize the pieces without legacy costs and wages reduced by half. perhaps this series should be retitled General Motors Death Wish.
It would be interesting to know what contracts they could get out of under US bankruptcy law, for example dealer agreements? And would it matter?
“Rich people don’t care [about high gas prices].”
I guess GM figured everyone who’s not a millionaire would flock the the … uh … Aveo? (snicker)
boofie59 :
It would be interesting to know what contracts they could get out of under US bankruptcy law, for example dealer agreements? And would it matter?
C11 would allow GM to ditch all its dealer franchise agreements. All of them, across the entire U.S. It’s the single largest reason to file.
They would NOT be able to suspend the UAW agreements; that move requires a federal judge’s court order and he/she is not likely to do so unless and until the union gets arrested for peddling meth (or some such thing). As Delphi’s bankruptcy shows, removing that particular “obstacle” is a matter of endless– not to say endless– negotiation.
The single largest reason NOT to file? Would anyone buy a car from a bankrupt car company? That’s the subject of my next GM DW.
It’s been like watching the world’s largest supertanker aiming straight for the cliffs underneath the world’s largest active lighthouse – engines working at maximum revolutions.
You really have to wonder at the sheer cluelessness exhibited by GM management throughout.
Can you remember a few years ago, when Toyota actually pondered hiking the price of their models, in order to “assist GM.” They saw it coming, and GM continued to pretend all was clear sailing.
I just don’t see how people can even consider buying a GM vehicle, if they know what’s going on behind the facade.
Robert,
they may go 11 but I highly doubt you’d see franchise agreements terminated en masse. they may have a Death Wish and a nefarious plan but the dealers control/own their customers and GM could never reformulate, privatize, and refloat if they pull all the dealer agreements.
You took the discussion to a good point/question:
If GM files C11, it seems like nobody will buy the cars… so it’s the end.
If GM doesn’t file C11, with the current losses the have, it will end in “another” way.
Whatever they do, it seems they’re toast.
So, given that both options are fugly How is GM going to end? No option is good, there’s not even one less bad than the other.
If GM goes kaput, who’s going to buy its “divisions”? Who is going to buy any of the remaining cars?. What’s going to happen with the workers, employees, factories around the globe?. We are talking about near 200 countries with factories and more than 200K employees/workers.
And that is just GM… then you have to add parts suppliers, contractors and a long, large etc of people/business that depend of GM.
This situation has to have a solution, whatever ugly or hard it is.
Those should be the questions Wagoner et al must have at their minds everyday. Or not…
“dealers control/own their customers”
Barkeep, whatever he is drinking, pour me one.
“he single largest reason NOT to file? Would anyone buy a car from a bankrupt car company? That’s the subject of my next GM DW.”
I can answer that question for you. Mr. Farago: no. So pretty much, when any car company files, they are unoffically dead. Nobody would buy a car from bankrupt car manufacturer in fear of not being able to find parts and their warranty not being honored. That is probably the reason why Lee Iacocca went to the White House to get help to get Chrysler on its feet, instead of filing. So in a nutshell: If GM files, all of their customers will run away in droves, and it will be over. If they don’t file, all of GM’s dead brands and useless assets and suppliers will keep sucking up all of their money, and since their management are too dumb to do anything about it, they will just let everything happen as normal, GM will eventually run out of money, and it will be over. It seems that unless the management does something drastic (which I doubt), GM is going to die. It is not a option one or option two kind of thing, because both easy options will lead to GM dieing.
But what Katie said about GM is true. I have long noted the whole “One step forward, two steps back” plan at GM. The most recent example is how GM was on a roll by launching a string of competitive new models: The redesigned Cadillac CTS, the Buick Enclave/GMC Acadia/Saturn OUTLOOK, redesigned Chevrolet Malibu, and the new Saab 9-3. Then the two steps back: Rick Wagoner deciding that the aforementioned step forward was incentive to give himself a pay raise (although I think GM’s R&D team deserves the pay raise more than you for that, Rick), and the American Axle strike.
GM has been doing the whole “one step forward, two steps back” thing ever since they started their nosedive. in fact, the Desert Rose Band song “One Step Forward” has become a theme song for GM for me. “One step forward/two steps back/nobody gets too far like that”. I think all of GM’s upper management needs to give the song a good listen. Scratch that, they need to read this site.
Despite this, the question that has been boggling my mind since GM posted their huge loss last year is “what does it take to get Rick Wagoner fired?” But, I think the biggest problem is that the management seem to think that GM is too big to die. I guess they must have forgotten what happened to American Motors, or Montgomery Ward, for that matter.
“dealers control/own their customers”
Barkeep, whatever he is drinking, pour me one.
not the case probably with the vast majority of knowledgable, independent thinkers who read and post on this site, but in reality this is true to a very large degree. there still is some loyalty in the world and years of service/goodwill lead to
repeat followings.
btw it’s Hennessy.
Pure comedy. People have been saying GM is going bankrupt for over 20 years. And people will be saying GM will go bankcrupt the next 20 year. GM is going nowhere.
I feel the GM death watch is going to continue for a while. they dont seem to want to change. at all.
on the other hand. is it time to consider a Ford Re-Birth Watch? They are the only one of the Detroit automakers that is actually doing what needs to be done. The company is getting itself right-sized. The next-gen of products are going to be world wide products. Quality is on its way up. Heck they even have some good looking cars coming in the near future AND they are relevant to the current market! Eco-boost looks promising. if they could sell off Volvo and Mercury they would be in great shape.
AlmostFamous:
Pure comedy. People have been saying GM is going bankrupt for over 20 years. And people will be saying GM will go bankcrupt the next 20 year. GM is going nowhere.
Glad I could lighten things up a bit. But here’s the thing: GM HAS been going bankrupt for 20 years. I also agree that GM is going nowhere.
How about instead of GM Death Watch…TTAC switches to GM Bankruptcy Wish list? I think the writings on the wall now and that bankruptcy is certainly the most likely outcome so maybe we should all just start looking ahead (unlike the Lutz-zites). I’ll start things off…
1. Destroy the UAW without mercy. Please refer to the Toyota way for the best means of extracting literally life-ending labor out of your workforce (y’know, death before dishonor and all that)
2. Destroy Buick and Pontiac with extreme prejudice (lets be environmentally friendly here and just scrap them, as opposed to the tradition of burning a la France)
3. Destroy the Hummer H2 with hateful prejudice, go full-speed ahead on H4 to take on a dying Jeep.
4. Eliminate, no wait..bulldoze the thousands of seedy, crappy dealerships that inundate my good state of California (and your states too) with much joy and enthusiasm until you’re down to LESS dealerships than Toyota.
5. Put as much money as you wasted on the GMT9000 (which for god’s sake still doesn’t have an IRS or rear-folding third row) into making a small car that doesn’t make you puke or lose your bowels
6. Eliminate Buick and Pontiac…oh wait, did I already say that?
7. Fire, nay, kick out the door…Wagoner and Friends. Lutz is almost retired anyway.
What say you? I know TTAC has done a much much better job of this than I can!
Perhaps this is a good time to unify the USA and EU laws concerning vehicle emissions and safety equipment. That way the Big 2.8 could switch the USA over to the efficient European vehicles (imported or switch the USA factories). Sure, we still wouldn’t see diesel models because of the lack of infrastructure for refining the fuel and the fact that Europe already uses lots of it. However, we could see lean-burn gasoline engines, smaller displacement engines, and lighter and smaller cars quite quickly. Plus, if fuel refining requirements were more in line with Europe’s, we could better share technology as well as do away with much of the “boutique” blends that can sometimes temporarily drive prices sky-high in some regions.
Another question is how long can the GM dealers survive. I think many, if not most, of them are making profits only on sales of used stuff now, but can this be sufficient to cover the floorplan and fixed costs? As I understand it, they are forced to buy certain volumes of new stuff from GM whether they want/order it or not, and it sets on their lots while they pay floorplan for stuff they can’t sell. My local Chevy/Caddy dealer had a HUGE inventory of trucks before the AA strike and now has just too many. According to a sales person there, most of those that disappeared went to other dealers or to brokers at a loss for the dealer after covering floorplan for months. Meanwhile they have to cover their fixed costs. And as sales of new whither, income from the repair shop does the same. This can’t go on even if GM somehow manages to postpone Chapter whatever.
As said above, where the hell are the stock holders? Clearly the board doesn’t give a rat’s, but I just don’t understand the stock holders. I’m ready for Mr. Lutz to describe the happy scenario that only he and Mr. Rick see.
What do you mean,”GM’s slide into Chapter 11 is beginning to assume the mantle of inevitability?”
Hasn’t that been the underlying premise of the GM Death Watch since its inception some time back in the Paleozoic?
“Rich people don’t care [about high gas prices]” is still correct with respect to refueling. What the rich do care about, however, is how those high gas prices create very low residuals as the not-so-rich bid for the lease returns.
Are there examples out there of vehicle pairs only differing in fuel efficiency (and engine power) where the wimpy vehicle has a much better depreciation? I know diesel VWs and Mercedes were doing extremely well until diesel shot through the roof. How about, say, Honda Accord or Toyota Camry models where you compare the I4 to the V6 model?
“Rich people don’t care [about high gas prices].” Bob Lutz’… that might be the case but Bob’s not selling Cayennes or Range Rover Sports so he better wise up.
NoSubstitute: What do you mean,”GM’s slide into Chapter 11 is beginning to assume the mantle of inevitability?” Hasn’t that been the underlying premise of the GM Death Watch since its inception some time back in the Paleozoic? Yes and no. I didn’t really believe GM was going under when I wrote GM Death Watch 1. As the series continued, as I looked closer at the fundamentals, it became clear to me that this dog won’t hunt. There were several turning points. Reading David Halberstram’s The Reckoning focused my mind. Maryann Keller’s call for a “sense of urgency” at GM sure got my attention. I actually pronounced The General RIP in Death Watch 33. Somewhere between GM DW 33 and this episode, the idea of a GM bankruptcy gained currency. And then The General convinced the media and industry analysts that they had a plan! There was a turnaround in the works! I found the fact that the mainstream media accepted this plan– which had neither timeline nor goals (still doesn’t)– shocking. As GM’s stock price clearly indicates, that faith has gone. And while some of my contacts still speak of recovery, there is an increasing awareness that GM might not make it. Considering GM’s impact on the U.S. economy, it’s about time. The question is: now what? I think onthercks07 has some good ideas. But first, I’ve got to address this C11 = death idea….
Dynamic88 :
May 28th, 2008 at 5:02 pm
Put simply, if GM waits too long to file 11, they have to go 7.
I’ve always argued that 11 leads to 7 no matter what. People won’t buy a car from a “bankrupt” automaker, even if it’s only Chapter 11. They will be afraid the company will go completely kaput, leaving them with a car with no warranty and no source of spare parts. That is, even though 11 allows GM (or Ford or Chrysler) to dump dealers and brands and union contracts, their sales will collapse even further, negating any positives those bring.
Chapter 11 simply isn’t a viable option in the real world, IMHO.
reading which inspired me:
Rats in the Grain (there are Rats in the Glovebox)
Atlas Shrugged (GM led by “looters” not “producers”)
General Motors Death Wish 1
look at market share loss over twenty years and it’s a descending flight of stairs. stupidity is not that sequential, rather it’s all over the place. even a blind cat catches an occasional dead mouse. these are very intelligent people. consider that BK is “the plan”. we may have no idea how deep the evil lurks.
I’d say that GM’s stock price is foreshadowing the coming decline of oil prices. (You knew that I’d work that into this.) For a bit of time here, we had a GM stock bubble, based upon speculation that GM might pull out of its nosedive.
Coming decline in oil prices? LOL!
Let’s talk about speculation. Usually even the outrageous speculation starts with a kernel of truth, which then proceeds to defy the laws of gravity, until it does not.
With the speculation on GM stock, I never saw any reason to believe they were pulling out of the nosedive, other than a rather lame promise of future excellence (“Wait for 2010!”).
I guess patriotism comes into it. People want to believe that GM is getting it, is getting their stuff together, will come out swinging. Memories play a role. Others may believe that GM is really to big too fail. I mean with all the brains they have in their organization they must know how to do this.
But there was never any evidence of a turnaround, even when Mad Jim Cramer was singing their praises.
Now reality has caught up with the hype. As it always does…
Even if GM goes chapter 11, they will still continue selling cars. And whatever form GM takes after Chapter 11, they will continue selling cars. And with obligations to the “old” company. Because otherwise, they wouldn’t be selling any cars at all in the future. Even the sales of today rests on the assurance that GM in whatever form it takes, will continue selling cars for the rest of eternity. Or otherwise, why would anyone TODAY buy GM-products at all? So, all this “If GM goes chapter 11, no one will buy a GM car” is a load of bollocks.
Whatever happens, the factories will be running, cars will be sold. Perhaps sales will go down, some factories will be closed, some lines will disappear, a lot of unionized people will end up unemployed, some cars that wasn’t good in the first place will be discontinued. But that ain’t a bad thing. The Phoenix rising from the ashes will be a better and more profitable company, producing and selling the cars that they are actually good at, and that people actually want. And that ain’t a bad thing.
Even if sales goes down by 50%, profit will go up. And the shares will actually sky-rocket. A leaner, meaner GM is not in the same league as Cerberus/Chrysler. Chryslers portfolio ain’t that thick. Even when all redundancy has been washed away from GM, they will still have a big portfolio of decent, profitable, sellable cars and trucks. I would even say that a chapter 11 combined with shaving off all redundancy and overheads will be the best thing that has happened to GM since, well, forever…
what does it take to get Rick Wagoner fired?
I suspect that will be his lasting legacy. The fact that his sheer incompetence did not get him fired within six months, is amazing. That the Board of Bystanders then (4/2/06) granted him a vote of confidence, is mind-blowing. That they did not attach any goals or timetables for Wagoner to meet with their vote of confidence, is inconceivable.
How does he do it? This guy could teach most politicians (already skilled in the art) a lot about avoiding accountability, and taking credit for the good things that the gullible believe would soon happen. Next quarter. Or the next. No later than 2010, for sure.
And lets not get started on the quality of reporting that surrounds Detroit in general, and Wagoner in particular. Every word is repeated breathlessly, without question or fact-check, as if the great leader just allowed the sun to rise. Again.
This guy will be the inspiration for a whole generation of underhanded CEOs, politicians and other leadership types.
“In Europe, GM has put Chevrolet in direction competition with Vauxhall/Opel.”
Taking the Chevrolet and Cadillac brands into Europe is so stupid it makes me want to scream. After decades of building indigenous brands in Europe there is no reason to try and spread that crap around. OMG.
“Whatever happens, the factories will be running, cars will be sold.”
There is no immutable law of nature which keeps GM going. Ask the good folks of British Leyland how it turned out. Remember when PanAm and TWA were the dominant international airlines? Gone. Remember the Polaroid Corporation, one of the hot stocks of the 1960s? Gone. RCA? Gone. Just because GM is big doesn’t mean it will live forever.
“Even if sales goes down by 50%, profit will go up. And the shares will actually sky-rocket.”
Chapter 11 almost always results in the common stockholders getting zeroed out. Their shares get canceled and are worthless. IF there is a recapitalization, new shareholders buy new shares and MIGHT get to participate in the revival, but anyone caught holding the stockholder bag on B-Day generally gets a big fat nothing.
I’ve said it before. When General Motors goes under, and I mean “Titanic” like – le morte – kaput – tango uniform – DEAD dead – there won’t be a sufficient number of automobile plants to churn out a sufficient number of US specification vehicles for the marketplace, even assuming a HUGE and if I could underline it and bold it, HUGE reduction in sales potential for new vehicles due to the insuing recession following GM going under…
You’ll see how I’m right when –
-State Governors will beg the Chinese and Indian automakers (such as the Indian conglomerate Tata, which is valued at much more than General Motors and has been for several years) to come in and take over ex-General Motors factories to produce new designs, or old. Anything to bring jobs back.
-State Governors will be flying to communist China and India grovelling to have any kind of jobs coming into their states and will offer tax incentives like monopoly money (or, more to the point, like the US Dollar)
-Thousands of dealers will be scrambling to add franchises for Mitsubishi, Suzuki and whatever other minor players have open areas where they are located, in order to have the benefits of a new car dealership (which allows them benefits at car auctions not shared with used-only dealers, for example)
Chrysler is also more than very likely to crap out. Ford may be the last man standing (and having shut down so many plants, they cannot full take advantage of the dead cat bounce to be seen when GM and Chrysler die)
Nobody Will Buy a Car from Company in Bankruptcy
well not quite, depends on the price asked.
Buickman: “there still is some loyalty in the world and years of service/goodwill lead to repeat followings.”
Your optimism about human nature is charming, but not realistic:
“If you want gratitude, buy a dog.”
–Samuel Goldwyn
“If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man.”
–Mark Twain
Robert one for you:
Gegen die Dummheit kämpfen die Götter selbst vergebens
Against stupidity the gods themselves fight in vain.
–Schiller
Looks like the illustrious GM board is still happy with Rick and his helpers. Here’s a quote from the WSJ today:
Despite GM’s troubles, Mr. Fisher, a former Eastman Kodak Co. chairman, said the board supports Mr. Wagoner and believes GM has the “best management team to get us through these difficult times.” He pointed to solid products and strong international growth as benchmarks of Mr. Wagoner’s success.
Another GM board member, Kent Kresa, said in a phone conversation Tuesday night that GM “management has a handle on the situation.”
New restructuring actions could include the elimination of some slow-selling models. Mr. Wagoner also will unveil plans to boost revenue. Mr. Wagoner was counting on GM’s recently redesigned trucks and SUVs to power a turnaround, but it is turning into a costly mistake.
Amazing.
I think Wagoneer keeps his job the same way 20% of American’s still trust the President, cannot admit that he has ever made a mistake, and literally heed his every word – almost worship the ground he walks on (Liberty College which was started by Falwell is a major recruiting station for devout students / loyal bushies into politics and government). I was reading an article on the die hard Bush followers – seems Bush has these followers are psychologically linked (either through 9/11 or some other closeness – maybe devout religious belivers) and cannot see the other side nor will then ever put themselves in that position of enlightenment.
I see it as Wagoneer’s best friends are on the Board and are some of the largest stockholders – so long as they make substantial money off the dividends they are happy. Wagoneer’s friends on the board do not act like bosses – more like golf buddies who love him so much they look past his job performance and the mess that he is making – so far past that they give him a huge bonus.
Oh, Eastman Kodak’s former executive has faith. That’s fantastic. Blind leading the blind if I ever saw it.
The ugly part of this is twofold:
* The shockwave that this will cause will do a lot of harm to the global economy. GM is big and, unlike IBM (but like GE), it’s not that vertically integrated. If IBM imploded, the crater would be deep, but not very wide. GM’s destruction will be both deep and wide as they’ve their tentacles into everything.
* If GM craters anytime in the next two years, it will be titanically bad simply by virtue of how shaky the economy is. Putting thousands (tens of thousands? Hundreds? How wide could it go?) of people out of work, as GM’s insolvency would certainly do, on top of the existing credit crunch, would so contract the economy that we might have to start thinking about the “D” word.
If Rick Wagoner wants to avoid being known as The Man Who Launched the Second Great Depression, he should be looking to sell assets and maintain stability. Yes, parceling GM’s crown jewels off to SAIC, Tata and/or Fiat this would look like a failure of leadership, but, hey, it’s just that now–all we’re discussing is the magnitude of said failure.
If I were running for political office in the US, I’d be leaning very hard on GM’s management about now, because I sure as hell wouldn’t want to be in office during a re-play of the 1930s.
What’s GM got lined up in the pipe line? The Camaro and the Volt. Anything else?
For any business with GM’s core problem – higher cost price/lower selling price than an equivalent product by its competitors – the ultimate result will be the same: bankruptcy. Barring government intervention, the only variable is time.
Given the state of the economy and GM’s cashflows, it’s unlikely that the company has more than a year left. All of which makes my decision to buy an Opel last year look rather silly.
I really don’t think bankruptcy is the end of the road for GM…the best example for this may be the airline industry. I mean, here you have an industry that is crippled by high fuel prices and lethal unions and aging fleet designs…sound familiar? So what’s the solution? Merge or declare bankruptcy! The fact that the federal gov’t allows them (w/o any sense at all) to compete at bankruptcy flight rates with their still afloat competitors means that GM can use bankruptcy to its advantage and literally become more competitive by ruthlessly cutting off fat i.e. the UAW, Buick/Pontiac, and dealers. Sure, there are airlines that do not emerge from bankruptcy (Eastern, Pan Am, TWA) but there are plenty of survivors as well (United, US Airways).
@Ingvar: You say: “The Phoenix rising from the ashes will be a better and more profitable company, producing and selling the cars that they are actually good at, and that people actually want.”
If they can’t/won’t produce cars now that “they are good at” (whatever that means), how will BK change that?
The factories are running now and cars are not flying off the lots; what makes you think bankruptcy will reverse that?
Ever experienced the morale at a company under bankruptcy? People flee–accountants, engineers, support staff that place materials orders or process orders–to the point that the company limps along. Can’t produce world-class products very easily in that situation.
In a perfect world, bankruptcy restructuring is designed for a fresh start, to allow a company to rebuild its business. Does anyone forsee the golden-parachuted top brass at GM giving all their effort to this task? (see: Delphi)
crickets…
At some point GM’s Asian/Euro/South Am operations will have to be cut loose. These would probably be worth more than the entire entity combined. That is, GMNA is probably worth less than zero right now.
“If they can’t/won’t produce cars now that “they are good at” (whatever that means), how will BK change that?
The factories are running now and cars are not flying off the lots; what makes you think bankruptcy will reverse that?”
GM has too many brands, too many cars, too many factories, too many dealer franchises, that sell too few cars. A chapter 11 means they could make rid of all redundancy. Kill off or sell the brands they don’t want or need, discontinue all the models that overlap, close some factories, get rid of the UAW in one singels swoop, kill off the entire dealer network as we know it and build something new and better from the ashes, and finally, sell those cars in numbers that are actually produced.
All of this is good and sound business decisions, and should be able to make GM stand for themselves and deliver products and generating money after a restructuring. It would even be a healtier, more sound and more profitable company than it is right now. Last time I checked, Toyota had a net value of twice of that of GM and Ford combined, they are aerning money in the tens of billions every year. That net and that worth is how the market looks at GM of today. A restructrured GM could actually be worth ten or twenty times more in a slimmed down version.
See you at GM Death Watch 200.
I’ve always argued that 11 leads to 7 no matter what. People won’t buy a car from a “bankrupt” automaker, even if it’s only Chapter 11. They will be afraid the company will go completely kaput, leaving them with a car with no warranty and no source of spare parts. That is, even though 11 allows GM (or Ford or Chrysler) to dump dealers and brands and union contracts, their sales will collapse even further, negating any positives those bring.
I’m not so sure. For one thing, if GM files 11, Ford has to do it too (don’t they?). Some people will still buy “American”. Who are they going to buy from? Also people know the difference between reorganization and a tag sale of all the assets. It will be interesting to see RF’s take on the question.
It’s very easy to tell when one of the Det2.8 are about to file for bankruptcy – whichever one hires someone who has taken a company through chapter 11, like when Steve Miller was hired at Delphi. RF – Have you heard of any of them hiring someone or a firm that specializes in bankruptcy? If not, then just read the news flashes as they come down the line and when it happens, get ready for the deathwatch that sends the company down the final spiral to business hell.
Which one of GM’s cars would you miss, if all of their models were pulled from the market tomorrow?
AND
Which model(s) have no substitutes from other, better run carmakers who are not in the red?
That’s the double-edged sword hanging over RenCen managers’ heads.
once again thee banksters have come out in support of Red Ink Rick. people need to understand that GM truly belongs to the banks who own two thirds of the stock. they enrich themselves through interest on the unbelievable long term debt and by garning large investment banking fees each time an asset is sold, or as in the case of Nissan merger, even when we “consider” such action. how much did we pay for “advice” in deciding not to merge? there is much to be learned by following the money. Fiat alone should have been Wagoner’s undoing.
jolo:
It’s very easy to tell when one of the Det2.8 are about to file for bankruptcy – whichever one hires someone who has taken a company through chapter 11, like when Steve Miller was hired at Delphi.
GM hired Alix Partners in 2005. They’re still there…
# Ingvar :
May 29th, 2008 at 3:11 am
“If they can’t/won’t produce cars now that “they A restructrured GM could actually be worth ten or twenty times more in a slimmed down version.
Ten or twenty times zero still equals zero. Does anybody know the actual assets versus liabilities? I can’t imagine it’s good nor can I believe the questionable figures from GM’s accountants.
onthercks07 :
May 29th, 2008 at 12:01 am
I really don’t think bankruptcy is the end of the road for GM…
Unlike a vehicle you purchase, you take your ticket and fly in a few days. I wouldn’t purchase a vehicle from a bankrupt manufacturer unless it was at a very steep discount. So steep in fact the manufacturer would be selling at a very serious loss.
Gm needs to do what every poor company does- to start real work, and build the house back , brick by brick. A platform by platform. by building themselv they capitalize on expertize, but expertize is the best firewall against fit and finish and quality earthquakes. By the way, here is a little update for my car under construction. What do you think of it?
Does anybody know the actual assets versus liabilities? I can’t imagine it’s good nor can I believe the questionable figures from GM’s accountants.
The liabilities already exceed the assets, and it’s likely that the value of the assets are overstated. Of GM’s $146 billion in assets, $43 billion of it is “property,” most of which is the depreciated book value of plant and equipment. It doesn’t seem likely that GM could sell its used factories for anything close to that amount, so in real world terms, they don’t have that much.
Another $17 billion is inventories, which includes that trucks that are sitting around gathering dust. I have my doubts that the $17 billion in inventory will generate $17 billion worth of cash.
They also have $185 billion in liabilities. A large chunk of that is in pensions, so perhaps that is ultimately overstated, in that they could eventually default on at least some of that. But other aspects may be understated. I’d bet that GMAC’s pending problems are not accounted for in the accounting.
Just in case anyone was counting, this means that the net equity of the company is -$41 billion. A big negative number.
Stein X Leikanger: “Which one of GM’s cars would you miss, if all of their models were pulled from the market tomorrow?
AND
Which model(s) have no substitutes from other, better run carmakers who are not in the red?”
Vette. Maybe the CTS.
Dynamic88: For one thing, if GM files 11, Ford has to do it too (don’t they?). Some people will still buy “American”. Who are they going to buy from?
If Ford files for bankruptcy, the Ford family’s control of the company through their special shares is jeopardized. It represents a big risk for them.
Bankruptcy won’t necessarily lead to a leaner GM, selling only Chevrolets and Cadillacs, free of union obligations and excess dealers. There is no guarantee that a GM bankruptcy filing would smoothly lead to a leaner, more competitive company.
A GM bankruptcy would likely drag on for a very long time, as the union would fight any attempt to abrogate those contracts (imagine the Delphi fiasco, only even nastier and receiving even more publicity).
Headlines would constantly link “GM” with “bankrupt.” To most people, “bankruptcy” means “failure,” which means that GM would be linked with “failure” in the public’s mind. And “failure” is much worse than “ailing,” or “troubled,” just as “dead” is worse than “sick” for people.
Despite all of the talk about people viewing vehicles as appliances (which is usually mouthed by those who are upset that people are buying Japanese vehicles), most people weigh the image of the company that makes a vehicle carefully. No one wants to be stuck with a vehicle branded as a “loser” because the parent company is a loser. That dynamic helped kill Kaiser-Frazer, Studebaker and Packard, and forced AMC to retire the Rambler moniker.
If GM declares bankruptcy, even the best of its vehicles – and the Malibu, CTS, full-size pickups and SUVs, Corvette and Lambda-based crossovers really are excellent vehicles – would become very difficult to sell, even among the buy-American crowd.
Sure, the bargain hunters would consider a GM vehicle, but given that most current GM buyers ALREADY expect hefty discounts and/or rebates, I doubt that these bargain hunters would pay enough for a shiny new GM vehicle to really help the company’s balance sheet.
Dynamic88: Also people know the difference between reorganization and a tag sale of all the assets.
Maybe…maybe not. That is a very big gamble, and represents uncharted territory for a major automobile manufacturer.
What the people like is a comeback story. Filing for bankruptcy, cancelling as many franchise agreements as possible (and every local paper would run stories on the Buick, Pontiac or Saturn dealer who lost his or her franchise because of the bankruptcy filing) and attempting to void the UAW contracts in court strikes many people as taking the easy way out.
A comeback story is what Ford is attempting under Mulally – restructuring the business from the inside out, to avoid making the mistakes that got said company into the mess in the first place.
Stein X Leikanger: Which one of GM’s cars would you miss, if all of their models were pulled from the market tomorrow?
Corvette
CTS
Full-size Pickups and SUVs
Lambda-based crossovers
Stein X Leikanger: Which model(s) have no substitutes from other, better run carmakers who are not in the red?
Corvette, considering the capabilities and the price point. But that is about it.
geeber wrote: A GM bankruptcy would likely drag on for a very long time, as the union would fight any attempt to abrogate those contracts (imagine the Delphi fiasco, only even nastier and receiving even more publicity).
One of the reasons Delphi filed when it did was because a few days later, the rules changed and one of them was that you could only be in chapter 11 for 18 months. Delphi did not get rid of the union or pension plans, but if they go chapter 7, all bets are off.
Jolo, if a company goes Chapter 7 bankruptcy, it is’t all bets are off re: union jobs.
It’s all jobs are gone, whether union, or not.
I think with bankruptcy, and Democratic control of both houses and the Presidency, you will see a change in policy with regard to import tariffs. In order to ease the Big Three back to function, It is essential to make all imported vehicles more expensive. Ideally non-NAFTA parts will also be hit with additional levies, it makes sense to nurture suppliers as well.
The three decade war on the middle class will have to come to an end. It has been a while since I mentioned it, but it is a miracle that blue collar workers could lead a middle class lifestyle. I have never understood the antagonism towards high paying jobs, they have a positive benefit to the economy that is more immediate than the boarderless, loyalty-free capital of the wealthy and dispassionate.
American hegemony in the world (such as it is) is coming to an end. I think a vast majority of the globe is in for a rude awakening in the aftermath, having forgotten how most regional powers play rough in the absence of a stabilizing power dedicated to peace and international commerce.
Sheer wealth led America to overlook or ignore the countless asymmetrical trading relationships with other nations, but that wealth has “poppped”, or evaporated for long term reasons, as well as short term acceleration over the past eight years of surreal leadership.
Bottom line, America absolutely needs to get into the business of symmetrical trade relationships. For too long, politicians have bought into the self interested corporate bs of how trade will somehow democratize fundamentally despotic regimes in Asia. There is absolutely no evidence of this, and plenty of evidence to the contrary.
The G3 (Pontiac version of Aveo) convinced me that a GM post Ch11 wouldn’t do anything different and would only require a few years before filing Ch7.
eh_political: I think with bankruptcy, and Democratic control of both houses and the Presidency, you will see a change in policy with regard to import tariffs. In order to ease the Big Three back to function, It is essential to make all imported vehicles more expensive. Ideally non-NAFTA parts will also be hit with additional levies, it makes sense to nurture suppliers as well.
The fiercest competitors for the domestics are Honda, Toyota, Nissan and Hyundai. All of these companies have established a production base located in the U.S. that can be expanded in the (unlikely) event that tariffs are imposed on automotive imports. Tariffs would therefore be a temporary solution at best.
One must also consider the political realities of imposing tariffs. The Democratic gains in the 2006 elections were in areas that had formerly voted Republican. Many of these “swing” areas are white-collar, suburban areas, where people are used to driving Toyotas, Hondas, Nissans and Hyundais. The Democrats are not going to antagonize these voters by suddenly raising the price of their automotive purchase, especially since many of them bought their vehicle precisely because they wanted to AVOID a GM, Ford or Chrysler product.
Unless Senator Obama wants to be a one-term president, and Speaker of the House Nancy Pelosi wants to go back to being just another of the more liberal members of the U. S. House of Representatives.
The Toyota Camry and Corolla and Honda Accord and Civic are among the top-ten selling vehicles in America. A high percentage of these vehicles are built here, by Americans who earn good wages.
Sorry, but the “We must save the Big Three to save the middle class” rings hollow, especially given that the domestics are outsourcing as much production beyond the reach of the UAW as possible.
Or do the people assembling Hondas, Toyotas and Nissans in Ohio, Kentucky, Tennessee and Alabama not count? Are they not members of the middle class? I’d like someone to tell that to them.
Or, more likely, they don’t count because they aren’t unionized, and thus aren’t paying union dues.
Any attempts to impose tariffs on Japanese, Korean and European vehicles is more a case of, “We are sheltering incompetent management and pacifying our union donor base under the guise of protecting the middle class.”
eh_political: For too long, politicians have bought into the self interested corporate bs of how trade will somehow democratize fundamentally despotic regimes in Asia. There is absolutely no evidence of this, and plenty of evidence to the contrary.
If you are talking about China, there are no Chinese cars imported to the United States.
GM imports a fully assembled engine for the Equinox/Torrent (the dreadful 3.4 V6) and sells a considerably more desirable Buick to the Chinese than it does to Americans, but that needs to be taken up with GM management. The source of that problem is Detroit, not Washington, D.C.
Also, the last time I checked, Taiwan and South Korea have become much more democratic over the last 20-30 years.
I therefore have trouble accepting your statement that, “There is absolutely no evidence of this, and plenty of evidence to the contrary.”
Also note that the automobile companies (except for Hyundai) that are giving the domestics the stiffest competition are…based in Japan. Is Japan now a despotic Asian country? I’d like to see proof of that one.
The U.S.A without Chevrolet is politically unthinkable. GM’s right to fail will be stayed, especially in an election year. Federal machinations and taxpayer money camouflaged the Bear Stearns fiasco. A GM rescue will be rationalized and financed. Government owned automobile manufacturers are not historically unusual.
Chryslerberus draws little sympathy. It is viewed as a vulture picking at roadkill. If Chrysler goes first, which seems probable, it will quickly disappear leaving few traces but bolstering the political argument for saving GM from itself.
I don’t know if Ford will make it. It has made more right moves than the others. With Chrysler gone and GM mortally wounded it can become America’s car company.
@ geeber
Japan, South Korea and Taiwan/Formosa all had their democracies imposed on them by an altruistic American occupying force. My point, fairly obviously, was that US corporations do huge business with many despotic Asian regimes, while pretending trade will somehow magically transform these nation states into freedom loving democracies. Not likely. But the US military and taxpayer once assumed the role.
Tariffs are likely, a near certainty, in fact and transplants should ramp up North American production. The Japanese in particular have proven adept at turning all the barriers the US have imposed into positives, so where is the problem? The US will be forced by economic realities to stop running trade deficits, no one will be funding additional debt for a long time. My thought is that the US should examine the nature of trade with each partner, to check for fairness, openess of markets/reciprocity and whatever metrics necessary to begin to address this economic crisis. South Korea is not an open market. Japan, Taiwan, are too sneaky by half, call the shots and manipulate everything from currencies to AMERICAN politicians. By contrast US economic policy looks piecemeal and downright incoherent. It should. It is.
China runs a huge trade surplus with the US. Are you seriously going to suggest that they will refrain from adding autos, and whatever else to that surplus? Treating them symmetrically would force them to establish joint ventures with American corporations, with those US corporations calling the shots. American politicians and business leaders have been bought off, choosing to essentially ignore Chinese misdeeds at home and abroad, because both groups have been the major beneficiaries of trade, with lower and middle classes suffering slow, incremental losses.
As the US sinks deeper into economic hardship, it is likely many liberal and loopy policies will be clamored for, and politicians will oblige. I expect Canada and Mexico will be in for the roughest ride, in spite of our complimentary and mutually reinforcing trade and economies. Ideally, I am wrong, and the impact of each trade relationship will be evaluated with an eye to fairness and mutual benefit.
Finally, if you don’t do something to stabilize and enhance your middle class, it will take America many generations, if ever, to recover a standard of living comparable to the one you currently enjoy–and cannot sustain.
Ok, if I ask you this:
Why would anyone TODAY buy ANY GM product?
What’s the difference from buying a car from a company in bankruptcy from buying a car from a company that inevitably will go bankrupt?
menno – I was only responding to the idea that when you file for bankruptcy, you can do away with the union contract. You can’t, as shown at Delphi. And yes, ALL bets are off on ALL jobs for chapter 7.
There is also the possibility that someone would buy Delphi’s pieces if they go chapter 7. They could buy the divisions for the ECMs and the audio systems, for example, and want to retain the engineers so that they can qualify the product as soon as possible. That way, they are a proven source and can resume product to their customers, with GM being the largest and the one who has the most to lose if Delphi pulls the chapter 7 pin.
eh_political: Japan, South Korea and Taiwan/Formosa all had their democracies imposed on them by an altruistic American occupying force.
They still became democracies…and are not despotic by any means. And given that Japan and South Korea are the home of the companies that are beating the American auto makers, it makes little sense to complain about despotic countries unfairly shielding their pet companies to take on America.
eh_political: My point, fairly obviously, was that US corporations do huge business with many despotic Asian regimes, while pretending trade will somehow magically transform these nation states into freedom loving democracies. Not likely. But the US military and taxpayer once assumed the role.
And China is hardly the same nation it was even 20 years ago. Is it a democracy today? No. But is it as closed and repressive as it was even 20 years ago? No. The transformation of China’s economy is slowly driving the change of China’s social structure, and thus, its government.
Plus, we import exactly zero vehicles from China right now, so, as far as the automotive industry goes, China is a red herring.
eh_political: Tariffs are likely, a near certainty, in fact and transplants should ramp up North American production. The Japanese in particular have proven adept at turning all the barriers the US have imposed into positives, so where is the problem?
The problem is that you are selling tariffs as a cure for what ails the domestics. The catch is that their toughest competitors all have an established production base here in the U.S., so any tariff will quickly be overcome, and the domestics will be right back where they started (i.e., in deep financial trouble).
Tariffs aren’t going to solve a darn thing, in the long run. They aren’t going to eliminate brand overlap, decision making that favors delaying tough choices, or product planning that has favored Escalades over a true Civic competitor.
From a political standpoint, the Democrats are unlikely to slap tariffs on motor vehicles for several reasons.
One, they would alienate the more moderate voters who have been crucial to their electoral gains since 2006. Do you really think that the Democrats want alienate those young suburbanites in Kentucky, the Carolinas or California by driving up the cost of that Hyundai Accent or Honda Fit with tariffs? That sounds like a good way to reverse the political gains they’ve made since 2006.
Perhaps Karl Rove is secretly advising them to push for tariffs?
Second, any imposition of tariffs would risk retaliatory measures by other countries on U.S. exports (there are more of those than you think).
Third, one of the biggest criticisms of the Bush Administration by Democrats has been that it has been heedless of world opinion and has alienated allies with its bull-in-the-China-shop actions.
I seriously doubt that an Obama or Clinton administration would be dumb enough to further alienate our allies (the great majority of imported vehicles come from Mexico, Canada, Japan, South Korea, Great Britain, Sweden and Germany – last time I checked, they were still our allies) by slapping tariffs on their automotive exports.
eh_political: South Korea is not an open market. Japan, Taiwan, are too sneaky by half, call the shots and manipulate everything from currencies to AMERICAN politicians. By contrast US economic policy looks piecemeal and downright incoherent. It should. It is.
There is no proof that South Korea or Japan, as a whole, have benefited from their protectionist policies. The Japanese economy has been in the dumps since the early 1990s, and has underperformed the U.S. economy in virtually every important measure.
The currency manipulation strawman has been shot down numerous times on this site. ALL countries manipulate their currency – including the U.S. No matter what the level of the yen is as compared to the level of the dollar, the Japanese have still stolen market share from GM, Ford and Chrysler. Must be some other factors at work…
eh_political: China runs a huge trade surplus with the US. Are you seriously going to suggest that they will refrain from adding autos, and whatever else to that surplus?
They can send us whatever autos that they want to, as long as said vehicles meet American safety and emissions standards. There is no guarantee that anyone will buy them. Most reputable analysts agree that the Chinese are 10-15 years away from making vehicles suitable for export.
GM, Ford and Chrysler are getting beaten TODAY by Honda, Toyota, Nissan and Hyundai because said companies make more attractive vehicles, not because they are necessarily cheaper.
Bringing up the China bogeyman only distracts from this uncomfortable truth.
eh_political: Finally, if you don’t do something to stabilize and enhance your middle class, it will take America many generations, if ever, to recover a standard of living comparable to the one you currently enjoy–and cannot sustain.
With tariffs on imported automobiles, you’re not stabilizing the middle class. You’re robbing Peter, who has to pay more for either his Hyundai, or his Chevy (as the domestics have demonstrated repeatedly that they will raise prices at the first opportunity, and raising prices is what they will do when import prices increase), to pay more to UAW member or white-collar GM worker, Paul.
That’s not stabilizing or enhancing anything. It’s taking money away from one group to pay off another, more politically favored, group.
That type of economics may appeal to Lou Dobbs listeners or UAW members, but most Americans can see right through it.
I think many of us purchase Asian and in my case Toyota vehicles because over the years, over 22 years in my case we have been not overjoyed to have purchased Domestic maker vehicles and have them either in the Service department a lot or just sitting around dying of Rust and old age, my GMC product has had a Roof leak ever since New, it was never repaired despite many tries and its engine was a Gas user too. At one time I tried to buy North American and used to promote same, what a stupid person I was way back when! I have learned the hard way!and never again will I trust GM, Ford or Chryslerberus period.
I expect Canada and Mexico will be in for the roughest ride, in spite of our complimentary and mutually reinforcing trade and economies. – eh_political
Over the next few years nearly 3-million barrels of oil per day will flow south into the U.S. from Canada, making it America’s No. 1 petroleum supplier by a considerable margin.
Hillary Clinton and Barack Obama recently speechified for the rubes they will reduce trade with the Great White North. The Canadian government gave notice it will alter oil export terms. Hilly and Bama don’t talk about it any more.
@Gardiner Westbound:
I still think we are in for a rough ride on trade with the US, just look at how softwood was resolved. Do bear in mind the latitude the US has to cut fat in energy consumption, and how dire the effects of trying to play hardball with the Americans would be to Canada. Inconvenience for them, catastrophe for us. Plus, they could walk in and take the oil if things ever became desperate. Unlikely at the moment, but temptingly easy.
just sayin
@geeber :**my argument was for symmetrical trade policy based on a country by country examination of trade irritants. Korea, Taiwan, and Japan sell mere handfuls of American made cars. Why? And why not require them to purchase some American made vehicles from Nissan, Honda, Toyota, Hyundai? Say for every car sold stateside, another must be shipped back to the home market, to compensate for imbalance of trade? Just one thought.
China has replaced Canada as US #1 trading partner. It is a police state. It lacks the most basic of freedoms, and dissent is met with immediate jailing and potentially execution. Hi tech US companies have assisted in the extending of monitoring capabilities over the populace, and as a result it is the most surveilled society on the planet. I would not want to be an average citizen in that country–nor would I argue the leadership is making any moves to relinquish its grasp. Again, China #1 trade partner, huge imbalance of trade, and it would be prudent for the US to address those issues, even if it were a democracy.
Tariffs, symmetrical trade, balanced trade would all be of enormous assistance to US manufacturers, their employees, the tax base and spin off a great deal of economic activity besides. They have the potential to do short, intermediate and long term good, it’s about application and modification–because what America is doing at present is not working. China could not have an automotive industry without the political will, good policy, and a long term view. It would appear now that America won’t have an industry without all three.
Japanese problems are twofold, both of which America is about to experience firsthand. First is demographic, and while the US will not have the same level of aging as Japan, it will still be pronounced, and it will still “overtax” your shitty public health infrastructure.
Second is asset value collapse. Banks and Financial institutions are loaded up with staggering amounts of worthless securities. Assets are plummeting in value, the dollar is imploding, and household and government debt are insane. Very similar to Japan, but potentially more severe, according to O, say Paul Volcker.
Please don’t lump me in with Lou Dobbs. I have merely made some observations, and wondered how to prevent further decline in American industry, because it has major ramifications for my own country. We may well get a chance to see how further laissez faire techniques would impact the US economy as a whole, but I seriously doubt it. It seems quite logical to turn the tables on unfair competition, to play by similar rules. Since the loan guarantees granted Chrysler, that company has added untold billions to the American economy. Frankly, the vehicles by and large sucked, but they also permitted families to buy houses, boats, send their children to schools and countless other activities that would not be possible to the same extent if the US auto industry was exclusively foreign owned.
US trade policy will change, both with regard to cars, and in general. How much and to what effect is anyones guess at this point. The only questions are how soon, and how much. We are living in interesting times.
Tariffs on goods coming from China and other Asian countries could, and should IMO, be justified on issues like lack of human rights, lack of environmental protections, etc. Fact is, our companies, even if they did have competent management and workaholic employees couldn’t compete with Asian workers making squat. I don’t know the numbers, but didn’t the employment numbers of auto suppliers dwarf the numbers of the Big 3 assemblers before the heavy off-shoring start?
No matter who gets the Whitehouse and Congress, this is going to be a hell of a mess to wade through, and even with wise decisions, it’ll take years and lots of luck to fix. Add in the fact that the opposition, especially the Republicans if the Democrats get power, will sabotage as much as they can. I think the country might be ungovernable or nearly so by the Democrats just because there’s so much animosity on the right.
Then there’s climate change which we haven’t even begun to address, unless you count ethanol and carbon dioxide coming out of politicians mouths.
Plus, they could walk in and take the oil if things ever became desperate. Unlikely at the moment, but temptingly easy. – eh_political
No kidding! In 1981, during a previous energy crisis, U.S. President Reagan declared Canada’s oil, gas and water continental resources.
We don’t have any weapons of mass destruction, but that little technicality didn’t help Saddam Hussein.
Gardiner said, “We don’t have any weapons of mass destruction, but that little technicality didn’t help Saddam Hussein.” Whew, thanks for that disclosure! Our troops won’t have to wear all the heavy gear for protection from radiation and chemicals that slowed us down in Iraq. Now, let’s see…we should take warm clothing, but there’s an ample donut supply up north, right?
As for the doom and gloom on this thread, I discount it because the media is always excitedly predicting the apocalypse. But I think eh-political is right that political conditions will lead to more protectionism. Still, it’s good to remember that such tactics can backfire. On August 15, 1971 President Nixon announced a 10% tariff on Japanese goods. (Our economic relationship with Japan then was much like the current situation with China.) The next day, figuring the price could only go up, I bought a Japanese car.
# eh_political :
May 29th, 2008 at 5:44 pm
@Gardiner Westbound:
I still think we are in for a rough ride on trade with the US, just look at how softwood was resolved. Do bear in mind the latitude the US has to cut fat in energy consumption, and how dire the effects of trying to play hardball with the Americans would be to Canada. Inconvenience for them, catastrophe for us. Plus, they could walk in and take the oil if things ever became desperate. Unlikely at the moment, but temptingly easy.
just sayin
Your post reminded me of a book I read many years ago. Do a search on “Exxoneration”. It was a fictional account about the US attacking Canada for oil. I won’t tell you the outcome.
It doesn’t seem nearly as implausible now as it did then.
A small question comes up from time to time here regarding who buys GM, besides its pick up trucks.
My 73 year old, still very alert and active brother recently bought a Buick. He ignored my negative predictions.
The headliner fell down on his head as he drove the new Buick home, a distance of about 4 miles. The front part started down before he got across I-285 and it was holding on in the back when he returned to the dealership. He did not make it home in that car for 2 days. Soon the On Star system or some other Gremlin was announcing loudly that the car was soon to be out of gas and an emergency fill up was needed. Of course, this loud announcement had nothing to do with actual gas in the tank. It took the dealer’s ace service department 3 days to fix that annoying problem.
The built in GPS system, again against his little brother’s buying advice, never worked. Neither did the replacement unit. Now there is a vacant space there.
I am not making this up.
The passenger front door leaks when it rains too, but we are in a drought of sorts around here so he is ignoring that.
Survey him and he will probably say it is a great car.
I went on a family trip up to the UP of Michigan two summers ago – and the Wal-Mart parking lot was full of GM cars (the most I’ve ever seen; down here in Tejas, you see Japanese cars and trucks; and lots of American trucks; but hardly any American cars, and most of those are Chryslers or Fords).
Economic desperation plus misidentified solidarity, I think.
Bill Wade said “Do a search on “Exxoneration”. It was a fictional account about the US attacking Canada for oil. I won’t tell you the outcome.”
I did just that. A 1974 Time article on Canadian nationalism mentions the book and “its stridently nationalistic author, Toronto Lawyer Richard Rohmer.” In it, “the U.S. invades Canada [to grab oil and gas, of course) but is beaten back by Canadian forces with some help from the Soviet Union.” [Remember them?] One has to wonder, however, why the US would go to the bother. As Time revealed in that article, “Canada’s present oil reserves will run out in about eight years [i.e., 1982], and there is no adequate technology to exploit the deeply buried oil deposits in the Athabasca tar sands.” So what IS all that black liquid Canada keeps selling to us? Tim Horton coffee?
Of course, in the 1980’s the technology for extracting oil from the tar sands cost about $70/barrel and the price at that time was below $20/barrel. Now oil is at $130/barrel. The cost for extraction is now about $30/barrel and falling. Of course, environmental cost impacts to downstream residents are largely being deferred for the moment.
“@geeber :**my argument was for symmetrical trade policy based on a country by country examination of trade irritants. Korea, Taiwan, and Japan sell mere handfuls of American made cars. Why? And why not require them to purchase some American made vehicles from Nissan, Honda, Toyota, Hyundai? Say for every car sold stateside, another must be shipped back to the home market, to compensate for imbalance of trade? Just one thought.”
Warren Buffett advocates a similar program to restore America’s balance of trade.
eh_political , I’m giving you about a hundred arms length claps at the moment. You are the official winner of TTAC’s unofficial and completely unsanctioned ‘Post of the Week’.
I doubt that US economy will recover. At least it will never see again economic expansion based on real indicators. Us will continue to simulate the growth by low credit interest rates, borrowing more and more from Asia, as dollar has no backup by gold or silver, just the oil supply , it will continue to loose value, because Fed is printing money out of thin air like crazy. GAs prices will get close to 6 dollars a gallon. Those who prepared for the perfect storm, like Toyota, will survive and flourish. While GM put too many cards on trucks, which are useless today in USA, because farming is not increasing, and people are fleeing to cities. Trucks are fashion statement, but if prices soar, you think of surviving, not vogue. By the way Gm is slow to adopt. It took for god`s sake 20 years for Gm to realize that body fit and finish matters, and that between bumpers and fenders and headlights there shouldn`t be 2 inch gaps. i guess gm will continue to fake compact car manufacturing by heavy badge job on korean daewoos.Guess where the profits go from Daewoo?
And slowly bleed to death. I can`t think of any single manufacturing branch within USA, that deals with precision complex engineering and stamping and that would excel.
And this is to everybody-
Seems that there is God out there. No matter how hard you try to be best avoiding honest means, you fail. Unless you with your own hands and honest sweating build your market share step by step, there is no other way to succeed. No bimmer has foreign platforms, no Lexae has foreign platforms. Seems only second tier lacklusters adopt this principle of heavy borrowing. And God kicks them in rear bumper, and they go off the track.You see, you had subpar engineered pure American cars, that failed. Now you have quality products that look like american products. Still failing. Extensive rebadging- Gods curse again. Beancounting on materials- Commandments from heaven again. Manufacturing is dying in USa, so is the middle class with it. Guess what will the purchasing power of the proposed truck buyers be?
Right, so people will swap seats to small subcompacts. wait a minute…what subcompacts does GM engineer? Right, Daewoo .How many Johnsons , Timkens, Davidsons, And Robertsons work on Daewoo, whether assmebly plant or engineering units? Guess none. The last page before diving in history books always has the smell of generic. Always had. Always will, at least in US.
eh_political: my argument was for symmetrical trade policy based on a country by country examination of trade irritants. Korea, Taiwan, and Japan sell mere handfuls of American made cars. Why?
There are several reasons:
1. The domestics have made no real effort to sell their products over there. For years, they couldn’t even be bothered to move the steering wheel to the other side of the car (the Japanese drive on the opposite side of the road). Hardly a sign of true commitment to cracking the market. Imagine how many cars Toyota and Datsun would have sold in America in the 1960s if the steering wheel had been placed on the “wrong” side of the car.
2. The domestic strategy, since the 1930s, has been to penetrate other markets by either buying established companies (Opel, Vauxhall and Holden, in GM’s case), or building local plants that will produce models tailored specifically for that market (hence, Ford of Europe and Ford of Australia). That is why Ford has a controlling interest in Mazda, and why GM, until recently, owned shares in Japanese auto companies (including Subaru). It’s also why GM now owns Daewoo.
Ford, GM and Chrysler have not exported North American-built vehicles in large numbers for well over 50 years.
3. The domestics make vehicles that COULD succeed in Japan because of their distinctly “American” character – the Mustang, Corvette and even the PT Cruiser – but do not bother to sell them there. The Chevy Caprice wagon and Chevy/GMC Astro van have been cult vehicles in Japan for several years. The domestics haven’t bothered building on this opening. That’s a management failure, not a trade failure.
5. If Americans aren’t exactly clamoring to buy most American vehicles, one wonders why Asians would do so. Does one really think that there are 300,000 or so Asians eagerly waiting to buy a Buick LaCrosse, especially when their homegrown models are better in almost every way?
You are aware that, in the 1990s, Toyota attempted to sell the last Chevrolet Cavalier in Japan…and couldn’t move them, because local buyers wanted no part of them? Fit-and-finish were far below Japanese standards, and most people couldn’t see why they should purchase a Cavalier instead of a Corolla or a Civic.
6. The most popular vehicle class in Japan is the microcar class. U.S manufacturers make NOTHING that would compete in that class. The Chevrolet Malibu is the best domestic mid-sized sedan, followed closely by the Ford Fusion, but both are still considered large in most Asian countries, which means most people can’t afford them. They just aren’t going to sell in large enough numbers to really make a difference.
If the Japanese market is so closed, then someone needs to explain why the Germans have been successfully selling vehicles in Japan for years…Mercedes, BMW, Audi and Porsche are quite prestigious over there, and do a pretty good business in that region.
The Cadillac CTS would have a good shot over there, as it’s distinctive, performs well, and sports a luxury nameplate, so most buyers would have the money to register it and keep it running…but GM isn’t selling it there. The Germans can do it…why not GM?
eh_political: And why not require them to purchase some American made vehicles from Nissan, Honda, Toyota, Hyundai? Say for every car sold stateside, another must be shipped back to the home market, to compensate for imbalance of trade? Just one thought.
Because it unfairly punishes Americans who want to purchase vehicles made by those companies if residents of their home countries don’t want to buy American cars.
One of my cars is a Honda Accord. Please explain why I should be faced with the possibility of paying more for another Honda just because Asian car buyers have rendered the same judgment on American cars that other Americans have?
If GM (or Ford, or Chrysler) wants my business, it can gain it the old fashioned way – by building a product that makes me (and others) pick it over the Toyota, Honda, Nissan, etc., competition.
eh_political: China has replaced Canada as US #1 trading partner. It is a police state. It lacks the most basic of freedoms, and dissent is met with immediate jailing and potentially execution. Hi tech US companies have assisted in the extending of monitoring capabilities over the populace, and as a result it is the most surveilled society on the planet. I would not want to be an average citizen in that country–nor would I argue the leadership is making any moves to relinquish its grasp. Again, China #1 trade partner, huge imbalance of trade, and it would be prudent for the US to address those issues, even if it were a democracy.
China does not sell cars in the U.S. Chinese cars won’t be ready for primetime for another 10 years, at the least. And there is no guarantee, that once they are here, people will automatically line up to buy them because of a low sticker price.
Hyundai initially sold well in the U.S., but once the cars started falling apart, buyers deserted the company in droves. It has taken 20 years for Hyundai to recover, and even then it still relies heavily on fleet sales to stay in business.
eh_political: Tariffs, symmetrical trade, balanced trade would all be of enormous assistance to US manufacturers, their employees, the tax base and spin off a great deal of economic activity besides. They have the potential to do short, intermediate and long term good, it’s about application and modification–because what America is doing at present is not working. China could not have an automotive industry without the political will, good policy, and a long term view. It would appear now that America won’t have an industry without all three.
Really…Toyota, Honda and Nissan building cars here don’t count? They are part of the new American automobile industry that is being born right before our eyes.
eh_political: Japanese problems are twofold, both of which America is about to experience firsthand. First is demographic, and while the US will not have the same level of aging as Japan, it will still be pronounced, and it will still “overtax” your shitty public health infrastructure.
No. Japan’s population is MUCH older than that of the United States. Japan is actually worried about a population DECLINE. The U.S. is nowhere near that point. The U.S. has one of the fastest population growth rates of any industrialized nations, and our population is also younger.
As for our “shitty” public health infrastructure – if that is it’s proper descriptive term, then the word also applies to the public health infrastructure of countries with nationalized health care. People who rely on Medicaid (the federal program for low-income people) or charity care receive the same level of care as people in other countries who depend on nationalized health care.
Meanwhile, people with private insurance, or who depend on Medicare (the federal program for the elderly) receive FAR better care than people who depend on nationalized health care in other countries. Which is why people come from all over the world for U.S. health care.
eh_political: Second is asset value collapse. Banks and Financial institutions are loaded up with staggering amounts of worthless securities. Assets are plummeting in value, the dollar is imploding, and household and government debt are insane. Very similar to Japan, but potentially more severe, according to O, say Paul Volcker.
The reason Japan’s economy has never recovered from the downturn of the early 1990s is because banks have never properly wrote off the value of bad loans and investments. A crash or downturn is a healthy sign that there is too much “garbage” in the system, and needs to be removed.
Our country (and a few others – Australia, the Netherlands, Great Britain) has been in the midst of a housing bubble, and, in the U.S., credit has also been much too lose during the same time, which helped fuel the housing bubble. Now we are in the midst of a correction, and that’s a good thing. The excess and slop need to be wrung out of the system.
eh_political: I have merely made some observations, and wondered how to prevent further decline in American industry, because it has major ramifications for my own country.
We produce as many cars in this country today as we did in 1978. So our auto industry is actually healthy. It just isn’t dominated by three major companies anymore, and labor used to build those cars isn’t 100 percent unionized.
Our industry is changing, as we are adding new players and some old nameplates will probably bite the dust (Pontiac, Mercury, maybe Dodge cars), but change is healthy.
eh_political: We may well get a chance to see how further laissez faire techniques would impact the US economy as a whole, but I seriously doubt it.
We’ve been taking a laissez-faire approach to our economy? Are you not aware of the Bush Administration’s attempt to slap tariffs on steel imports about 5-6 years ago, and how that ultimately failed (and how are allies reacted)?
What you are proposing has been tried before, and it resulted in the worst economic calamity in American history.
In the late 1920s, stocks were overvalued. When the stock market crashed in late 1929, it was actually a healthy correction. Meanwhile, the economy was slowing down at the same time, as the auto boom of the 1920s about over. But the government tried to intervene and prevent the slowdown from happening, which only prolonged the agony. Even worse, fearing inflation, the government throttled the money supply, when the problem was DEFLATION. It was as if a doctor had treated a patient for high fever after he had already frozen to death.
Then, in 1930, the U.S. government passed the Hawley-Smoot Act, a comprehensive series of tariffs designed to “protect” American industry.
In other words, it took the course of action that you are advocating that it take today.
The result was a catastrophe. Other countries retaliated by slapping tariffs on American goods, which completely decimated demand. American automobile exports, for example, fell over 90 percent, which helped drive down American car production a staggering 75 percent between 1929 and 1932.
By 1933, the American unemployment rate was an incredible 25 percent!
Today, reputable economists agree that Hawley Smoot, along with the efforts of the Hoover and the Roosevelt administrations to restrict the money supply and prop up shaky businesses, turned what should have been a short and sharp recession into an economic calamity that lasted until the eve of World War II.
eh_political: It seems quite logical to turn the tables on unfair competition, to play by similar rules. Since the loan guarantees granted Chrysler, that company has added untold billions to the American economy. Frankly, the vehicles by and large sucked, but they also permitted families to buy houses, boats, send their children to schools and countless other activities that would not be possible to the same extent if the US auto industry was exclusively foreign owned.
You are advocating something entirely different now – government aid to a faltering company, which is different from tariffs.
Second, there is no proof whatsoever that foreign automobile companies pay poverty-level wages to their workers. If anything, experience has shown that the transplants pay their workers competitive wages, because they don’t want workers from the bottom of the barrel. Workers are expected to take responsbility for quality, and show initiative. Such people will quickly leave if they are not sufficiently paid.
The difference is that the transplants aren’t as generous with health care benefits.
Given that the domestics are staggering under that obligation, and that even governments are waking up to the fact that they cannot afford to provide lavish health care benefits on a universal basis, this is a wise move on their part.
jurisb: I can`t think of any single manufacturing branch within USA, that deals with precision complex engineering and stamping and that would excel.
Here are a few: high-tech computers, aircraft, defense equipment, medical equipment, pharmaceuticals – those are just for starters.
jurisb: Seems only second tier lacklusters adopt this principle of heavy borrowing.
Given that VW is selling a rebadged Chrysler minivan, I guess this now means that VW is a second-tier, lackluster make. Which is accurate, considering that it loses money in the U.S., and scrapes the bottom of the quality barrel.
Queeber- VW is not second tier, otherwise Porsche wouldn`t suck out a platform and body for Cayenne. VW will learn a lesson that sharing a car with european built Galaxy minivan and american built Chrysler ain`t the same thing. By the way , VW has a real engineering share in the new Chrysler minivans. VW company today is a benchmark in stamping quality. You showed me an exception, exceptions are not rules. US car manufacturers adopt platform borrowing as a rule. It is a pattern. By the way DEtroit 3 doesn`t borrow their own platforms, just imports. Does it give you a hint? Ok, here goes the logics. Domestics are beancounters and try to save bucks on every panel and bolt, yet they don`t beancount on platforms, they just open wallets and buy japanese and korean ones.
To crack japanese market you need real products. Why do you americans think that you will ship japanese platforms, engines and trannies to US, then stamp on it subpar tins and then export it back to japan as pure american cars? You think japanese neede them? Sure there is market for US cars in Japan, about the size of Lamborghini or Ferrari sales. Are yoy selling them Pontiac vibe? How much would it cost to double ship the vehicle? MAybe you propose just to stamp on a Pontiac badge right at the Toyota factory doors in japan?
Japan population. You are right, they are aging. But I have a question why do japanese don`t open gates to immigration? Because the cornerstone of Japan is precision manufacturing. And they are a benchmark country in this. And there is a common denominator between 99.8 per cent of population being japanese and impeccable engineering standards. So while US is immigrant country, they unfortunately fail in engineering more and more, because most of the immigrants come from different cultures of precision engineering understanding. Ask yourself a question why all lexuses are shipped from Japan ? why Sony is made worldwide but luxury electronic brands like TEAC or Marantz are still made in Japan? And Sony top shelf stereos are also made only in Japan. Because only they can ensure the highest quality, if they make it domestically. US will never crack Japanese market, unless they downgrade their culture before it. By the way US can`t put or cancel any tariffs, because they borrow so much money from Japan, that they are dependant on it.
Why do Big 3 buy shares of foreign companies? The same why the never buy shares in their own domestic companies. Why would ford buy shares in Chrysler? to get access to an antique OHV cast iron engine? To get a discount from Chrysler plastic stampers? They don`t need it! Thatš why they always buy shares in japanese, so they can get access to their engineering, their platforms, trannies, suspensions, engines. How would Gm benefit getting any ford platform? It is cheaper for Gm to buy shares in Daewoo, and pay to korean government 1250 $ for each vehicle than to find and pay real engineers in continental US.Especially the stress is on FIND. And sorry, but the more immigrants you let it the more you will wonder on lowering quality standards of any engineering.
Sure, you mentioned that China has limited freedoms, and oppression. But there is no no long term gain, unless you have a strict rule over population. democracy is a good thing for those who have conscience, for the rest it is a gateway to their greed and sloth. Thatš why you need stadiums where you take people to and simly shoot them. China does so not because they like it, because it sets a sample for hundreds of millions of what they could get if they violate laws. One person shot by chinese governmet, stop thousands from even wanting a gun or wanting to attack others.One thief being deprived of his arm, sets a sample for million other potential thieves, who will think twice before entering your house. China lacks democracy you say, but it doesn`t lack manufacturing which accounts for 40 percent of GDp, while US share is 14 percent. China lacks freedom of speech, but it doesn`t lack trade surplus of well over 200bn a year. While US with their democracies bleed 800bn every year. Every American wants prosperity, but they want to have an easy job sitting at computer, singing in American idols or selling souvenirs, and they expect their neighbours to sweat out tv sets, furniture or lay asphalt.The problem is that every person should be in the right place and should love their job. But there are much more unpleasant jobs than the good ones. It is easy to find 200 singers who would love what they are doing, yet it is not so easy to find 300 ooo janitors who would be in love with their floor mop, or 2 million assembly line workers who would say that monotonous work at packaging bolts is awesome. People avoid really responsible and hard works. So do countries…….
Queeber- VW is not second tier, otherwise Porsche wouldn`t suck out a platform and body for Cayenne. VW will learn a lesson that sharing a car with european built Galaxy minivan and american built Chrysler ain`t the same thing.
It’s Geeber, not Queeber.
Your earlier post said this: “Only second tier lacklusters adopt this principle of heavy borrowing.”
Those are YOUR words, not mine. VW is doing more than heavy borrowing – it is borrowing the entire vehicle and sticking a VW badge and nameplate on it. By your standards, VW is a “second tier lackluster” company.
jurisb: By the way , VW has a real engineering share in the new Chrysler minivans.
VW is rebadging the Chrysler minivan. It has not performed any of the engineering work on the vehicle. Unless you consider suspension tuning to constitute a heavy engineering rework, which would certainly place you in the minority among those who understand vehicle engineering.
VW is borrowing a Chrysler minivan because it does not have a suitable vehicle in that segment. One bright side – this minivan will probably be more reliable than the typical VW vehicle.
jurisb: VW company today is a benchmark in stamping quality.
Unfortunately, that doesn’t translate into exceptional reliability, or a quality vehicle. GM sets the benchmark for building V-8s with exceptional reliability, mileage and performance. That is not enough to save the company, and VW’s prowess in stamping technology does not appear to be enough to ensure profits in the U.S market.
Virtually every company excels at one aspect of car making.
jurisb: US car manufacturers adopt platform borrowing as a rule. It is a pattern. By the way DEtroit 3 doesn`t borrow their own platforms, just imports. Does it give you a hint? Ok, here goes the logics. Domestics are beancounters and try to save bucks on every panel and bolt, yet they don`t beancount on platforms, they just open wallets and buy japanese and korean ones.
You appear not to understand how plaftform sharing works. Ford, for example, helped to engineer the Mazda6 platform used for the Fusion and its cousins. It didn’t simply take a Mazda6 platform and restyle the sheetmetal to create the Fusion. (For one thing, the Fusion is bigger than the previous-generation Mazda6.) You also realize that the Mazda6 uses a Ford-sourced V-6?
GM of North America worked with GM Europe on the Epsilon platform, and will work with GM Europe on the new Delta platform.
What you mistakenly regard as a sign of weakness and failure is really a strength. GM and Ford are working on a worldwide basis – as Toyota and Honda do now – to produce platforms and vehicles that can be easily adapted for use in several markets. This way they can tailor individual cars to each market, while using a common platform to save money.
Simply using one platform for all markets – as, say, VW does – will result in limited sales outside the home market. Which VW is experiencing right now.
Incidentally, if the European car makers are so great, please explain why Fiat, Alfa, Renault, Peugeot and Citroen can’t even establish a foothold in the North American market.
The simple fact is that all of those companies left the U.S. market with their tails between their legs, chased by furious customers who had been burned by awful products. And they haven’t dared come back since.
Hardly sounds as though they are examples of precision manufacturing, or makers of quality products.
jurisb: Japan population. You are right, they are aging. But I have a question why do japanese don`t open gates to immigration? Because the cornerstone of Japan is precision manufacturing.‘
Japan does not open its gates to immigration for two reasons. One, it has historically taken a very racist attitude toward other peoples and cultures, regarding them as inferior. Japan’s defeat by the U.S. in World War II has helped to change this, but even the American influence can’t overcome the second factor, which is….
That Japan is an extremely crowded country, and has no room for large amounts of immigrants.
jurisb: So while US is immigrant country, they unfortunately fail in engineering more and more, because most of the immigrants come from different cultures of precision engineering understanding.
Really? You need to tell that the manufacturers of high-tech medical equipment, or Boeing, which is shipping its latest air liner, unlike Airbus, which is still trying to make its A380 turkey profitable. They apparently haven’t gotten the memo.
jurisb: Ask yourself a question why all lexuses are shipped from Japan ? why Sony is made worldwide but luxury electronic brands like TEAC or Marantz are still made in Japan? And Sony top shelf stereos are also made only in Japan. Because only they can ensure the highest quality, if they make it domestically. US will never crack Japanese market, unless they downgrade their culture before it. By the way US can`t put or cancel any tariffs, because they borrow so much money from Japan, that they are dependant on it.
Not all Lexuses are made in Japan – since the 2004 model year, the North American-market RX 350 has been produced in the city of Cambridge, in Ontario, Canada. It is the first Lexus plant located outside of Japan.
I’d also like to know why, if Americans are so stupid and clumsy, Hondas, Toyotas and Nissans manufactured in the U.S. are better made and more reliable than VWs made in Europe.
jurisb: Why do Big 3 buy shares of foreign companies? The same why the never buy shares in their own domestic companies. Why would ford buy shares in Chrysler? to get access to an antique OHV cast iron engine?
Have you already forgotten that Daimler bought ALL of Chrysler, and promptly ran it into the ground through mismanagement? I explained this to you before about two months ago in another thread…should I search for that thread, copy my old posts, and repost them here, to once again educate you on this sorry chapter in Daimler-Benz history?
Why would Ford buy a company that Daimler ruined? Ford doesn’t need it.
jurisb: Thatš why they always buy shares in japanese, so they can get access to their engineering, their platforms, trannies, suspensions, engines. How would Gm benefit getting any ford platform? It is cheaper for Gm to buy shares in Daewoo, and pay to korean government 1250 $ for each vehicle than to find and pay real engineers in continental US.Especially the stress is on FIND. And sorry, but the more immigrants you let it the more you will wonder on lowering quality standards of any engineering.
Why would GM buy Ford, when they compete largely in the same segments, not only in the U.S., but also in Europe, South America and Australia? Why would GM buy Ford platforms, when it has platforms in each of those same segments?
GM isn’t buying Ford because to do so would be stupid, in view of the product overlap, not because Ford doesn’t have anything of value.
GM bought Daewoo because it wanted a foothold in the Asian market, and Daewoo gave this to the company for not too much money. Daewoo also gave GM access to small car platforms and a low-cost manufacturing base. Buying Daewoo was one of GM’s smartest moves.
jurisb: China lacks democracy you say, but it doesn`t lack manufacturing which accounts for 40 percent of GDp, while US share is 14 percent. China lacks freedom of speech, but it doesn`t lack trade surplus of well over 200bn a year. While US with their democracies bleed 800bn every year.
And the old Soviet Union had an even higher percentage of its economy devoted to manufacturing, and look where it is now.
As I explained to you before, the VALUE of manufactured goods in the U.S. has INCREASED over the years, and all countries grow a healthy service sector as their economies mature.
jurisb: Every American wants prosperity, but they want to have an easy job sitting at computer, singing in American idols or selling souvenirs, and they expect their neighbours to sweat out tv sets, furniture or lay asphalt.The problem is that every person should be in the right place and should love their job. But there are much more unpleasant jobs than the good ones. It is easy to find 200 singers who would love what they are doing, yet it is not so easy to find 300 ooo janitors who would be in love with their floor mop, or 2 million assembly line workers who would say that monotonous work at packaging bolts is awesome. People avoid really responsible and hard works. So do countries…….
As opposed to Europeans who want at least six weeks of vacation every year? See, anyone can make generalizations based on what we think we know.
It’s easy to make generalizations, but without actual knowledge of said countries, such generalizations tend to be not worth the time it took to type them.
Geeber-VW is not second tier. I sooner believe Lamborghini to be second tier than VW, because Lamborghini was unable to design even serious radio and A/C controls so they borrowed ones from Audi. How much longer you are going to stick me in the eye this VW minivan that they borrowed from Chrysler? Cut it! I can give you zillion examples of where Detroit borrows platforms from others, Every year, every month. Soon there will no domestic platforms left. VW has Phaeton, by any means world class premium sedan, Touareg, new passat 4 door coupe“ etc. Give me the amount of foreign non-german parts in Phaeton!
And VW is profitable in Europe, using their own domestic engineering potential. By stamping benchmark I rather mean Audi, that is within VW, yet VW itself is a close shave.
You are right, and no. Mazda really uses Ford engines, yet it has nothing to do with USa, They use 100% german built Duratec. And Ford doesn`t share anything in engineering Mazda 6 platform, it was done completely by japanese mazda. Ford has only adopted suspension pieces for US car versions. And exhaust systems due to different engines.
About Gm platforms – most of them come either from daewoo or german opel. Vectra, corsa, Omega and astra platforms were 100% engineered in germany by german engineers. Yet Gm has adopted or tuned them for usage in Cadillacs and pontiacs and Chevys, etc. By the way big deal of that tuning was done in Aussies Holden. By help Gm and ford understand not rolling up sleeves and engineering metal shapes or safety structures or wiring. By sharing stake in platforms they usually understand building an assembly plant for the ready-to-stamp parts.For example new Chevrolet Camaro is being built on german engineered Omega platform and at assembly line they use german Leoni robots. Coincidence?
About Fiat, alfa. They are close to being second tier, because their product range is poor , so is the quality and their engine choices are dismal.
Peougeot, Renault , Citroen- close to being second tier. The biggest engine peugeot, citroen has is still oldtimer 3 litre. And peugeot has borrowed and rebadged Mitsus. So they are flirting with second echelon. Renault also flirts by using Nissan parts and engines, yet they have bigger product range, and a success in truck building. Yet sooner or later french will return to USA.
And, Geeber, japanese are not racist. They don`t hate other nations. They hate people that are lazy and don`t work hard. Coincidentally it happens that mostly non japanese people are more tended towards this category. Japanese are result oriented, Long term thinkers and planners. Which is opposite to US thinking. And japanese have never ever thought of themselves as being superior! Their philosophy is being humble. Every aspect of their achievements they express by their hardware, not slogans or words!
You are right about Daimler having bought Chrysler. At that time I was at my teen years, and already then smelled thar it is going to fail. I checked out the Chrysler cars and their philosophy of cheap materials, old engines, ancient gearboxes and Jurassic suspensions.I thought, jesus how is Mercedes ging to turn it around? Merc couldn`t benefit from it at all. While Chrysler was pumping out previous generation e-klass platforms it didn`t engineer a single bolt for the next gen E-klasse. Sure Chrysler had cash and dealerš net. But merceds needed top engineering to fight bimmers and Audis, which Chrysler could hardly share.
Gm isn`t buying ford because of product overlap? don`t be ridiculous. As if Opel products don`t overlap, or Mazdas, or mercedes itself. i have a question- What does mazda need from US ford division?
You also mentioned Soviet Union. And it was only partly a failure. it collapsed. But have to look back at Russia, where it was before it created Soviet Union. It was poor, uneducated, with no serious industries. During soviet period it experienced the biggest industrial leap in human history. It manufactured everything. The failure was the lack of competition, that would push those companies to spend on R&D and crank out better products. yet governmental claw on prices sustained middle class and reigned the greed. During Soviet union there were no people who couldn`t afford university or who would be shoved out of hospitals because they didn`t have insurance. There were also no people on streets or near dumpsters. There was no chemical , artificial food with preservatives, emulsifiers and artificial flavouring and colouring. no obesity, and excessive balding for middle aged men.
Geeber- US is wasting money, a trillion dollars a year on sustaining 735 bases around the world. See USA has the money, but are unwilling to invest it properly. Can you imagine this trillion being spent on new car platforms, rebirth of manufacturing, civil aircraft engineering, and improving education. See, after a soldier there is nothing of a value left behind, nothing created, not a picture, not mobile phone , tv set or happy house, screwdriver or family album. nothing that could be sold, or taxed with added value. Learn from Japan. They are not superior. They are just smarter. At least in terms of cars 100%.
jurisb: Geeber-VW is not second tier. I sooner believe Lamborghini to be second tier than VW, because Lamborghini was unable to design even serious radio and A/C controls so they borrowed ones from Audi. How much longer you are going to stick me in the eye this VW minivan that they borrowed from Chrysler? Cut it!
YOU walked right into that trap by proclaiming that any company using borrowed platforms is second tier, and lackluster. Which would apparently include VW, as it plans to sell a rebadged Chrysler minivan. And then you attempted to extricate yourself by proclaiming that VW helped develop the current van (which it did not).
I’d suggest doing more research before making these proclamations. In the meantime, if you’re in the hole, stop digging.
jurisb: I can give you zillion examples of where Detroit borrows platforms from others, Every year, every month. Soon there will no domestic platforms left.
And, as I explained, GM and Ford are switching to GLOBAL platforms, which will require input from American and European (and, in some cases, Australian) engineers and product planners. This is a SMART strategy, and one that will help them to better compete in the marketplace.
jurisb: VW has Phaeton, by any means world class premium sedan, Touareg, new passat 4 door coupe“ etc. Give me the amount of foreign non-german parts in Phaeton!
Would that be the same Phaeton that landed with a big, fat thud in the U.S.? Yes, ALL car makers should emulate that lemon.
Given the dismal reliability (and sales) of the Touareg, I’d suggest that all of those German parts aren’t doing much good. Perhaps VW needs to learn a few lessons in reliability (not to mention production engineering and customer service) from the Japanese.
jurisb: And VW is profitable in Europe, using their own domestic engineering potential. By stamping benchmark I rather mean Audi, that is within VW, yet VW itself is a close shave.
And VW LOSES money in the U.S.
jurisb: Mazda really uses Ford engines, yet it has nothing to do with USa, They use 100% german built Duratec.
Wrong. Do you just make this stuff up? The Duratec V-6 is BUILT in Cleveland, Ohio.
Here is the entry in Wikipedia:
The 3.0 L Duratec 30 or Mazda AJ was introduced in 1996 as a replacement for the 232 in³ (3.8 L) Essex V6 in the Taurus/Sable. It has 2967 cc of displacement and produces between 200 and 240 hp (150 and 180 kW). The same basic engine is used in the Jaguar S-Type, Lincoln LS, Mazda MPV, Mazda6, Mondeo ST220 and many other Ford vehicles. It is essentially a bored-out (to 89 mm) Duratec 25 and is built in Ford Motor Company’s Cleveland, OH #2 plant. A slightly modified version for the Ford Five Hundred entered production at the Cleveland, OH #1 plant in 2004. (emphasis added)
Did Ohio secede from the United States and join Germany?
jurisb: And Ford doesn`t share anything in engineering Mazda 6 platform, it was done completely by japanese mazda. Ford has only adopted suspension pieces for US car versions. And exhaust systems due to different engines.
Again, completely wrong. Ford expanded the previous-generation Mazda6 platform to create the Fusion (it was concerned that the Mazda6, which is a sportier vehicle, would not be big enough for American buyers in the family sedan segment). This involved a considerable amount of rework and reengineering.
jurisb: Yet Gm has adopted or tuned them for usage in Cadillacs and pontiacs and Chevys, etc. By the way big deal of that tuning was done in Aussies Holden.
The only North American Cadillac that used a European platform was the ill-fated Cadillac Catera, which was basically a rebadged Opel. It was discontinued almost a decade ago.
The current CTS, SRX and STS all ride on the Sigma platform, which was engineered in the U.S., although GM took it to Nurburgring, Germany, for final development work on chassis tuning.
The DTS rides on a modified version of GM’s front-wheel-drive, full-size platform, which debuted in the mid-1990s with the Buick Riviera and Oldsmobile Aurora.
The XLR shares the Corvette platform, which was developed and engineered in the U.S.
The Escalade series rides on GM’s GMT-900 platform, which was developed and engineered in the U.S.
jurisb: For example new Chevrolet Camaro is being built on german engineered Omega platform and at assembly line they use german Leoni robots. Coincidence?
Once again…wrong. The upcoming Camaro will be built on the Zeta platform, which was engineered by Holden of Australia.
Again – are you just making this stuff up as you go along? I could make a career out of correcting your incorrect statements and postings.
jurisb: And, Geeber, japanese are not racist. They don`t hate other nations. They hate people that are lazy and don`t work hard.
Read how the Japanese treated the Chinese and Koreans during World War II. Then get back to me about how they weren’t really racist and only hated foreigners because they were supposedly “lazy.”
For years, a Japanese native who lived overseas for any length of time was looked down upon as being “tainted” by that outside influence.
Those attitudes have softened considerably in recent years, but their effects still linger, which means that Japan isn’t about to open its borders to unlimited immigration. It’s not because the Japanese are worried about the effect that immigrants will have on their industries that require precision manufacturing capabilities.
jurisb: And japanese have never ever thought of themselves as being superior! Their philosophy is being humble. Every aspect of their achievements they express by their hardware, not slogans or words!
Complete nonsense. You obviously have NO clue about Japanese history, or how they view themselves.
jurisb: I checked out the Chrysler cars and their philosophy of cheap materials, old engines, ancient gearboxes and Jurassic suspensions.I thought, jesus how is Mercedes ging to turn it around? Merc couldn`t benefit from it at all.
And yet the geniuses at Daimler, even given a decade and complete ownership of the company, only succeed in…making things worse, and ended up basically PAYING someone to take the company off their hands.
jurisb: While Chrysler was pumping out previous generation e-klass platforms it didn`t engineer a single bolt for the next gen E-klasse. Sure Chrysler had cash and dealerš net. But merceds needed top engineering to fight bimmers and Audis, which Chrysler could hardly share.
More excuses. Sorry, won’t wash. If Daimler could not spare the engineers to improve Chrysler, it should not have bought the company in the first place. And note that Chrysler’s products, with few exceptions, got WORSE after the merger, which hardly speaks well for Daimler’s managerial abilities.
You are also apparently unaware that Chrysler had a large cash reserve that Daimler promptly raided, and that Daimler further raided the company by charging obscene amounts of money for “consultation” services.
jurisb: Gm isn`t buying ford because of product overlap? don`t be ridiculous. As if Opel products don`t overlap, or Mazdas, or mercedes itself. i have a question- What does mazda need from US ford division?
Again, more nonsense. Ford and GM compete DIRECTLY with each other in virtually every segment. Why would a company buy another company that offers all of the same basic products? Why would GM need the Fusion, when it has the Malibu? Why does it need the F-150 when it has the Silverado/Sierra?
They appeal to the EXACT same market segment.
That is different from having some products overlap slightly (as occurs with all manufacturers – for example, the high-line Civics sell for as much as the lower-line Accords).
As for what Mazda needed from Ford – you are apparently unaware that, in the early 1990s, Mazda was virtually bankrupt, and would have gone out of business if not for Ford’s purchase of a controlling interest in the company. Ford provided Mazda with much-needed cash and managerial resources to turn the company around, as well as access to the Duratec engines.
And here in the U.S., Ford and Mazda appeal to different sets of customers. There is very little cross-shopping between the Ford and Mazda brands.
jurisb: You also mentioned Soviet Union. And it was only partly a failure.
Sure…and the maiden voyage of the Titanic was a success except for the iceberg.
jurisb: But have to look back at Russia, where it was before it created Soviet Union. It was poor, uneducated, with no serious industries. During soviet period it experienced the biggest industrial leap in human history. It manufactured everything.
There was manufacturing in czarist Russia.
jurisb: yet governmental claw on prices sustained middle class and reigned the greed. During Soviet union there were no people who couldn`t afford university or who would be shoved out of hospitals because they didn`t have insurance. There were also no people on streets or near dumpsters.
I see the Soviet propoganda machine is still having an effect, almost two decades after the collapse of the Soviet Union.
If the Soviet system “reigned in” greed, please explain why the party officials wanted those dachas, foreign travel, access to foreign goods, privileges to shop at special department and food stores and other perks that were unavailable to the masses they supposedly cared so much about.
jurisb: There was no chemical , artificial food with preservatives, emulsifiers and artificial flavouring and colouring. no obesity, and excessive balding for middle aged men.
The only reason there was no obesity was that most people couldn’t buy enough food to really overeat. Plus, after eating, they stood in line to buy more food, which certainly burned a share of calories.
And if the USSR was this bucolic Eden, I’d like to know why alcoholism was rampant, and why life expectancy for Soviet men was DROPPING in the 1980s.
Geeber. Sure alcoholism was and still is the biggest health issue in Post Soviet territories. It has nothing to do with Soviet union or communism. It has to do with stupid majority of slavic people( sorry!) that consider vodka drinking as manly.
And you are wrong that people didn`t have enough food to become obese. They just didn`t have so much genetically modified and synthetic food and had physically more demanding jobs. By the way people were doing much more sports because every district supported free sports clubs. Sports was in fashion, and not a way of making living. Of course some people using governmental ties, used to have rich mansions( which pale in luxury compared to westerners villas), and volga cars, that were kinda luxury. Yet the difference between Simple middle class Lada and elite Volga was not so big. Today the poorer seem to become even poorer, hardly making both ends meet while barely affording even a bicycle, while the rich ones don`t even know how many yachts and cars they own. I don`t want that you give your money to the poor. But they deserve a chance to earn more. Give them a chance for education or attaining skills and they will not only feed themselves they will improve economy of the state.
I think you have also noticed, that rich people are never obese in USA. Why? They have enough money to overeat tenfold. THey don`t become fat, because they eat good food( plus expensive sports clubs), while underpaid workers go for the cheapest items- modified, synthetic and low value.
And I am not under any propoganda machine. I personally hate russia, hate majority of their people and see also bad things in Soviet Union. But I can`t deny their achievements , and if given a chance would aply many of them. For example free dental care . Sometimes I choke under capitalism because everywhere you turn only money makes you move, and it makes us similar to animals. But I want to be a man, and not by a name, but by essence, and character. Socialism at least pretends to do more beyond money…..
By the way in Soviet Union GDP was irrelevant because total size of economy was measured by manufactured units- fabrics in meters, steel in tons, timber in square meters etc. It gave real indicators.
Geeber and it doesn`t matter if products overlap, it matters if you can sell them, so don`t worry about what companies Gm would buy or not. They would never buy domestic, exactly for the same reason Soviet emmigrants run to territories, anywhere, where there arent their brothers and sisters.
You mentioned that some Chryslers products got worse after the merger. Mention ,please those cars that were better before the merger!And I agree Daimler should have never bought Chrysler. What were they thinking of?
Geeber I don`t care what japanese did to China or Korea in WW2, I know that their asset is precision manufacturing and they will do everything to preserve it, even if it takes decrease of population. When you see those smiling japanese tourists with cameras, behold , when they return home, they give a lesson to their kids, and not with smiles in their faces.
Zeta is engineered in Australia by Holden. Did Holden start if from a scratch? Nope. They took Opel Omega and derived it. By the way Gm didnt learn from Cater enough so they took exactly the same car , sent it to Australia and they made Holdem Monaro even using 94`Opel Omega exterior parts. And the only Caddy sedan running on pure GM platform is DTS. Also XLR is GM piece, and trucks that are based on GMt-900. ( yepp, even your Chevy HHR is opel platformed, opel engined, opel gearboxed)
ANd Geeber if Gm is switching to global platforms and it is so great, how come they bleed more than wounded aliens in sci-fi thrillers? How come Toyota doesn`t steal this idea and start buying platforms according to portfolio and market paradigms.Must be blind. Wait, they posted about15bn profits last year. Must be just a coincidence.
And Duratec 3liter engine is a version of 2.5 liter engine which itself debuted in German built Mondeo 96, while was not available in US at all. And it doesn`t matter that they make it in Cleveland, Mercedes is also made in Alabama, yet I don`t call it an american car. And if Phaeton failed in US, I am sorry for the US , not for VW.
jurisb: Sure alcoholism was and still is the biggest health issue in Post Soviet territories. It has nothing to do with Soviet union or communism. It has to do with stupid majority of slavic people( sorry!) that consider vodka drinking as manly.
And the Irish and the Germans consider drinking alcoholic beverages to be manly, too. And the French love their wine.
But you don’t see the rampant alcoholism in those countries that you did in the Soviet Union. Nor is life expectancy declining in those countries.
Sorry, but that excuse won’t wash.
jurisb: And you are wrong that people didn`t have enough food to become obese. They just didn`t have so much genetically modified and synthetic food and had physically more demanding jobs. By the way people were doing much more sports because every district supported free sports clubs. Sports was in fashion, and not a way of making living.
They didn’t have much food, period, and what the masses did have they either grew themselves or spent time waiting in line to buy at a state-owned store (which usually had a lousy selection of poor-quality food).
jurisb: Of course some people using governmental ties, used to have rich mansions( which pale in luxury compared to westerners villas), and volga cars, that were kinda luxury. Yet the difference between Simple middle class Lada and elite Volga was not so big.
The ability to travel abroad, own a vacation home and a car, and shop in stores stocked with foreign goods unavailable to the masses constituted HUGE differences between the party officials (and the well-connected) and the masses.
jurisb: I think you have also noticed, that rich people are never obese in USA. Why? They have enough money to overeat tenfold. THey don`t become fat, because they eat good food( plus expensive sports clubs), while underpaid workers go for the cheapest items- modified, synthetic and low value.
While it is true that rich and some members of the middle class are thin because they work out regularly and watch what they eat, it is not true that the poor are more likely to be obese because they don’t have access to good food.
The poor are overweight because they avoid physical activity, never learned to cook and therefore spend their money on junk. This is not because they can’t afford anything better, but because they don’t want to spend time preparing more nutritious food. They are also more likely to drink high-calorie alcoholic beverages (i.e., beer).
jurisb: Socialism at least pretends to do more beyond money…..
The problem is that it only pretends…
jurisb: By the way in Soviet Union GDP was irrelevant because total size of economy was measured by manufactured units- fabrics in meters, steel in tons, timber in square meters etc. It gave real indicators.
Size is meaningless if what is produced has no value. Plus, the idea that services don’t generate wealth, and therefore don’t count when calculating GDP, has been rejected by every reputable economist.
jurisb: Geeber and it doesn`t matter if products overlap, it matters if you can sell them, so don`t worry about what companies Gm would buy or not.
A company isn’t going to gain anything from a merger if it has to spend time consolidating overlapping dealer bodies, model lines and factories. The goal of merging two companies is to build upon their complementary strengths, not worry about two lines or models that compete with each other.
This is what hindered the British Motor Corporation – it never rationalized its Austin and Morris lines, which competed in the same market segments for largely the same customers. This resulted in rampant badge engineering and corporate infighting.
jurisb: You mentioned that some Chryslers products got worse after the merger. Mention ,please those cars that were better before the merger!
Stratus/Cirrus (later renamed Sebring); the minivans; Neon versus Caliber.
jurisb: Zeta is engineered in Australia by Holden. Did Holden start if from a scratch? Nope. They took Opel Omega and derived it. By the way Gm didnt learn from Cater enough so they took exactly the same car , sent it to Australia and they made Holdem Monaro even using 94`Opel Omega exterior parts.
No. The Opel Omega was being discontinued, so Holden, with input from American and European engineers, developed the Zeta platform to replace it. The Zeta platform is all-new. Holden certainly didn’t discard everything from the Opel Omega platform, but to say that it merely updated the Omega platform to create Zeta is incorrect.
jurisb: And the only Caddy sedan running on pure GM platform is DTS. Also XLR is GM piece, and trucks that are based on GMt-900. ( yepp, even your Chevy HHR is opel platformed, opel engined, opel gearboxed)
Again, no. First, Opel and Holden are wholly-owned GM subsidiaries, so they count as part of GM.
Second, the Sigma platform that is used for the CTS, SRX and STS was developed in North America, with input from Europe. The final chassis tuning was conducted in Germany.
jurisb: ANd Geeber if Gm is switching to global platforms and it is so great, how come they bleed more than wounded aliens in sci-fi thrillers? How come Toyota doesn`t steal this idea and start buying platforms according to portfolio and market paradigms.Must be blind. Wait, they posted about15bn profits last year. Must be just a coincidence.
Toyota prefers to grow from within, unlike Daimler or GM. It doesn’t need to buy platforms – it already has them in-house. It develops them itself. It adapts platforms to different countries, which saves money by using common components where possible, but allows the distinctions demanded by various markets.
Honda does this, too. Hence, the Civics sold in Japan, Europe and North America ride on a common platform, with changes made for each market (hatchbacks for Europe, for example).
jurisb: And Duratec 3liter engine is a version of 2.5 liter engine which itself debuted in German built Mondeo 96, while was not available in US at all. And it doesn`t matter that they make it in Cleveland, Mercedes is also made in Alabama, yet I don`t call it an american car.
First, you specifically said that the Duratec used in the Mazda6 was built in Germany. This is incorrect. So, yes, it does matter.
It also matters because you claimed that the Duratec was made in Germany to prove that Americans cannot handle the manufacture of a precision-built engine used in a Mazda. This is obviously incorrect – Mazda happily uses American-built engines for several of its vehicles, and even builds the North American Mazda6 at its Flat Rock, Michigan, factory (which also builds the Mustang).
Second, Ford developed this line of engines with the goal of using them throughout the world. The Duratec has been modified for different markets (with input from local engineers) and manufactured in different markets. It is used throughout the world, which is a smart strategy for Ford.
jurisb: And if Phaeton failed in US, I am sorry for the US , not for VW.
You should save your sympathy for VW, which lost a bundle on that turkey. People with $70,000+ to spend on a new vehicle do not want to spend it on a VW. Unfortunately, management didn’t realize this.
Businesses fail all the time….Whats the BIG deal!
oh…I’m sorry about all those $40.00 an hour jobs
for watching a machine do your work…thats really awful.
The USA is THE country of change!!!!
I hate that the auto business has lost its way but,if it was my business,who would give a sh_t?
Let them fail or find a way to survive..those are the only options left.
I wont let my tax dollars bail them out If I can help it ,and neither should you.
Butcher the long time “cash cows” and move on…