Former NADA president and prolific car dealer Ron Tonkin has gone public with a new plan to fix the mess we call Detroit. And you’ll never guess what it isn’t. You see, Tonkin believes that government loan programs written with Detroit in mind are just not enough of a non-bailout. The federal shore-up of domestic auto lenders? Also insufficient. Tonkin thinks the country needs a non-bailout that’s easy to understand and, most importantly, one that doesn’t cut the dealers out of the non-bailout loop. So he’s written a letter to the D2.8’s executives calling on them to lobby President Bush for a $2,500 consumer tax credit towards the purchase of any new GM, Ford or Chrysler product. “I don’t know what I expect to hear from them,” Tonkin tells KATU TV. “I just hope that it triggers a response of some sort. And I think that if they really sit down and think about it, maybe this is a key that will unlock some progress.” Our friends at KATU are quick to point out that as well as not being a bailout, Mr Tonkin’s proposal isn’t motivated by self interest. After all, “if you think this is Tonkin’s way of drumming up business for himself, think again. Of his 18 dealerships, only two are domestic.” Read Tonkin’s credibility gulf after the jump.
Gentlemen:
I am a multi-franchised automobile dealer, however less than 20% of our dealerships are domestic, so this letter is anything but self serving.
The importance of the domestic side of our industry is paramount to the employment base and health of all America. Much of American employment depends on a successful and healthy industry which in turn filters to employment in allied and supply side industry as well as thousands of dealerships and their employees. In short, we need what we don’t have. And it isn’t quality. Our domestic products are as good or better than anything now produced worldwide. The trouble is, perception lags reality by several years, and we are not getting people into our showrooms to see what we have. Right now you could spend millions advertising until you are blue in the face and I don’t think you would achieve meaningful results.
What I am asking is for the three of you to call on President Bush and his advisors immediately and ask for a $2500 tax CREDIT for anyone purchasing a new GM, Ford or Chrysler product for the balance of the year. This would not be a “bail-out.” Keeping you profitable and all the people employed would more than make up in taxes what the stimulant package would cost. On the other hand, closing more plants and thousands of unemployed would be disastrous. We need help and we need it now. Indeed, this is a time for action. This will work!
Sincerely,
Ron B. Tonkin, Pres./CEO
Ron Tonkin Dealerships
See, this is the problem (and I completely understand it)….the gov bails out a sector, and now suddenly everyone else wants something too. Personally, nobody should be bailed out (unless I get a check every time AIG turns a profit in the future, they don’t get a check from me when they have big losses), but if bailouts are suddenly gonna happen, why would banks get the goods while everyone else is left to go under? Talk about incredibly unfair (but what do we expect, honestly).
Same thing with helping homeowner re-adjust the principle on their home. Uh, no. Why should you get to re-adjust your purchase price while your neighbor has been making his payments, on time, bought a house he can actually afford, and gets nothing?! You made an investment. No rule anywhere says home values have to rise forever (how come SE Michigan homeowners haven’t been getting anything for their plummeting home values the last 5 years?).
You know, I bought a GTI. I want the government to cover my depreciation on the car. Also, gas is expensive and I can’t afford to drive 20,000 miles in my 15mpg truck. I want the government to pay for my gas. Also, I have a lot of stock and 401k that has lost gazillions of dollars. I want the government to put the money back into my account that I lost. See how ridiculous that sounds?!
We all make investments. You live with your choice. I understand the logic (if they got theirs I want mine), but this crap is getting insane. The gov doesn’t owe you. I don’t owe you. Nobody gives me anything for being smart with my money. How messed up is that?
I like it for one reason. It is the only bailout idea on the table that is contingent on selling product. Given the Detroit Three product mix, it does need to be scalable, to about 4k, but overall, at least it rewards results.
Anyone?
Jerome 10>
Well said.
I have saved, saved, and saved some more to put a large down payment on the car I wanted. My first car was at 29 years old…..which I just paid off a year ahead of time. I saved to pay off my wedding (6 figures) and have no debt from that. When everyone was buying homes at overinflated prices the last couple of years, I rented instead and paid my cc bills.
I currently carry 0 revolving debt, and my only monthly obligations are my car insurance & rent.
Where is my reward for being responsible?
Oh wait…I have to go buy an overpriced home with $0 down, or be a large bank with irresponsible lending practices to get a bailout, my bad!
After losing my job several times during the dotcom boom I saw the writing on the wall and started studying a tangent to my field and I made my own future. I work my butt off every day (average 50-60 hours/week) & also study on my own 10-20 hours per week at home. When I was in college I paid my own way, working 35 hours per week loading UPS trucks while taking 15 hours of classes per week and still got a B average or higher. I ended college with very little debt which was quickly paid off. I had no friends in college, no parties, no living on campus, but I did have my bills paid and was ready to start my life in my early 20’s.
People really need to take responsibility for themselvs & their own situation.
Problem is (beyond getting the government involved again) is the majority of people are not going to buy a domestic vehicle, even with a $2,500.00 tax credit. Chrysler just put “40% off MSRP” on their trucks and they sit gathering dust. Ford is offering “$10,000.00 off sticker on extended cab trucks” and they gather dust. Toe tags sales have been tried repeatedly, yet there are acres of unsold vehicles at most dealerships.
Unfortunately, much too little too late.
To TTAC: Can someone within your experts delve into the subject of what happens to “factory warranties” if a manufacturer goes bankrupt?
Thanks, keep up the excellent work.
Robstar is my new hero! His approach is exactly where I’m trying to head (selling off quite a bit of stuff to clear the debt). Where did fiscal conservatism go? Give people $2500 to go further into debt?? Brilliant idea. Why is it that it was okay for my parents to save and save in order to buy their cars in cash, but not us? I remember sitting at the coffee table in the living room when I was young, staring at the $8000 or so that would be handed over the next morning for the purchase of our new 1981 Toyota Corolla. Or the dealer’s facial expression in 2003 when my mother politely told him that she wasn’t going to finance her new Corolla, but intended on paying for the vehicle (all $19,000, tax, title, etc…) completely out of pocket.
These bailouts are idiotic, and so is baiting folks to go further into debt.
I really doubt that you could have a bald-faced tax credit to move specific brands of cars.
Do we really want to keep patching up problems rather than facing them? That’s how GM ended up in the mess in the first place, I don’t want the country to do the same long slow slide into bankruptcy, which is going to happen if the government borrows money to patch up every problem we have. Sometimes life sucks. People need to deal with it. Borrowing to fix the problem of too much borrowing never ends well.
Totally agree Jerome10. I lost over 30% of the value of my mutual funds this year. Where’s my bailout? I also bought a home that I really could afford despite pressure by real estate agents that I could afford more. I always pay cash for my cars and expect to have said home paid off before the end of next year, after 8 years of ownership. I think there are many more people like us than people who were irresponsible personally and/or corporately. Unfortunately, we don’t seem to have the voice or the ear of the politicians, and anybody against bailing out the Joneses, who are getting thrown out on the street, is labeled a cold hearted so and so.
HitGuy – Factory warranties remain in force in Chapter 11 filing. Maintaining warranties is deemed essential for the debtor to continue its business. An exception might be made if warranty claims caused the filing, but that’s not the case here.
We should have taken the same stance with bailouts as we have with Terroists. “America will not negotiate with terrorists”.
Know what would make more sense? Give that 700billion to every man and woman between the ages of 21-70 who make s a combined income less than $250,000. Everyone would have paid off their cars or houses or bought new ones. Crisis averted!
This is so myopic. By giving the domestic car makers subsidies on their products, we (the US) can’t complain when other countries slap tariffs on US exports of the things we are good at. I mean if Europe decided to slap a 20% tariff on all US computers and software in order to protect their domestic computer/software industry, then we would have no grounds to complain.
Dumb idea…
If Detroit wants to convince the US customers that their cars are just as good, then then crank up a meaningful warranty and offer a buy-back guarantee. Put your money where your mouth is.
Jerome10 for President! Oh wait, too late. OK I’ll vote for the next nearest person.
Chuck Baldwin for President!
There’s a REAL Presidential Debate (you know, not just the two major disasters – I mean parties) tonight at 9pm EST on C-SPAN
http://www.constitutionparty.com/news.php?aid=785
…$2500 tax CREDIT for anyone purchasing a new GM, Ford or Chrysler product for the balance of the year.
I just bought a Civic Coupe and paid $1500 in sales tax, not to mention the added license costs of a new car. Why not a Honda as well?
The Big 2.8 and their union thugs should be required to compete like everyone else and I’ll be damned if I’ll ever buy another one of their cars.
Oh my this is disturbing. Mr Tonkin needs to get a clue that buying shiny new cars is not a requirement in life. Every car purchase beyond just basic transportation is a luxury purchase.
Just like the easy credit mortgage industry caused real estate prices to be artificially inflated, car loans did the same thing to car prices/sales. Look if people cant get the crazy home loans they stop offering obscene prices for homes and the market gets “real”. Same with cars now that hopefully the 7 year loans and such have stopped. People dont need cars with 15 airbags that call them when they need an oil change.
There is a whole fake economy out there (loans and credit card balances) that business seem to forget about. This reckoning is needed.
Being from Portland, I am familiar with Tonkin’s dealership. Oldest Ferrari dealership on the west coast, on 122nd ave. He is familiar with automotive disaster – he sold both Deloreans and Vectors when they were new!
But I’m not sure this is really helpful – or why he cares. Would the 2500 be no matter what the price of a car? Even with a 2500 discount I couldn’t take a caliber.