What with all this End of Days news swirling around the autoblogsphere, you’d kinda hope that Detroit News columnist John McCormick could find something useful to say about the plight of his hometown heroes. And he does– if you’re a Big 2.8 auto exec. Yes, McCormick’s column inches are devoted to a simple message: buy a Chevy Traverse, Dodge Journey or Ford Flex! If it wasn’t so tragic, Big Mac’s lead could be considered comedy gold. “It seems like Detroit’s automakers can’t get an even break. Just as General Motors, Ford and Chrysler are launching vehicles better tuned to the needs of American consumers slammed by high fuel prices and a soft economy, the world plunges into a massive financial crisis. Now with mounting monetary pressures, the very existence of some automakers is in question. Meanwhile, consumers, even if they are in the mood to buy a vehicle, struggle to obtain financing because of the interbank credit freeze. It’s all very troubling, yet at the same time for those plucky enough to head to dealer showrooms, the Big Three have some excellent vehicles in their lineups and more on the way. And while the present slump in the price of oil should not be seen as a permanent trend, today’s relatively cheaper gas does bring certain larger vehicles back into contention. Consider, too, that Detroit-area dealers are probably more eager than ever to work with buyers to complete a sale.”
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Call me a heartless cynic (I’ve been called worse), but let me predict what would have happened were the economy not now plunging like a skydiver with a failed parachute.
A bunch of buyers would check out the Malibu, Flex, et al. They would find them surprisingly competitive with the current Japanese, German and Korean options. Sales in the first two years would be promising — not enough to seriously challenge the market leaders, but pretty good.
Then the rot would set in. Early buyers would discover the little bugs the automakers didn’t catch before launch (e.g., the tendency to spontaneously catch fire). They would run into the typical Big 2.8 dealer service stonewall. Buyer confidence would begin to drop. To compensate, incentives would pile up, ensuring each of these vehicles victory in the rental car sweepstakes.
Then the Japanese and Koreans would roll out their next generation of vehicles, which would start to make the Malibu, Flex, et al seem a little behind the times, not to mention all those pesky problems. Disheartened, the Big 2.8 would respond by starving these models of development funds, and moving on to the Next Big Thing. The current Malibu would soldier on until, say, 2016 with minor facelifts, becoming increasingly uncompetitive.
By then, the Next Big Thing (q.v.) would have debuted, and the cycle would begin again.
Stop me if you’ve heard this one before…
One year ago today GM stock was $37.77 per share, today it is at $6.26. Just a massacre for stockholders and retirees. The top managament still have the huge golden parachutes. Lovely.
I think one real enemy of new car sales is the outstanding buys currently available in the used market. 20 grand can buy you a new econobox or a very sweet 2 yr old mid lux lease return.
Gas mileage? @ $2/gallon, that’s yesterday’s problem.
Yeah Detroit does have alot of stick-to-it-ness aka doesn’t do baby steps in the right direction…
Wonder where that problem originates? Is it a bean counter thing that has math that shows diminishing returns so the management quits early and eats the losses or is it a management thing where they think if they can’t be first in class from the get-go they aren’t even going to compete (see GM minivans).
This to illustrate the painting above; it is a poem on Nero and burning Rome to the ground ( written by Victor Hugo).
Just substitute Rome with Detroit, Christians by UAW, slave by US Govt., roses with $$$ aid package. The model still applies today (this was wwritten in 1825)
“I’ve destroyed Rome, in order to build a better city.
But her downfall at least has broken the back of the rebels.
No more Christians! We are going to exterminate all of you!
You are the cause of the grave punishment of Rome.
Death to you!
Slave bring me some roses–
The perfume of roses is sweet.”
Consumers struggle to obtain financing?
Isn’t Toyota offering 0%?
It should be “Consumers are struggling to obtain financing from Domestic lenders”