We are like fish, swimming wide-eyed through an ocean of blood, that no longer taste the horror in which we are suspended. On Dec. 19th, eight days after the automotive bailout bill failed in the senate, former President George W. Bush used his executive power to direct $13.4 billion to the automotive industry—$9.4 billion for General Motors and $4 billion for Chrysler. This is a measure only 36 percent of the country supported, according to a December CNN poll. The cost of this bailout will be tossed atop the $10.6 trillion U.S. debt, according to the treasury. This is a debt our generation will be forced to spend its lifetime repaying.
To add insult to injury, one of the first things Chrysler did with its money was take out a full-page, color ad in The Wall Street Journal and USA Today entitled “Thank You America — thank you for investing in Chrysler” signed by Bob Nardelli, Chrysler’s CEO and Chairman.
It’s hard to imagine something more disgusting.
Usually when one says “investing,” one refers to voluntarily exchanging money for a share in future profits. But the “investing” of Bush’s executive order was involuntary. It occurred not through the invisible hand of the free market but through the iron fist of government power.
To call this “investing” is to kidnap and call it a date. To call this “investing” is to enslave and insist that it is employment. To call this “investing” is to rape and plead that it is lovemaking.
One does not have to be an economic expert to appreciate the reality of this situation. The government finances the automakers’ bailout through taxation, through you.
If you do not pay your taxes, then you will receive a court summons. If you do not answer your court summons, then men with guns will come to your door. If you resist them, then you will be shot.
The Detroit Bailout—like all bailouts and all government action—is made possible by the threat of violence. This is the gun in the room Nardelli wants you to ignore. This is the gun that forces Nardelli to lie.
As Alexander Solzhenitsyn wrote, “violence can only be concealed by a lie, and the lie can only be maintained by violence. Any man who has once proclaimed violence as his method is inevitably forced to take the lie as his principle.”
If one wishes to speak with honesty and clarity about our society, one must begin by pointing out the difference between voluntary and coercive action; and by pointing out the gun.
This is the gun that forces people to act against their self-interest. This is the gun that damns politicians to a lifetime of deceit and bribery. This is the gun that both political parties will gladly wield in exchange for the glories of political power.
Despite having to crawl to Congress late last year, Chrysler was stable enough to donate almost $900,000 to political causes in the latest election cycle. United Auto Workers, who begged and pleaded alongside them, gave more than $2 million to the Democrats in 2008, according to opensecrets.org. These voluntary measures, unlike the bailout, could be considered an investment.
When Bush used his executive power to pay back Chrysler, the democratic process failed to represent the will of the people. But we still have the ability to vote with our dollars. The next time you need to buy a car, don’t feel pressured to “Buy American.”
Nobody should blindly buy anything. However, many people, for valid reasons or not, blindly ignore American. That is a shame for obvious reasons. When I buy vehicles, I always look at all models in the given class. Sometimes that means an American product ends up in the garage, sometimes it doesn’t. I feel that I don’t owe anybody an apology for that.
Hating the United Auto Worker World is enough for me to buy anything BUT an American automobile. I despise the lack of quality and durability of the big 3 companies. They are horrible organizations led by idiotic morons out for their own self interests.
“TTAC continues its quest to post article after article that will serve no purpose than to aid in damaging the domestics.”
Yes, the U.S. domestic auto industry will be/ is crippled not by their poor management decisions, generally uncompetetive product, or unsustainable liabilities, but by commentary from a website.
The involuntary nature of taxation did not start with the bailout of US auto manufacturers.
There are many things we are forced by our governments to do (or pay for) that we don’t agree with and ultimately the government’s authority against individuals is backed by force – though usually by taking your property away rather than by shooting you.
Although this article is colourful – it is not, in my view, anything like “The Truth”. It’s just spinning, like Nardelli.
Let’s see, the US auto companies:
1) Wouldn’t give me a job.
2) Sold me poor quality cars.
3) Their dealers treated me like shit.
Of course it’s my patriotic duty to be loyal to them as an American. When are they going to start being loyal to me?
The bailout of Chrysler bothers me far more than the bailout of GM or even the insanely criminal financial industry. Chrysler is a subsidiary of Cerberus Capital, a private company made up of many other subsidiaries with billions in reserve.
Cerberus had no right to ask the taxpayer to shore up their piss poor investment.
The Detroit Bailout — like all bailouts and all government action — is made possible by the threat of violence. …
To characterize legal enforcement of laws passed by elected representatives as violence, is like kidnapping and calling it a date. …
If one wishes to speak with honesty and clarity about our society, one must begin by pointing out the difference between a representative republic and a democracy.
“This is the gun that forces people to act against their self-interest.”
Yes, because if everyone acted in their own self-interest ALL the time we’d have come so much farther as a society.
Not that I agree with the bailout (GM and Chrysler deserve to die, Ford – not so much). But government makes mistakes; that doesn’t mean their very existence is a grave miscarriage of justice.
“I despise the lack of quality and durability of the big 3 companies”
Typical anti domestic venom. Totally baseless. Simply an untruth. But if you keep saying it over and over and over…
Dynamic88 :
I believe you’re mischaracterizing the statement. Mr. Morgan is stating the fact that the threat of violence underpins all governmental actions.
Whether you agree with the application of that power, the underlying assumption is sound.
There is a feedback loop, of course. We have elections to alter the use and/or curtail the abuse of the public trust/will.
But, lest we forget, the bailout bridge to nowhere failed in the United States Congress. It was revived by the president by executive order.
Was it an end run around the will of the people? It sure as hell (small “h”) looks that way to me. Regardless, we, as taxpayers, are FORCED to pay for this folly. And then criticized if we choose not to support the bailout through our decisions as consumers.
Even if you think that Chrysler should survive, or GM, at the taxpayers’ expense, that’s got to stick in your craw. Of, if it doesn’t, it should.
What is an American car? That Canadian Impala with the Chinese engine? An Australian G8? The Mexican built Focus on the Japanese platform? A Chrysler 20% owned by Germans, and 35% by Italians built in Mexico? I live in Warren,Mi…and have no idea what an American car is. If they want me to buy one, build one here. And build it right. And guarantee resale for 10 years.
I believe your mischaracterizing the statement. Mr. Morgan is stating the fact that the threat of violence underpins all governmental actions.
With respect to both you and Mr. Morgan, I believe most people agree with most govt. action – given that laws are passed by our elected reps, and our elected reps are frequently re-elected- and therefore public interest underpins most governmental actions.
Even if you think that Chrysler should survive, or GM, at the taxpayers’ expense, that’s got to stick in your craw. Of, if it doesn’t, it should.
I’m sorry, I may be a bit dense here, but I’m not sure what is supposed to be sticking in my craw – if it’s being forced to pay my taxes, it doesn’t, for the reasons I’ve noted above. If it’s being criticized for not buying American, I take that on the chin.
There are the few who refuse to obey the law, and enforcement action is taken against them. Enforcement can be characterized as violence, I suppose, but most people don’t need to be threatened. If one does not pay taxes, one’s money doesn’t go to Chrysler, but then, it also doesn’t go to roads, schools, police departments, fire departments, the military, Katrina victims….
Was it an end run around the will of the people? It sure as hell (small “h”) looks that way to me. Regardless, we, as taxpayers, are FORCED to pay for this folly. And then criticized if we choose not to support the bailout through our decisions as consumers.
We are indeed FORCED to pay for the bailout, whether we think it’s folly or not. I’m not sure a true democracy -with several hundred million voters weighing in on every bill is workable. But hey, maybe we should give it a try. I am sure that if paying taxes were optional, there would be no schools, roads, police, firefighters, EMTs, etc. Most of us have accepted the fact that the govt. will collect taxes, and will spend it in a variety of ways, some of which we agree with, and some we don’t. That’s life. Most of us have made peace with this fact. There are 300 million of us here, sometimes things won’t always go my way.
I don’t know who is criticizing you for not buying an American car, but it’s hard for me to believe you feel much pressure. I don’t, and I live in Michigan.
IF AMERICAN ONE SHOULD TRY TO BUY AMERICAN
I have no loyalty to the USA, I am not an American with not ties to the States. So why do I make the statement above?
1) Not every car that is made in America is bad, there are quite a few American cars that have good value, good reliability and could stand up with the best imports.
2) I have an Accord, but given a hot summers day traveling long distances, I would take a good American Car with its effective Air Conditioning over an import.
3) Despite hatred of American Auto Workers expressed above, I would warrant that good American cars are made with American pride and for every US Auto worker job saved, there are also another dozen jobs that depend on that job saved (Steel, tool shops, parts suppliers, truckers, train drivers, car salesmen, etc etc)
4) If us Swedes had a choice we would have saved our auto industry (we were not given that option), you guys have your chance. You will be sorry if you lose your own auto industry
Having said this, I cant say a good word, or give a good reason to save Chrysler.
The only reason to buy American and/or to support the bailout is a national security one. Every nation, to be secure, must be able to provide for itself. If we lose our manufacturing capability and become totally dependent on foreign factories, any number of international incidents could suddenly stop the flow of goods. We have already completely ceded many industries, are we to cede the auto manufacturing also? Suppose we find ourselves in another WWII scenario, but no longer have the ability to design and produce tanks, jeeps, etc. The auto factories converted to wartime production in WWII and we could need them again. Could we depend on our foreign suppliers to produce our weapons and thus our protection, if they happened to disagree with our point of view? How could we risk that?
We have become a high cost producer and have priced ourselves out of our own market. We need a 50 year reset on labor laws, environmental laws, etc. All the things that cause us not to be price competitive with off shore producers. We need to become a net exporter again, somehow, anyhow. Let all the Mexicans in if thats what it takes.
Bridge2far quoted somebody else:
“I despise the lack of quality and durability of the big 3 companies”
Typical anti domestic venom. Totally baseless. Simply an untruth. But if you keep saying it over and over and over…
It may be venomous, but I can sympathize with such venom, because I too have felt it. Quality, lack of durability, and in some cases, inept service and even fraudulent practices.
And that’s the Truth.
I’d take that CNN “poll” with a grain of salt as the vast majority of Americans do not have the knowledge to answer that question properly.
“Suppose we find ourselves in another WWII scenario, but no longer have the ability to design and produce tanks, jeeps, etc”
Uh, this ain’t the 1940s. When Eisenhower warned of the “military-industrial complex” it was because we had divorced the production of war armaments from the rest of manufacturing.
The Detroit3 could disappear and it doesn’t matter. We make tanks, planes, Hummers, guns, etc. totally without them. And sell them around the world. Oh, and fight a war on two fronts by the way.
The ‘national security’ argument is totally false.
Well, America does have class leading products in some areas. I believe the best all-around sports car in the world is the Corvette.
It’s got a big hatch, it can get reasonable gas mileage because of the engine’s colossal low-end torque, it’s fast as hell, sounds good doing it, can be equipped to where the interior isn’t Mattel-grade, it costs over eight grand, but it also includes power memory seats, a telescoping steering wheel, Bose surround sound, a Head-Up Display, side airbags, heated seats, and some other stuff too, so it’s not like how Porsche charges you $180 for floor mats on a $70,000 911.
It has great grip, the steering is improved, the stock tires last pretty from what I’ve seen, it’s got a good share of gadgets, it has one of the most reliable and the most popular engine of all time- the Chevy-small block, it has a variety of tuners, and it competes with the 911, V8 Vantage, R8, and others of that strata for a $47K base price.
The Corvette is an American car you don’t have to feel guilty about not buying.
We The People have given the government this “point of the gun” authority to collect taxes.
Each time we vote for the same politicians or don’t vote at all (thereby allowing a bad one to gain office or another bad one to remain in office), we are giving our consent to be governed in the way that those politicians see fit.
Therefore, I think we are getting everything we want and everything we deserve.
Or maybe just everything that our education system has indoctrinated us to think that we want and deserve…
Therefore, everything’s just fine and dandy because, after all, it’s working EXACTLY how We The People want it to.
And that’s my one last choice. As long as We The People allow me to choose what car to drive, I will choose what I want. Part of that decision is to not choose what I don’t want. I don’t want to support union thuggery or paying for people to not work.
So there!
Just like when the government takes my money and uses it to pay for the air traffic control system. Sure, there would be a few collisions from time to time, but, hey, we don’t need no nanny state.
I remain convinced the USA is in the throes of class warfare.
Thank you for the article. It is one of the very best this site has done.
Wow, I love the article. I felt so alone in my coming to the conclusion that it’s the threat of violence that is behind every law. I have so much anger at this country because of that. I better vent it out, in a healthy way of course. I’m also mad at Americans and the world. Things are really messed up on a lot of levels. People are really messed up.
I’ll continue working on my issues, including accepting others as they are and living my life as best I can.
I’d like to add that I do not consider myself a taxpayer in a sense. I look at taxes like I look at computer software. Some things are running in the background of my pc, I don’t care I just want a fast and capable pc that does not get in my way.
“# obbop :
January 30th, 2009 at 10:16 pm
I remain convinced the USA is in the throes of class warfare.”
Fully agreed – and it is about time. Look around where did all the lassez-faire and other devastating policies of the ruling class take us…
I will consider buying American when they will bring this one (or something very close to it) here: http://totalcar.hu/tesztek/insignia20cd/
Let me start by saying I only own American branded products. American branded cars actually are the best ones for my needs. I have no particular loyalty. I do my research. I test drive and American branded cars deliver what I want and the best price.
I use the term American branded cars because no cars are made purely in America anymore. It would be hard to find a ride where even 50% of the total labor hours (effort to build parts and the final assembly) comes from American labor.
That being said, our ability to buy any brand at great prices is a function of the strength of the US dollar and the willingness of every large foreign nation to lower their standards of living in order to loan us massive amounts of money.
If the dollar ever caves in and/or the foreign lenders won’t/can’t lend us anymore money, foreign labor and foreign parts will become very expensive and all you’ll be able to afford are domestic cars made with domestic parts.
It won’t matter if they are well made or made like crap, you’ll buy them because you’ll have to. Buying an “American” car right now won’t prevent this, just like buying a “foreign” car won’t make it happen any faster.
So if you want to support GM Brazil or GM China, buy a GM car!
Even GM isn’t dumb enough to invest profits in a country that borrows money every week just to pay interest on the money we borrowed last week.
Welcome to the Global Economy!
There seem to be a fair number of people in the world that are in denial about being adults. They don’t want their tax money going to filthy programs like car bailouts, but they sure as hell want the government to have contract law, civil courts, police to enforce civil judgments, and so on. If you want the government to enforce and advance your economic rights, you have a reciprocal obligation to deal with some policies you don’t like.
After people in England made the “government is violence” argument in the 1600s, people realized that anarchy is actually a lot worse.
As for America, we tried having a weak central government and minimal taxes from 1776-1789. It was a dismal failure, and resulted in a rebellion that almost overthrew the federal government.
The “free hand” of the market is equally “violent” as any government. You think debtor’s prison was nice? Victorian England, which was about as close as you get to libertarian life in relatively modern times, was an absolutely horrible place to live for all but the most wealthy. Business leaders like uh, Rick Wagoner and Bernie Madoff can abuse the market and steal your money? At least you can vote politicians out of office.
People seem a lot more pissed off about a government that unduly interferes in the economy than one that can tap your phones without a warrant, or that has thrown due process out the window. Can’t really understand this line of thinking. But it seems like many people in the US share opinions with those in Russia and China – as long as they are able to keep their money, they don’t care about actual freedoms.
“People seem a lot more pissed off about a government that unduly interferes in the economy than one that can tap your phones without a warrant, or that has thrown due process out the window. Can’t really understand this line of thinking.”
QFT
@ Justin Berkowitz: “People seem a lot more pissed off about a government that unduly interferes in the economy than one that can tap your phones without a warrant, or that has thrown due process out the window.”
Oh, trust me – hating .gov for its interference in business affairs is in no way mutually exclusive for detesting it for trampling my natural rights.
I firmly believe that our rights have been curtailed in recent years in such a way to empower the government in the event of an economic collapse (such as the one that may be unfolding now). I’ll save that sort of ranting for other websites, however.
Was it an end run around the will of the people?
The people’s representatives in the legislative branch were in general agreement that the president had the power to act under the TARP, 136 and through the Fed. The president, elected twice, acted in accordance with the law. Nobody has challenged the legality or constitutionality of the loan package.
We don’t govern our country based on polls, but rather on the results of the last election. Right now 42% of people oppose the “stimulus” package. Should that figure rise above 50% do you think it will stop the Democrats from passing it?
Them’s the breaks. It’s how things work here. The “will of the people” is expressed by the most recent election results.
You’re not happy with loans to the domestic automakers, I’m not happy with the largest expansion in spending on government programs since Johnson’s Great Society and dressing it up in a “stimulus” package. If the $800 trillion was all going to infrastructure and tax incentives and other things with measurable economic benefit multipliers, that would be one thing. Instead it’s full of pork and pet Democratic projects. The loans to the automakers are what, about 2% of the stimulus package?
Washington’s fiscal irresponsibility, which I suppose means all of our irresponsibility since we elected them, makes anything Detroit has done look small. You may think that’s moral relativism. I think it’s placing things in perspective.
“Instead it’s full of pork and pet Democratic projects.”
You meant Republican, right? Stupid and useless tax breaks, to please the clueless or cynically egoist Repugs – take up almost 40% of this crap bill.
golden2husky: “Nobody should blindly buy anything. However, many people, for valid reasons or not, blindly ignore American. That is a shame for obvious reasons. When I buy vehicles, I always look at all models in the given class. Sometimes that means an American product ends up in the garage, sometimes it doesn’t. I feel that I don’t owe anybody an apology for that.”
Who’s asking you to apologize for it? You want to buy Detroit? Go right ahead.
On the other hand, a Japanese-branded manufacturer has earned my trust and loyalty. I will sleep better at night buying another one, and I won’t waste time considering other products. I have no plans to apologize for that.
Justin:
These are good points, and I sympathize, but you’re mistaken in thinking that this is an either/or question. We should all be thinking about this question on a continuum. “Filthy bailouts vs civil services” isn’t a sufficiently complex description of the issues. We’re all much more likely to be adversely affected by the curtailment of our civil liberties than by an ultimately small addition to our national debt. But just like the national security vs individual liberty pendulum swings both ways, this one does, as well.
I think that it’s also worth mentioning that we don’t really live in a representative democracy as it is. I don’t think that anyone will argue that Congress is representative of the demographic profile of American public. Either way, how does an action taken by a single elected official (with literally zero political accountability) qualify as an act of a representative democracy? Isn’t this argument about presidential power, rather than the democratic process?
The IRS rarely sends people with guns to your house, they just seize your assets.
And it’s all legal. I have no particular problem with it; we have some order and structure to our society and it takes money to run the things we do collectively. We have representatives, duly elected, in most cases, to work out things politically.
Daniel Morgan, I think your problem is that you’ve spent much too much time reading Ayn Rand and enjoying the fantasies of her Universe of Perfect People. You should get out more.
You want laissez-faire everything? Try Somalia. You’ll love it. Their government won’t bother you.
Kix Start:
Daniel Morgan, I think your problem is that you’ve spent much too much time reading Ayn Rand and enjoying the fantasies of her Universe of Perfect People. You should get out more.
You want laissez-faire everything? Try Somalia. You’ll love it. Their government won’t bother you.
Winner.
I won’t so much “buy American” as I’ll “buy local” when I pick up my family hauler next fall/year. The Toyota plant 5 miles down the road has been a major boost for our economy here in SW West Virginia. The Venza, which has really impressed me, is assembled in Georgetown, KY and the transmission comes from Buffalo, WV. Buying a Venza helps my family, friends, and neighbors.
The mountain bike frame I purchased last evening was hand built in Bedford, PA, which is ~ 60 miles from my parent’s house. This is my 2nd Cannondale to come out of that factory.
All my dinner-ware is made in West Virginia as well (Fiesta Ware).
Basically, buying a car built in Detroit does very little, to nothing, for my local economy. Considering I live and work in one of the poorest states in the union, I prefer to keep a majority of my large purchases local and I frankly don’t care where the 5 ~ 10% profit goes (Japan for Toyota, CT for Cannondale). The majority of what I spend on these items is staying in my local economy.
Yeah, I realize my post is largely off-topic, but I wanted to state my case for my decisions.
Without the government, there would be a real threat of violence from organized mafias, warlords, bullies. Rather than the government being the enemy, it is the only institution that protects us.
Sometimes the government doesn’t do it job, such as with the SEC during the Bush administration, or the FDA, or many other agencies. That is because the government was being influenced by the bullies.
Now the whole economy is unraveling, and businesses are starting to realize that the consumer is not some kind of sheep to be eaten but actually a goose that lays golden eggs. But it may be too late. We have to question the entire basis of our economy. Can we even have an economy that is not based on more and more consumption? I don’t think anyone has figured out what will replace a system that is unsustainable.
So we turn to the government, because, who should we turn to? Wall Street? Halliburton? Exxon? Tom Delay? Rush Limbaugh?
Since we are a nation ruled by people and not by a divine king, we have to come up with our own solution.
Personally, I don’t think giving health insurance subsidies to layed off workers is the worst thing the govenment can do. It may stave off foreclosure. I would rather have my tax money help a family stay alive and in their home than give it to Bankers as bonuses. It seems many people on this board are more upset about giving money to the auto industry than upset with the way the bankers have used the money to enrich themselves.
I agree with just about everything in the article, save that Ford has not (yet) taken any patriot crack. My money is being taken at gunpoint to prop up two companies that are “important” enough not to have to go through established procedures like bankruptcy court like all other failing companies.
I would like to thank the people that read and commented on my editorial story. It was originally written for another publication, but Robert asked me to post it here.
It looks like I stirred up the controversy that he was looking for. ;-)
The editorial that I wrote was very polemic and did not touch on the real issues at hand. I was not commenting on the wisdom of the bailout itself, but merely on the language with which the bailout was dressed.
Commenting on the bailout itself, I have full faith and confidence that the US economy would be able to adapt without a taking our money. This interview did an excellent job of addressing that point some time back.
As to the responses to what I actually wrote, I think that keeping the violent nature of government in mind is absolutely essential. It is a facet of reality that the people that define legality have a monopoly on force. The fact that we sometimes benefit from the current arrangement does not change that fact, and it should be remembered even if we don’t actively work toward alternatives.
Oh, and KixStart,
You’ll be happy to hear that Somalia is actually far improved since they entered statelessness. Their people’s lives are not on a Western level, but they far exceed the lives of comparable neighbors.
http://peterleeson.com/better_off_stateless.pdf
Thought that that was worth quickly addressing!
Reads like something I would have written in high school.
Good thing I’ve wised up in the intervening 15 years… I didn’t realize how much of a know-nothing jackass I was.
To be honest, I can sort of see a logic to buying domestic, in my case the UK. I’ve got a Jaguar X-Type (built in the UK and a lot of the parts come from the UK) and a Toyota Yaris (whilst built in France, a lot of the parts come from the UK, one of which, I manufactured personally! Same with the X-Type) and part of the reason (about 40%) was that I wanted to support the UK industry. The other 60% was because they were the right cars for me. I could have bought a Honda Jazz (built in Japan) and a BMW 3-series (built in Germany), but the thought of sending my money there, just wasn’t appealing for me.
It’s not just with cars, I feel like this. When I go shopping, I go out of my way to buy stuff made in the UK or, at the very least, made by a UK company. Part of the reason is economic patriotism, but most of it karma.
I’m buying these products to make sure UK people have jobs. Likewise, I’d like to think that one day, people will buy the product that supports my job. Germany have been doing this for ages.
In my old job (a German company), they changed the mobile phone provider from Vodafone (UK) to T-Mobile (German), their suppliers were German, even when they installed a database system, they gave Oracle the cold shoulder and bought SAP (German), their fleet of cars were either German (BMW) or built in Germany (Vauxhall Vectra). They just supported any German company they could.
Even in an advert for Siemens engineering, I noticed the people were wearing Adidas clothes and had SAP on the computer screen!
Anyway, back to the article.
The bit which makes me fume (on behalf of Americans) is the fact how Detroit got a bailout, but it got it by hoodwinking the government and/or the people. They alluded that their reason for asking for a bailout was that the downturn (i.e Credit crisis) was so sharp, that they couldn’t forecast for it.
Any TTACers will know this to be a falsehood. All the credit crisis did was catalyse their demise. When credit was plentiful, Detroit still couldn’t turn a profit. But they successfully got what they wanted.
This bailout was bad for 2 reasons:
1. It’s supporting a broken business model (i.e good money after bad).
and
2. It undermines the United States when it preaches free capitalist values (“Yes, countries of the world, let’s your economies run free and let the market decide. If a company fails, it should fail, no socialist values here……unless the company failing is american, then, you should help it.”)
It’s not all bad, Ford is a company which, with a little care and attention, could be an American car company to be proud of.
Daniel Morgan :
You’ll be happy to hear that Somalia is actually far improved since they entered statelessness. Their people’s lives are not on a Western level, but they far exceed the lives of comparable neighbors.
So you’re advocating anarchy? That’s what the freshly minted professor who authored that article is doing.
The flaw in that article’s author’s thesis is that he’s comparing Somali statelessness now to a very bad government beforehand. That doesn’t make anarchy better than any government, it makes anarchy (possibly) preferable to a very bad government.
That’s a very weak thesis by political science standards. Then again, he’s not a political scientist. He’s an economist.
Mind you his paper ignores (or shall we give him the benefit of the doubt and say predates?) any of the developments of international piracy based in Somalia. That’s the market solving right there. No government, no money, the people turn to hijacking freighters. The market will solve again, of course, by armed guards shooting the pirates to death and burning their port city to the ground.
Kinda Ayn Rand-ish.
A simple concept, flawed at its core, defended with flowing prose.
We’ve (in effect) pointed the gun at our own heads?
Anyway, look to greed and consumerism to answer the question – we took the sacrifices of the greatest generation and squandered them, buyng all things coveted.
The engine of commerce is “flex fuel”; our greedy desire chose the fuel called “hubris”.
“Hubris” in the mistaken idea that our country’s future, and even the future of the planet would somehow benefit by the “good life” that became the birthright of Americans.
Hey, that was pretty good! (but undoubtedly flawed in its simplicity)
Maybe we should all “take” a car from them for free and call it a “contribution”.
It is important for human freedom not to purchase anything from these infantile/weak-minded taxtaker parasites.
The last two times I went out to buy “a car”, the Americans were simply not present, unless one subscribes to the absurdity that a rebadged Daewoo designed and built on the other side of the globe should be considered “American”. The only Americans who would have benefited from that purchase work at the dealer who I bought my S2000 from, so I consider myself settled on that front.
To tell the truth, even before the bailout, the only American car I would buy is a Ford product. I wouldn’t buy a Chrysler because I don’t want my money going towards Cerberus’ smoke and mirrors show, and I don’t think they haven’t made a decent product since the second-gen Stratus. And I wouldn’t buy a GM product because I didn’t want my money going towards Rick Wagoner’s paycheck. Ford is the only one deserving of my cash.
When you stop and consider how many GM Ford and Chrysler models are made in foreign factories, and how many Honda, Hyundai, Nissan, and Toyota (as well as M-B, BMW, and VW) cars are made on American soil, the patriotic thing to do is buy one of the American made cars. At least the foreign companies are reinvesting profits back into America. Sure they get tax breaks, so does every company and industry at one time or another. But people pay their bills with wealth earned building these “foreign” cars, and not by stealing money from me.
“This is a debt our generation will be forced to spend its lifetime repaying.”
Highly unlikely, it will be quietly monetized as needed to manage market interest rates.
“But the ‘investing’ of Bush’s executive order was involuntary.”
By your logic, all government action is “involuntary”. Unless you are an anarchist, this house of rhetorical cards quickly falls of its own weight.
“Wow, I love the article. I felt so alone in my coming to the conclusion that it’s the threat of violence that is behind every law.”
Government is the one sector of society empowered to employ violence. It is the very nature of government. Personally, I want my government to be able to use the threat of, or reality of, violence to pursue, capture, try, convict and incarcerate criminals. Of course we all have varying ideas of what behavior is in fact criminal. Democratic systems empower voters in aggregate and over the long haul to determine what the laws are. Monarchies and other forms of dictatorship leave that power directly in the hands of one (or a few) people. There are idealists who try to imagine a world where violence and the threat of violence do not play a role in effective government. Their fantasy is just that, a fantasy.
Justin,
Are you advocating occupation and nation-building in Somalia, to end the anarchy there and stop the piracy?
Seriously, I think your argument misses the point of the author’s paper. It’s an economic thesis, written by an economic professor, but you wish to judge it as a political science one for some reason, so naturally it will be “flawed” by your standards.
Back to autos and auto biz stuff, now.
We should support laws which require domestic production, to lessen our trade deficit and support the dollar. Domestic production can be Honda in Ohio or Hyundai in Alabama.
No one should be forced to buy cars they do not want.
I don’t buy the argument that there is a difference between economics and politics. Economics is politics.
The whole ‘government uses an implicit threat of violence’ argument is just a Libertarian fantasy.
The world is a violent place. Slavery is violent. Just because we have a government to protect us from being enslaved, does not mean the alternative is any better.
Genocide is violent. Just because we have a government that now prevents ethnic cleansing, of the sort that occurred by “pioneers” against Native Americans, does not mean the alternative is better.
Implicit in the government ‘taking property with the use of violence’ argument is the notion that there is no public good. Private property, whether claimed and inherited by kings, barons, dukes, patrons, or wrestled from small farmers by large cattle ranchers, rubber barons, or mining companies, accounts for real, not implied, violence. Sometimes, we have to take away the coal mining companies ‘right’ to dump waste into streams and rivers on their own property, if those bodies of water are commonly shared.
Of course, those who favor corporatism over democracy would try and weaken the government.
Voters are pshycological children who want mommy and daddy government to provide for them by stealing from everybody else. To say that politician’s actions are “The will of the people” is just laughable.
As has been pointed out so often here on TTAC, these companies generally couldn’t manage to generate reliable profits even when folks were buying their “American” brands, so buyer behavior in today’s market seems to be pretty much irrelevant. What better time to go through the inevitable bankruptcies than right now when sales are at an historic low? As to the auto company “bailouts”, they will look like peanuts compared to the catastrophe that Nancy, Harry, and Barry have in store for us under the rubric of economic “stimulus”.
very interesting post. very intriguing comments.
though i really do wonder why IGB declares “The bailout of Chrysler bothers me far more than the bailout of…the insanely criminal financial industry.”
“the insanely criminal financial industry” – supported by the efforts or indifference of the ‘criminally insane’ in government – is by far the greater evil; it is the root cause of our economic collapse. they have completely destroyed our financial system; severely compromised the global economy and greatly diminished the future for almost all of us.
the bailout of chrysler will be considered nothing more than a minor footnote when all is finally said and done.
The cost of this bailout will be tossed atop the $10.6 trillion U.S. debt, according to the treasury. This is a debt our generation will be forced to spend its lifetime repaying.
No Problemo
“Your” generation can just revalue the currency 100:1. Bingo the $10.6 trillion debt becomes only $100.6 billion debt. Easily manageable.
What ALL of you arguing taxation, democracy and “investing” are missing is: The US Constitution. We, the People, gave certain, defined and limited powers to the Federal Government. In Article I, Section 8, WE consented to give the Congress 14 enumerated powers to make laws and collect taxes. In those powers are NOTHING alluding to bailing out private parties, NOTHING about regulating the economy. WE, the People, formed a government to protect rights we had naturally. This government, Democrat and Republican, with taxes and silly investments” like the bailout and stimulus package are stealing from us and the future in violation of the Constitution.
GF
Does anyone know if there is a website or any knowledgeable source which calculates the “domestic value add” for cars sold in the U.S.? To me, one way to allow those buyers who do wish to do channel their auto purchase dollars into the US economy to know how best to do so would be to list each vehicle and say how much of the MSRP (yeah, I know it is bogus, but it is a starting point) ends up in the US economy by way of purchases from US-located vendors and plants, and SGA and R&D money spent in the USA.
I know the domestic content laws say a generic percentage has to be on the vehicle sticker, but these are corporate averages. It would be neat to know for each specific vehicle how much of the cost of the car flows through the US economy…..
Interesting posts, some very thoughtful comments.
A few people made comments about the TARP program. But there seems to be lot less outrage about it. Hard to wrap around; the thought of almost a trillion dollars going to banks and find out a good chunk of money was grabbed by bankers and stuffed into their pants, while it was supposed to be used to prime the credit pump. When the bill was stalled, what got it passed was not more controls on were the money goes, It took few goodies tossed to reluctant congressman. (where are the Republicans when you need em) to get it passed.
What is almost ‘funny’ is the the people who lined up at the trough used to extol the virtuals a “free market”.
It is hard balance between a nanny state, and free market.
We have seen the bad results of both of them.
We are a split car family. Our “junk” domestic cars have been cheaper to run then our Japanese car. Both are fine autos.
Yes, the U.S. domestic auto industry will be/ is crippled not by their poor management decisions, generally uncompetetive product, or unsustainable liabilities, but by commentary from a website
Many Americans are idiots and believe most of the shit they read online.
Quentin said I won’t so much “buy American” as I’ll “buy local” Buying a Venza helps my family, friends, and neighbors. frankly don’t care where the 5 ~ 10% profit goes (Japan for Toyota, CT for Cannondale). The majority of what I spend on these items is staying in my local economy.
Unlike most of the posters on here, I actually live in SE Michigan/Detroit so I am getting a kick out of these posts. I have a front row view of the auto industry that some shmuck in Tennessee wont have. When I mentioned that I buy local in MI, people on this site crucified me. However, most of the suppliers are located here so even if I buy a Toyota, I support some of the local economy since they have a major RD presence here.
Ok ok…not to troll….just because your Toyota is assembled in Kentucky doesn’t necessarily make it any more American than some Ford built in Mexico. Why? Because assembly is just ONE part of the overall process in creating a vehicle….what about the research, development, design, testing, marketing and legal aspects of the process…..yea, all that goes into developing a vehicle as well.
A PT Cruiser isn’t “made” in Mexico. It may be assembled there, but that is a small part of the overall process. It was designed by American designers, marketers and engineers. Most of the suppliers are American as well. The vast majority of posters on this site are unable to differentiate between assembly and other areas of the process.
derm81: “When I mentioned that I buy local in MI, people on this site crucified me.”
Do you post under other pseudonyms? Searching via Google shows no record of such a thing.
And it would be unusual to get a hostile response for I am buying local in MI. You’re free to do so, if you think it helps something near and dear to your heart. At worse, you’re going to get a response to the effect that those “local” cars aren’t as “local” as you think.
The boisterous responses usually come after “I buy American [brands] and so should you.”
I take my Toyotas to the dealer for oil changes (otherwise, so far, he’d wouldn’t have seen me at all, post-sale). The last time I was there, I checked a Tacoma, out of boredom. Assembled here of 90%+ US domestic content. That’s not a foreign car. Buy that and you’re doing something for someone in TN or KY or whatever.
I checked a Tacoma, out of boredom. Assembled here of 90%+ US domestic content. That’s not a foreign car
Where are the suppliers located and where are those supplier-provided parts designed and engineered? You’d be surprised to know that many are engineered in SE Michigan. Like I said before, just because a unit has __% US domestic content doesnt answer where the parts were engineered and designed. Like I said, assembly is just one part of the process. However, in the Tacoma’s case, I bet some of it was designed in Ann Arbor.
And Toyota’s profits go to Japan. Can’t any of the apologists figure that out? Simple.
A PT Cruiser isn’t “made” in Mexico. It may be assembled there, but that is a small part of the overall process. It was designed by American designers, marketers and engineers. Most of the suppliers are American as well. The vast majority of posters on this site are unable to differentiate between assembly and other areas of the process.
I think the majority of posters on this site can differentiate between assembly and other processes. Once the other processes are done, they are pretty much done, but each and every unit produced must be assembled. So yes, the Honda made in OH is more American than the Fusion made in Mexico.
A PT Cruiser isn’t “made” in Mexico. It may be assembled there, but that is a small part of the overall process. It was designed by American designers, marketers and engineers. Most of the suppliers are American as well.
This comment is entirely incorrect.
Most of the money spent in the auto business goes to parts, labor and equipment. As many of the parts come from suppliers within proximity of the factory, the location of the factory is the most important factor about where the money gets spent.
Only a few percent of revenues go into R%D. It’s one of the more negligible line items of all.
Accordingly, most of the economic benefit is going to be derived by those countries in which the plants are located. That will generally include local suppliers, which base themselves within reach of the factory, particularly in the case of Just In Time manufacturers that depend upon plants in close proximity in order to keep their inventories down.
And Toyota’s profits go to Japan.
That comment is almost entirely false. Companies don’t just hoard their cash, they reinvest most of their profits into the business. Profits mostly go to paying for new and refurbished factories, and to R&D.
Toyota is expanding its production to nations such as the US, Mexico and Thailand. The profits are going to those locations.
That’s really no different from what GM has done, which was eager to export its profits to Sweden (Saab), Italy (Fiat), Japan (Isuzu, Subaru) and South Korea (Daewoo), as well as Brazil, Australia, Europe, and China.
So if you want to be sure to send some American “profits” (or least some money) to China, be sure to buy GM. Someone in Shanghai will be glad that you did.
derm81: Ok ok…not to troll….just because your Toyota is assembled in Kentucky doesn’t necessarily make it any more American than some Ford built in Mexico. Why? Because assembly is just ONE part of the overall process in creating a vehicle….what about the research, development, design, testing, marketing and legal aspects of the process…..yea, all that goes into developing a vehicle as well.
Well, R&D, engineering, marketing, etc costs are tough one to calculate as far as domestic content. There isn’t a good way to do it, as far as I know. I do know that the majority of the cost of a vehicle is in the manufacturing. If I can keep that money local, I’ll try to do it.
“Toyota is expanding its production to nations such as the US, Mexico and Thailand. The profits are going to those locations.”
Right. As I said, APOLOGISTS have a difficult time rationalizing the obvious. At the end of the day (or the fiscal year), profits are taken. And Toyota’s go to Japan. Period. You can spin it any way you like but it does not change anything.
Read article. Checked calendar. No, not 1st of April.
Fortunately some sane voices in the comments.
The definition of a functioning polity is that is has a monopoly on the use of violence; then it’s up to the voters to ensure that this violence is applied in accordance with fair and equitable laws in order to secure the life and property of those enjoying its protection.
Many haters of government choose not to participate it, do not understand it, have no respect for it, but want to cherry pick its advantages.
You get the government you deserve, relative to the extent you choose to engage yourself in it. Yes, you.
referencing my previous point, recorded January 31st, 2009 at 1:44 pm:
“the insanely criminal financial industry…is by far the greater evil; it is the root cause of our economic collapse. they have completely destroyed our financial system; severely compromised the global economy and greatly diminished the future…” london’s financial times reports on ft.com that:
“…Obama administration is gearing up for [an] announcement within the next two weeks that will combine a bank clean-up with measures to reduce home foreclosures and probably steps to kick-start credit markets.”
“The plan will [include] strict curbs on compensation at banks receiving public aid…and ensure that taxpayer money is not used to fund excessive pay, bonuses and dividends to shareholders.”
“There will definitely be a cap of some sort on bonuses,” said a Wall Street executive who has taken part in talks with the authorities. “The political climate is such that there is a need to punish Wall Street.”
amen to that. greedy, money-grubbing bastards! you can read all the rest, here – http://www.ft.com/cms/s/0/15f37800-ef05-11dd-bbb5-0000779fd2ac.html
This whole “threat of government violence” shtick is standard-issue drivel of the anarchist wing of the Libertarian party. Its level of sophistication is about that of a college freshman.
It’s no mistake that Ayn Rand (the favorite philosopher of college freshmen) is often name-dropped to lend weight to the argument, and now we have a bow-tie wearing college professor right out of Alex Keaton central casting to tell us how great it is in Somalia now that there is no government (yes, he really does wear a bow tie, see here:)
http://www.cato-unbound.org/contributors/peter-t-leeson/
I have a Master’s Degree from a conservative Business School (ask Ken Starr) so I’ve heard these “Austrian” influenced economic arguments before.
It might not be surprising that this theory has very few adherents in mainstream economics (since they are all socialist Keynesians, right?)
It is, however, worth noting that this point of view has zero, and I mean zero, influence among the professional managerial class. These are the people, from CEOs to middle managers and on down who actually operate and manage businesses and business units. They (we) understand the ways in which industries are interrelated and how disruption in one area cause instability across an entire economic spectrum.
They (we) also understand just how grave the condition of our economy is right now. If you know what a “liquidity trap” is then you know just how irrelevant this editorial is to the real world that we find ourselves in.
While you guys are squealing about how the government is holding a gun to your head the rest of us (the serious ones at least) are working our butts off to figure out how to take care of our businesses and our employees and our families.
As I said, APOLOGISTS have a difficult time rationalizing the obvious.
I hope that you don’t think that I was actually trying to apologize to you for anything. There’s no shame in explaining finance concepts to those who aren’t familiar with them.
On a personal level, I don’t mind if “profits go to Japan.” Except for racists who are under the mistaken impression that the US is still fighting WWII, there’s no reason for them to care, either.
Then there’s the business reality, which shows this “profits goes to Japan” statement for the cliched red herring that it is. “Profits” don’t go to any one country, but to those places in which a company invests. In the case of multinational companies, the money goes whereever their businesses are.
What the Domestic Defenders fail to understand is that most car companies are multinational corporations, loyal to no one flag. The majority of GM’s production is now outside the US. If it is going to expand anywhere, it is going to be in Asia and Latin America, not its traditional markets.
With the exception of Chrysler, which never did get the hang of operating an international business, there’s really no such thing as an “American car” company. The location of the headquarters is meaningless in an era where capital and ideas flow easily across borders.
The money goes where the manufacturing is. So go ahead and buy GM if you want to help the Chinese or buy Ford if you wish to give a hand to the Mexicans, because their goal is to build less in the US, not more.
The future of American automobile production is in the hands of Toyota, Honda and the other transplants that are actually interested in expanding their US operations. Buy a calculator to do the math, and have a reality check to get used to it.
Pch101:
“On a personal level, I don’t mind if ‘profits go to Japan.’ Except for racists who are under the mistaken impression that the US is still fighting WWII, there’s no reason for them to care, either.”
I’m not sure somebody has to be a “racist” to be concerned about the idea that the Japanese use Americans as low-skill assembly labor while retaining the majority of high-skill jobs in Japan and banking the money in their home country.
It seems to me that the term “racist” loses its strength when it is used in this fashion. As an Ohioan, I wouldn’t want every white-collar job in this state to leave for Indiana, to be replaced by janitorial labor; would this make me a “racist”?
I’ve said this before on TTAC, but Americans are about the least “racist” group of people in the world. The Japanese practice racism like a national religion, the Europeans cherish their national stereotypes more than they do anything else in this world, and in Africa, being from the wrong tribe in the wrong place is fundamentally an invitation to get shot in the face.
Let’s not be so quick to cheerlead the transplants for using Americans as assembly robots; it’s great, and necessary, to have as many jobs in this country as we can, but if all of those jobs consist of assembling products on behalf of overseas companies then we’ve fundamentally lost our economic strength as a nation.
I’m not sure somebody has to be a “racist” to be concerned about the idea that the Japanese use Americans as low-skill assembly labor while retaining the majority of high-skill jobs in Japan and banking the money in their home country.
I think that you must have a hangup with the Japanese to make a factually selective statement like that. GM has management employees and R&D in China, Australia, Brazil, Germany, etc., but that doesn’t bother you. They have assembly workers in the same countries, but that doesn’t bother you, either.
It only bothers you when the transplants do the same thing. It’s a blatant double standard, and I’m sure that race has more than a little something to do with it. The drama isn’t nearly as focused when the Germans do it, and if there is any group of automakers that tends to keep the high-end work almost exclusively at home, it’s the Germans.
If GM and Ford become profitable again, they are going to export those dollars. Their path is obvious; they are mostly cost conscious and they build in low wage markets when they can. GM sees its US-market production future in China, Mexico and South Korea, and Ford sees its future in Mexico.
At least the transplants care enough about production quality that they are more likely to keep successful plants operating. They figure that they will get the premium needed to pay wages and benefits by selling the vehicles for more money.
You folks are about forty years behind the curve. The industry is far more international than you care to believe. Profits flow to where the factories are. The math is easy, but the race-based flagwaving gets in the way of adding things up properly.
This bailout was bad for 2 reasons:
1. It’s supporting a broken business model (i.e good money after bad).
Wrong. Every carmaker operating or selling vehicles in the United States has exactly the same “business model.” Each designs, engineers, and manufactures automobiles multi-nationally (paying people to do all three), markets and advertises directly to the public to create pull demand. Each sells their vehicles though a channel of dealers which are for the most part regulated under *state* laws in 50 distinct political entities. And each offers parts and services, under warranty and on a fee basis, to buyers.
There’s *no* difference between Toyota’s “business model” and GM’s. But there is a difference in their profitability and this is tied to many factors, only one of which is the competence with which they pursue said “business model.” So the bailouts are not “good money after bad,” in the sense that one is subsidizing a broken business model. Since all automaker’s business models in the US are identical, the bailout exists to buy time for more competent execution to work. Ideally, the bailouts should come with stipulations about changes to executive management, but since we don’t want the Federal government directly running automakers, that’s been a thorny condition to set. The boards are the right place to target Federal conditions.
The bailouts may or may not work as intended, but even pessimistic projections of their ultimate volume peg a relatively small amount of money for mitigating risk and fallout from precipitous failure of a large and emanating sector that could create an unemployment catastrophe if not brought to either revival or a soft landing. Once again, economic purists miss the political and human elements that complicate real-world compliance with their ideals.
What is true about the precipitous cessation of credit is that recent progress by the D3 automakers has been truncated as a matter of consequence, along with the financial performance of most of the rest of the world’s automakers. Notwithstanding the many prior years of dysfunction that eroded the market power of the D3, proper steps had been taken by those companies in the past several years to restore product quality, market-appropriate product mix and general competitiveness. The “bailout” is intended to address two problems and bridge their resolution. First, markets tend not to respond immediately to improved competitiveness. Second, an external market shock (cessation of credit) drastically shortened the runway the D3 have for remedial actions to achieve lift. Bailouts buy time. It’s an entirely legitimate response to precipitous collapse of a lynchpin sector of the US economy.
and
2. It undermines the United States when it preaches free capitalist values (”Yes, countries of the world, let’s your economies run free and let the market decide. If a company fails, it should fail, no socialist values here……unless the company failing is american, then, you should help it.”)
The U.S. doesn’t preach pure capitalism and there’s nothing about the bailouts in the US today that are inconsistent with “free capitalist values.” “Values” do not comprehensively describe a system, and our system isn’t pure, intentionally.
None of the bailouts of 2008/9 in the US are nationalizations. They are temporary (though extraordinary) measures to mitigate the social and political fallout of an economic rupture. When the crisis passes, Federal shares in banks will be sold back to private investors in the public markets, loans to other sectors will either be in repayment or defaulted (thereby becoming, in effect, failed graints). What the US has consistently “preached” against is state control of economies, wherein production is stipulated by the state irrespective of demand, and political control of companies results in a complete disconnect of production from market preference or demand. In the bailouts, our government is not taking any role in stipulating how many automobiles must be produced, and they are aleady amply using extant regulatory powers to attempt to coerce the market to produce vehicles of specific attributes. We didn’t object to the Italian government’s shoring up of Fiat in the past, nor British Leyland’s receipt of government help. The objections raised from some quarters in the US regarding Japanese government participation in its auto industry were primarily centered on whether that assistance enabled predatory practices by Japanese companies, and the same concerns will be raised by some regarding Chinese carmakers in the coming years. No country has devised an effective response to these concerns, since the politically expedient response — protectionism — is neither feasible nor effective.
When Bush used his executive power to pay …. Chrysler, the democratic process failed to represent the will of the people.
The US is a representative democracy, not a direct one. It’s not Congress’ duty nor the President’s, to reflect “the will of the people” on every decision. In electing representatives, including the President, we delegate to them law-making and operating responsibilities as an extension of governance. Because “the will of the people” is sometimes volatile, representatives that are elected by districts of varying “localness” are charged with using their best judgment to represent our interests. The will of the people is directly expressed at election intervals and other special provisions like recalls and referendums that vary by state, because we often have reason to be unhappy with said representatives’ “best judgment.”
No tax system will ever be anything but coercive. Without some coercive element, taxes would instead become like tithing is to churces — a suggestion abetted by a moral appeal. The very nature of government is that violence is its reserved right. We’re a nation of laws and threat of force against the uncompliant is elemental to upholding the law.
Particularly in context of the mitigating taxpayer-funded assistance offered to the Michigan headquartered automakers, it’s in every American’s self-interest to include competitive American vehicles in their serious evaluations for a new vehicle purchase.You retain your freedom to buy what you want. Buy quality where it exists, but don’t disqualify quality because it’s American, which is the behavior that most divides people in the car realm. In other words, it’s time for Americans to put brand perceptions aside.
It’s not at all difficult to find and own interesting, reliable D3 vehicles with low operating cost and high reliability. I’ve been doiing it continuously without fail for over 25 years. In the majority of anecdotes I read here about cars that have disappointed their owners and ruined their owners’ respect for the maker, I think, “well, of course you had trouble with that car; wasn’t it obvious the car in question should have been avoided?”
Well, I suppose not. Consumers continue to be a contributor to dysfunction in automotive markets and until we accept that, market distortions will persist. Put another way, if half of the portion of the market *not* won by the Michigan Three in a poor 12mm units year buys an import or transplant referentially or reflexively, a swing of that share to competitive products from the D3 in one year would exceed all the influence of the bailout. Persistent over a few years, need for a bailout of any kind would be obviated, and dealers would benefit as well. I’m sure at least half of the non-D3 American market would have their needs and expectations fully met by a competitive D3 vehicle if they dropped their brand biases and cherry-picked from Detroit. Individual Americans have the power to avoid both the high cost of high unemployment and taxpayer-funded bailouts through conscious routing of their own purchasing power to the portion of Detroit’s catalog that is competitive.
Phil
Every carmaker operating or selling vehicles in the United States has exactly the same “business model.”
That is absolutely not true, and it’s not surprising that one who believes that they maintain the same model would miss what has gone wrong in Detroit.
Detroit’s tendency has been to build volumes in order to maximize capacity utilization, even when demand is lacking. That causes them to carry larger inventories, to use incentives and fleets in order to dump the unwanted inventories, and to use the dealer network to channel stuff and conceal the excess production.
The successful Japanese companies build to demand. They maintain flexible production lines and lower inventories so that they don’t too many tie up resources into building too much product. That reduces the need for incentives, fleet sales and channel stuffing, because they stop building to excess fairly early in the game.
The Japanese also use build quality as a means to support higher prices, which increases their margins. That differs from the Detroit model, which relies upon features and options in order to justify price increases.
These are very different approaches to the business. It’s no wonder that one of them succeeds while the other one doesn’t. The Japanese model focuses on customer demand and quality; the Detroit model focuses instead on cost management and production efficiency.
Detroit needs to learn to change, because its old ways stopped working a long time ago. The bailout money is going to be a complete waste if they are convinced that they aren’t conducting their business in an inferior manner.
Detroit’s tendency has been to build volumes in order to maximize capacity utilization, even when demand is lacking. That causes them to carry larger inventories, to use incentives and fleets in order to dump the unwanted inventories, and to use the dealer network to channel stuff and conceal the excess production.
This is not a difference in business model. It is a difference in managerial execution.
The successful Japanese companies build to demand. They maintain flexible production lines and lower inventories so that they don’t too many tie up resources into building too much product. That reduces the need for incentives, fleet sales and channel stuffing, because they stop building to excess fairly early in the game.
Sometimes. They make mistakes too, but some aspects of their managerial execution have enabled more timely responsiveness. This is not a difference in business model.
These are very different approaches to the business. It’s no wonder that one of them succeeds while the other one doesn’t. The Japanese model focuses on customer demand and quality; the Detroit model focuses instead on cost management and production efficiency.
Differences in business practice, not business model.
Detroit needs to learn to change, because its old ways stopped working a long time ago. The bailout money is going to be a complete waste if they are convinced that they aren’t conducting their business in an inferior manner.
The difference between Toyota and GM is in “conducting their business in an inferior manner,” which is not a difference in business model. The two companies have a model for monetization of automotive manufacturing that is exactly the same. Executional inferiority is correctable and bailout money can come with such conditions.
Phil
This is not a difference in business model. It is a difference in managerial execution.
Absolutely wrong. The Japanese model prioritizes quality, at the expense of full capacity utilization. Maintaining a policy of stopping the line in order to prioritize zero defects reduces capacity utilization, by definition. Not the same thing at all.
Until you recognize that the problems in Detroit are systemic, structural and cultural, you will never get it.
Detroit’s method of doing business is wrong at its core. Running a line to be “efficient” and reduce marginal cost, even when there is no demand for the vehicle itself, is inherent to the approach. The model is designed to fail, and it needs to be fixed.
Ressler: “Consumers continue to be a contributor to dysfunction in automotive markets and until we accept that, market distortions will persist.”
Oh, for crying out loud. The consumers do not contribute to dysfunction in the marketplace. They define the demand side of the marketplace. They want what they want. Reliable, trouble-free cars that give them peace of mind. The manufacturers that are giving them this are winning. The ones that don’t are losing.
Ressler: “It’s not at all difficult to find and own interesting, reliable D3 vehicles with low operating cost and high reliability. I’ve been doiing it continuously without fail for over 25 years.”
Well, you’ve been invited to provide a list of such cars, available today, and you have declined.
Here’s the new and improved challenge, provide a list of Detroit cars with superior reliability 5 to 8 years from today.
Ressler: “In the majority of anecdotes I read here about cars that have disappointed their owners and ruined their owners’ respect for the maker, I think, “well, of course you had trouble with that car; wasn’t it obvious the car in question should have been avoided?””
Yeah. Me, too. I think to myself, “What? You didn’t notice it was a Chrysler/Chevrolet/Ford/VW?”
Respect for certain automakers was ruined, not by customer perception but by the manfacturers own actions. GM left DexCool and crap gaskets in their cars for a decade, maybe even longer. There’s no excuse for that. No one at GM was willing to stand up for GM’s own long-term interest of the interest of the customers. That was a fatal flaw in GM’s system.
pch101: “Detroit’s tendency has been to build volumes in order to maximize capacity utilization, even when demand is lacking. That causes them to carry larger inventories, to use incentives and fleets in order to dump the unwanted inventories, and to use the dealer network to channel stuff and conceal the excess production.”
Ressler: “This is not a difference in business model. It is a difference in managerial execution.”
Wrong. It is a difference in business model. GM is building “deals out the door.” Toyota is building cars with long-term value.
Absolutely wrong. The Japanese model prioritizes quality, at the expense of full capacity utilization. Maintaining a policy of stopping the line in order to prioritize zero defects reduces capacity utilization, by definition. Not the same thing at all.
This is not a business model difference. It is a difference in execution. There are many ways to adjust capacity utilization and to improve quality. What you describe is a practice, not a business model difference.
Until you recognize that the problems in Detroit are systemic, structural and cultural, you will never get it.
Detroit’s method of doing business is wrong at its core. Running a line to be “efficient” and reduce marginal cost, even when there is no demand for the vehicle itself, is inherent to the approach. The model is designed to fail, and it needs to be fixed.
I fully recognize Detroit’s problems. Executional practices can be systemic assets or liabilities when they become institutionalized. Nevertheless, a business model difference this is not. Every error committed by Detroit as described by you is solvable through a change in practices under the same business model that prevails for all automakers operating in the US.
Wrong. It is a difference in business model. GM is building “deals out the door.” Toyota is building cars with long-term value.
The monetization is the same. The product configuration is the same. This is not a business model difference. The differences are in selective product execution (some are better some are not) and business practices under identical business model with advantage to Toyota.
The last statement brings a chuckle, however. How do you define “long-term value?” I’m having trouble seeing any potential long term value advantage in today’s Camry over a Fusion, Malibu or Taurus, or in a Toyota full size pickup over an F150 or Silverado *other* than possibly the intangible brand value advantage conferred on the Toyo by consumers who aren’t looking closely or buying only referentially.
Well, you’ve been invited to provide a list of such cars, available today, and you have declined.
Here’s the new and improved challenge, provide a list of Detroit cars with superior reliability 5 to 8 years from today.
I long ago listed all the D3-produced cars I’ve owned. Take your cues from that. I’ve mentioned many current D3 products I consider competitive, and others have mentioned models I left out. Go out and evaluate and make your decision. As for what D3 cars will be reliable 5 – 8 years from today, most of Ford’s catalog, all of GM’s catalog models that debuted since 2004 and on Chrysler I can’t comment as it’s a long time since I’ve driven one. However, if I extrapolated my own experience, I have no reason to fear 5 – 8 year reliability on anything that passes my own evaluation criteria.
The consumers do not contribute to dysfunction in the marketplace. They define the demand side of the marketplace. They want what they want.
Consumers contribute dysfunction to every marketplace. Oh yes, I forgot — it was GM and Ford that forced at gunpoint huge swaths of the market to buy SUVs and pickup trucks.
Phil
It is a difference in execution.
Managing a business around completely different priorities is a whole lot more than just a difference in execution. It’s the model that determines the priorities, and that feeds the culture that creates the mindset that blinds them to the issues.
It’s not surprising that Detroit is so broken that the leadership doesn’t even comprehend that they make fundamental mistakes in their approach.
We need to have 12-step programs for senior executives. Admitting that there is a problem is an essential first step.
Managing a business around completely different priorities is a whole lot more than just a difference in execution. It’s the model that determines the priorities, and that feeds the culture that creates the mindset that blinds them to the issues.
Any holistic-thinking business executive understands that priorities, culture, mindset and intake of external conditions are all matters of execution. To separate them is to misunderstand business management. There’s plenty of that, unfortunately.
It’s not surprising that Detroit is so broken that the leadership doesn’t even comprehend that they make fundamental mistakes in their approach.
I can’t say what D3 executives comprehend, since I don’t know any one in such a position. However, we can observe what they *do* and what they do right and wrong are matters of execution. They can be replaced.
If Gillette announced that they will no long make replaceable razor blades but instead will only sell $200 razors with a permanent blade, that would be a change in business model. If Gillette stuck to the prevailing cheap-razors-infinite-blades model and made more razor blades than the market wanted while Schick made fewer, under the same business model, that would reflect a difference in practices and, presumably, competence. If Gillette made too many blades for the market and made them poorly and refused to correct both errors while Schick improved already good blades and made only what met the demand they could create, that too would merely be a difference of execution under a prevailing business model.
Toyota and GM and everyone else have identical business models. Their monetization is undifferentiated. Now if a carmaker announced that they will cease to sell cars through dealers and instead will only rent vehicles from their own outlets, as their only means of product monetization, that would be a change of business model. If Toyota announced they will begin selling only major automotive subsystems, including complete bodies, to integrators who will build completed cars to customer preferences for retail delivery using subsystems from multiple manufacturers (Lexus body and rolling components powered by an LS9?), that would be a change in business model.
Quality, production management and customer sensitivity are not changes to business model.
One can make the case that the business model for automaking as monetized in the US is broken or suboptimal for everyone. But what’s inhibiting the performance of the D3 relative to others are matters of executive, managerial and individual contributor execution, under a standardized business model, for better or worse. Statistical control of quality, JIT, flexible manufacturing, demand matching — even low common denominator design & drive blandness — are all changes of practice that can begin, on varying schedules, today with no change of monetization schema or business model.
Phil
The issue of execution is a qualitative measure of how well one performs the actions dictated by the business model.
A business model defines the goals of the organization and the processes that one is supposed to follow to achieve those goals.
Detroit screws up both, but the latter problem cannot be swept under the rug, despite your best efforts. Not only do they perform badly, but the goals are all wrong and the processes are all wrong.
Toyota does not excel because it has magicians at the helm or on the assembly line — it doesn’t — but because it has fundamentally better processes serving fundamentally different goals.
Quality and customer satisfaction vs. margin and volume. The objectives could not be more different.
Detroit does the wrong things and it does them badly. It isn’t simply a matter of continuing the status quo with a few different people in charge. They need to change their priorities and approach the business from an entirely different perspective.
The culture of fingerpointing and responsibility avoidance needs to be dismantled before any progress can be made. With posts such as Mr. Ressler’s, I don’t see that happening anytime soon.
The last statement brings a chuckle, however. How do you define “long-term value?” I’m having trouble seeing any potential long term value advantage in today’s Camry over a Fusion, Malibu or Taurus
Long term value. I judge it buy looking at and driving several 1998 models. I understand that manufacturers may change but I really won’t know that until 2018.
I just don’t trust that the D3 still hasn’t chosen to save a nickle by using a plastic rather than metal part deep in the transmission of the car they want me to buy.
The only hope for the D3 is the Hyundai recovery template and I don’t think they have the time or resources to pull it off.
Quentin- I like the “buy local” idea. I don’t know of any cars or car suppliers that are in my area (Hudson Valley NY) but I’m very close to a semiconductor plant that makes chips for the major videogame systems. Might be a reason to get a PS3.
“Absolutely wrong. The Japanese model prioritizes quality, at the expense of full capacity utilization. Maintaining a policy of stopping the line in order to prioritize zero defects reduces capacity utilization, by definition. Not the same thing at all.”
Everything I’ve read/heard points the “Japanese” (really only Toyota and Honda as Mazda/Nissan/Suzuki/Mitsubishi/Subaru do not have the same reputation) quality as happening even before the assembly lines are formed in the engineering and design process. Suppliers are brought in on the development of cars so that engineering and quality issues are ironed out before assembly takes place.
JB,
Belittling those whose argument you don’t like, won’t get you far with me.
First, college debate has little, if anything, to do with advancing a disagreement towards the best resolution. Great training for lawyers, and perhaps politicians, but bad for people who actually desire to reach the best solution for anything. Even military men understand incentive better than lawyers and politicians (I know that almost all politicians are lawyers, but I didn’t want to exclude the half dozen who are not). Don’t get me wrong, I am not insulting lawyers, just making a ridiculous generalization because something in the process seems to rid the bar of people who understand carrots rather than just sticks.
Second, having a passion about where our resources are spent is precisely an adult characteristic. It’s the apathetic that are being children. Yes, you have to accept it when you lose, but you don’t have to give up the fight. Having lost round one, the adults will continue to fight on. OTOH, “we won, you lost, shut up,” is really childish. The reciprocal responsibility to deal with your losses is limited to responding lawfully. Otherwise, we would have most of the pols on both sides locked up by now.
The classical liberal, or conservative, wants the courts, police and other institutions, and not those things like bailouts because those things endanger all the institutions which both sides hold valuable. Limiting government is nothing more than prioritizing those things which are best and most needed, like the institutions you mentioned. It is the modern liberal, or socialist, who wills for more government power which will undermine the courts, police, and civil rights whether he desires that or not. If some on the right get overzealous, with their privitization or government elimination schemes, that does not negate the value of the concept.
Lastly, you do a poor job of supporting your argument by bringing up anarchists and eighteenth century history. I never played the debate game, but I am pretty sure that little argument wouldn’t stand given the lack of legs. No one is arguing for anarchy, and the parallels to the period mentioned are either flimsy or even support the opposite side. How about we debate speed limits, and I use Stalin as a reason not to have them?
Pch101:
I think that you must have a hangup with the Japanese to make a factually selective statement like that. GM has management employees and R&D in China, Australia, Brazil, Germany, etc., but that doesn’t bother you.
You’re a mind-reader now?
It only bothers you when the transplants do the same thing. It’s a blatant double standard, and I’m sure that race has more than a little something to do with it.
And you’re “sure” how again? Even if I did have a “double standard”, it might be because I’m an American, and therefore I’m concerned with America. We don’t call that “racism” outside Antioch College.
The drama isn’t nearly as focused when the Germans do it, and if there is any group of automakers that tends to keep the high-end work almost exclusively at home, it’s the Germans.
The Germans don’t play in the volume market. Vacheron Constantin keeps the high-work almost exclusively at home, too.
If GM and Ford become profitable again, they are going to export those dollars. Their path is obvious; they are mostly cost conscious and they build in low wage markets when they can. GM sees its US-market production future in China, Mexico and South Korea, and Ford sees its future in Mexico.
You’re a mind-reader, you can detect racism in trace quantities, and you can see the future?
At least the transplants care enough about production quality that they are more likely to keep successful plants operating.
Alas, your superpowers appear to be unable to see Acura transmission or sludged Toyota engines.
The math is easy, but the race-based flagwaving gets in the way of adding things up properly.
Race-based flagwaving? Is that the part where you figure that the Japanese know everything, are obsessed with quality, and the Americans are stupid, lazy subhumans?
You’re a mind-reader now?
I don’t need to have that talent to see that your complaints are selective.
Even if I did have a “double standard”…
When you rationalize your pass of the Germans (“The Germans don’t play in the volume market.”) just a few sentences later, it’s almost as if you’re going out of your way to prove that you do have a double standard.
So you don’t like the fact that Detroit has mainstream competition. I would suggest that Detroit address this by being more competitive, instead of whining like spoiled children.
You’re a mind-reader, you can detect racism in trace quantities, and you can see the future?
No, I read the automotive trades and have a good sense of history. Go ahead and Google terms such as “Daewoo” and “Hermosillo Mexico”, and let me know what you come up with.
Alas, your superpowers appear to be unable to see Acura transmission or sludged Toyota engines.
The fact that the Detroit Defenders have only two examples that they must constantly rehash proves how flimsy their position is.
The list of Detroit malfunctions is far lengthier and more consistent. There is really no comparison in the quality problems coming from the 2.8 and what is found among the best Japanese transplants. The data supports this.
Apologizing for Detroit’s continuous errors does it no favors. They won’t be able to compete until they catch up. It may be fun to make excuses, but they won’t sell any cars.
The issue of execution is a qualitative measure of how well one performs the actions dictated by the business model.
Yet differences in execution and performance do not define a difference in business model.
A business model defines the goals of the organization and the processes that one is supposed to follow to achieve those goals.
Detroit screws up both, but the latter problem cannot be swept under the rug, despite your best efforts. Not only do they perform badly, but the goals are all wrong and the processes are all wrong.
Sorry, no. A business model defines the means of monetization and value accumulation. Goals can and do vary according to chosen methods for operating to a given business model. I’m not defending management malfunction on the part of the D3. But every one of these differences cited is a difference in execution, not a difference of business model that precludes an investment working. The executional changes can begin immediately.
Toyota does not excel because it has magicians at the helm or on the assembly line — it doesn’t — but because it has fundamentally better processes serving fundamentally different goals.
Quality and customer satisfaction vs. margin and volume. The objectives could not be more different.
Agreed, there are no magicians at Toyota. Both Toyota and GM (and everyone else) manage to some combination of priorities on all four attributes you cite. Toyota also manages to volume and margin just as GM also manages to satisfaction and quality, but the proportions of attention vary.
Detroit does the wrong things and it does them badly. It isn’t simply a matter of continuing the status quo with a few different people in charge. They need to change their priorities and approach the business from an entirely different perspective.
The culture of fingerpointing and responsibility avoidance needs to be dismantled before any progress can be made. With posts such as Mr. Ressler’s, I don’t see that happening anytime soon.
And yet each company manages to produce some excellent vehicles that are embraced by the market in large numbers, and not just once.
No one, including me, has suggested that different people running identical processes can or will reform the D3. The process and pursuit deficiencies in some of the operations of the D3 are easy to identify and any serious change of executive management will drive dramatic change, or at least attempt mightily to do so. But it will all be in service to the same business model everyone else is working to if selling cars in the United States.
The progress the D3 have made in product quality throughout their catalog over the last several years could not have been made without steady dismantling of the notorious responsibility-avoidance cultures in all three companies. They are different companies from 15, 20 and 40 years ago, but the reform is incomplete. I have no connection to the automobile industry other than being a customer, so my posts here indicate absolutely nothing about the rate of change inside the companies in question.
Phil
Yet differences in execution and performance do not define a difference in business model.
In this case, they are in part symptomatic of differences in the business model. The model creates the path that leads to the bad choices that produce bad results.
A business model defines the means of monetization and value accumulation.
Right, a business model establishes the processes by which an enterprise is supposed to be operated. And the disparity between the domestics and their strongest competitors is the byproduct of a classic processes problem.
Phil Ressler
You are forgetting that defining a method of motivating customers to buy your product or service is a key part of the classical business model. If you try to present a business model to venture capitalists, for example, and do not have a detailed presentation on how you intend to attract and keep customers, you will not get your financing. Thus the difference in customer service and focus is in fact a difference in business models between the domestics and Toyota. It is not just a difference in execution.
Pch and Phil Ressler:
I have enjoyed reading your exchange and there seems to be some difference in semantics. The differences between Toyota and GM may not be business, but cultural. At Toyota, the value to the customer is prioritized (Quality of product). At GM, the value to the company (cost of production).
While this may be the driving force, both companies have shown they have complex values. Notice the responses to the down market. The concern at Toyota with the revamping and streamlining of internal costs. Their goal is to providing the same value to the customer. At GM, a new customer (the federal government) was found to provide the same value to the company.
This, at least to me, shows a difference in business model. I remember a quote that GM makes money, not cars. So for a while, GM made money buy selling cars using a model similar to other manufacturers, this may no longer be the case.
Just my $0.02.
This quote provides a little perspective on the coercive nature of government:
“Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.”
What radical would say such a thing? Why, George Washington, of course. Perhaps you have heard of him.
You are forgetting that defining a method of motivating customers to buy your product or service is a key part of the classical business model. If you try to present a business model to venture capitalists, for example, and do not have a detailed presentation on how you intend to attract and keep customers, you will not get your financing. Thus the difference in customer service and focus is in fact a difference in business models between the domestics and Toyota. It is not just a difference in execution.
Every business must operate a demand generating function, of which motivating the customer to buy is critical. I don’t single this out because it’s generic and in any case it doesn’t reflect a change to the means of monetization.
I have raised money from VCs and spent several years in a venture capital firm so I’m intimately familiar with this. VCs look for how a business will be monetized and then they decide whether the team can and will execute to win the monetization. Attracting and retaining customers is both an architectural and executional issue, but not influential to the business model chosen as the prevailing means of monetization.
This is important in this thread only because if viewed as an investment, the bailout’s performance depends on executing properly, not wasting time trying to re-architect the means of monetization that prevails for an entire industry.
Phil
@PCH101 and Phil Ressler:
You mentioned the issue of culture on an earlier post, and I agree with that being at the root cause of the D3 problems. The discussion of differences in business models and execution is illuminating, but the organizational culture has as much as, if not more to do with the failure of the D3 as either of those other two data points.
At a grass roots level, consumers have fully defined ‘quality’ to the auto makers. The non-D3 manufacturers understand that the definition of ‘quality’ changes based on the make of the car. The D3 and it’s defenders are still trying to blame the consumer. They appear upset that the consumer has acted in his best interest by not purchasing what for a long time has been an inferior product.
Compare this to the path Hyundai chose with generous warranties. Hard to imagine GM and Chrysler would do this (without all the exceptions Chrysler wrote into their warranties). One would think that with GM and Chrysler on the ropes, they would pull out all the stops to right the ship. Shutting down elevators and voice mail is tantamount to pissing in the wind compared to the tough cultural changes they need to make.
Phil,
I’ve agreed with most of what you’ve said on this thread. I do have one question:
However, if I extrapolated my own experience, I have no reason to fear 5 – 8 year reliability on anything that passes my own evaluation criteria.
What are your evaluation criteria?
While consumers may contribute to dysfunction, this will always be true. Only in Econ 101 is it pretended that consumers act with perfect knowledge.
Most people don’t know – or care- about cars. Cars are tools. Cars are appliances. Most people will not be able to assess whether a car will hold up or not.
As an aside, we just had trouble with our Frigidaire electric stove. For the life of me, I could not tell by looking at it in the store that the clock timer would give out in 3 years.
…but the organizational culture has as much as, if not more to do with the failure of the D3 as either of those other two data points.
I agree this is the root issue. Fixing dysfunctional business culture, or in this case defining something new, has to come from the top and therefore is fundamentally an executive management responsibility. In my own career, having spent 2/3rds of my working life undertaking turn-arounds, sometimes from below the top, I know dramatic progress can be made with sufficiently strong leadership but it takes a very long time in the absence of it. The D3 have mostly been run by managers, not leaders, for the past 35 years hence the cultural changes have been elusive.
The D3 and it’s defenders are still trying to blame the consumer.
I can’t speak for others, but when I see this charge flung, it doesn’t ring true. There are 360 degrees of accountability for the state of the US market and its domestic manufacturers, so the consumer is a component. Saying so isn’t nearly the same thing as “trying to blame the consumer.” The customer is in control in that they don’t spend unless they want to, and one can take the position that consumers can be as engaged or irresponsible as they want. But in a balanced ecosystem where people have a contextual interest in the makeup of their own national economy, the consumer has some responsibility and has to be expected to put some skin in the game. I know this is a difficult view for this group at large to accept, but we live in a world that works on shared, not only selfish, interest.
Compare this to the path Hyundai chose with generous warranties. Hard to imagine GM and Chrysler would do this (without all the exceptions Chrysler wrote into their warranties). One would think that with GM and Chrysler on the ropes, they would pull out all the stops to right the ship. Shutting down elevators and voice mail is tantamount to pissing in the wind compared to the tough cultural changes they need to make.
Agreed. Right now, executive management in GM and Chrysler lack the leadership to use available assets offensively. They are in pure defensive mode, and trying to save their way to success. That will fall short. They need to operate from a conviction they can and will win market share for competitive models. The marketing organizations in both companies are operating in a manner disconnected from the challenge at hand. Marketing is the true broken function in Detroit. The rest is on an extant path of improvement. Marketing is still regressing.
Phil
Bridge2far :
January 30th, 2009 at 8:54 pm
“I despise the lack of quality and durability of the big 3 companies”
Typical anti domestic venom. Totally baseless. Simply an untruth. But if you keep saying it over and over and over…
Drive a Cobalt back to back with a Civic. I recently had a dealer loaner Chevy Cobalt. Garbage through and through. Why would anyone in his right mind buy the Chevy over a Civic? Honda makes high quality well engineered compact cars. (since forever). I would pay $1-2K more for the Honda and I’m a 29 yr. loyal dues paying union member.
But in a balanced ecosystem where people have a contextual interest in the makeup of their own national economy, the consumer has some responsibility and has to be expected to put some skin in the game. I know this is a difficult view for this group at large to accept, but we live in a world that works on shared, not only selfish, interest.
So, the expectation is that people buy crap products, when the only real difference between a good chunk of models is that a small portion of that money goes to executives in detroit instead of ones overseas? I’m sure they must be so grateful for the concern.
Landcrusher:
wants the courts, police and other institutions, and not those things like bailouts because those things endanger all the institutions which both sides hold valuable. Limiting government is nothing more than prioritizing those things which are best and most needed, like the institutions you mentioned
1. Gov is bad
2. Therefore by definition, all things not bad must not be in the government
Is that how it works?
Re: business model.
Regardless of how a term is defined, detroit needs to build better cars, consistently, for a long time, in order to win back the market. For decades, they’ve just been outworked by those who were more motivated to delivering a better customer experience.
That’s the harsh reality. Cars are expensive things. TCO matters. Their problems are pretty fundamental.
Compare this to the path Hyundai chose with generous warranties. Hard to imagine GM and Chrysler would do this (without all the exceptions Chrysler wrote into their warranties). One would think that with GM and Chrysler on the ropes, they would pull out all the stops to right the ship…
I’ve often wondered this myself. You have a wary public – rightly so – but you also have a vastly improved product line. If you could eliminate the customer’s worry of being GM’s beta tester by offering a generous warranty, you just might get some takers. And honor the warranty without BS loopholes. As a bare minimum, it would be necessary to match Hyundai’s warranty. Smarter business would be to better Hyundai by a year. These steps would go a long way to getting more sales.
The next step would be to improve the quality of the dealer experience. Just look at Saturn to see the value of improving the shopping experience.
So, the expectation is that people buy crap products, when the only real difference between a good chunk of models is that a small portion of that money goes to executives in detroit instead of ones overseas? I’m sure they must be so grateful for the concern.
Nope, not nearly. The difference between the models worth buying and those not worth buying is quite large. Find and buy the models worth owning. Don’t buy crap from any company. The money spent buying the models worth owning supports an entire employment ecosystem of designers, engineers, managers, sellers, builders, marketers, suppliers and yes, executives. The executives are but a thin layer of the economics and focusing on their compensation thwarts one’s ability to see the bigger picture.
Maddening as it can be, it doesn’t really make a difference whether a CEO makes $1 or $14mm in a given year. What matters is whether they’re doing a good job and if they are NOT, then they should be fired and replaced regardless of their compensation.
Phil
jkross22 on February 2: “The D3 and it’s defenders are still trying to blame the consumer.”
Ressler on February 2: “I can’t speak for others, but when I see this charge flung, it doesn’t ring true.”
Got memory trouble, Ressler? Ressler on February 1: “Consumers continue to be a contributor to dysfunction in automotive markets…”
By the way, did “monetize” pop up on your Word-a-Day calendar or what? It should have given you guidance for actual usage. “Monetize” is a term better used for a new, non-traditional or innovative way of generating revenue where there wasn’t any before. Building and selling cars is nothing new. Although generating profits from them, for GM, would be remarkable.
By the way, going back to my earlier question… which you evaded… Here’s my prediction for GM reliability 5 to 8 years down the road… Not as good is what we’ll see in CR. Their newer models might not be “not as” “not as good” but, overall, still lagging.
Now, I’ve got decades of experience behind my prediction. Why would I pick and choose models? And I don’t believe in that, anyway. A company either drives to reliability, durability, quality and longevity and has the processes in place, across the board for them, or every car is a crapshoot. I’m going to the vendor with the best processes.
I’m sure you’ll fault this customer for failing to take adequate time to consider GM’s product line but… why should a customer spend time analyzing a manufacturer’s probable quality? The manufacturer either cares for a quality reputation and cultivates it or the manufacturer doesn’t.
jkross22 on February 2: “The D3 and it’s defenders are still trying to blame the consumer.”
Ressler on February 2: “I can’t speak for others, but when I see this charge flung, it doesn’t ring true.”
Got memory trouble, Ressler? Ressler on February 1: “Consumers continue to be a contributor to dysfunction in automotive markets…”
As is often the case, a non-sequitur. “…contributor to…” is not equivalent to “…blame the consumer….”
“Monetize” is a term better used for a new, non-traditional or innovative way of generating revenue where there wasn’t any before. Building and selling cars is nothing new.
Perhaps you’re very young. I don’t know. But the term monetize has been in general business vernacular for decades. The dot-bomb usurpers don’t own it.
By the way, going back to my earlier question… which you evaded… Here’s my prediction for GM reliability 5 to 8 years down the road… Not as good is what we’ll see in CR.
I can’t say, and neither can you. But if I extrapolate my own experience, then reliability 5 – 8 years out, no…10 years out….should be exceptional.
I’m sure you’ll fault this customer for failing to take adequate time to consider GM’s product line…
Yes. For reasons already stated.
Phil
I’ve agreed with most of what you’ve said on this thread. I do have one question:
“However, if I extrapolated my own experience, I have no reason to fear 5 – 8 year reliability on anything that passes my own evaluation criteria.”
What are your evaluation criteria?
First, an anecdote. In 2001, I bought a Philips CRT-based HDTV for $5,000. It was vastly better than any flat panel available then and delivered the most detailed, natural image of any television at the time. It had a five-year warranty. At five years and two months, that TV died. I didn’t mind the prospect of paying for the repair myself because a deal’s a deal. I had five years of coverage, and nothing went wrong. A warranty expires at some time, so I came up short in the luck department. What did set me off however was finding out that the power supply daughterboard chipset that had blown could not be procured. Neither the company nor anyone else I tried could supply it. I expected to have that TV longer.
So I understand your Frigidaire problem. Will I ever buy another consumer electronics item from Philips? Yeah, if they are making something I want that is best-in-class. Right now their TVs aren’t, so they are out of the running there, but that’s a different discussion entirely.
But cars. My evaluation criteria are subjective and intuitive, honed experientially going back to a much earlier time when people were more involved with their cars. It’s difficult to describe but easy to grasp if you’re with me.
Yup, that’s me at an auto show or in a dealer lying on the carpet with my face under the car. I’m looking at the welds, the quality and size of the fasteners relative to the job they have to do. I’m looking for engineering clues. Is the suspension simple? If so, is there a good reason for that and is it robust? If it’s complicated, is the complexity warranted and elegantly as well as durably executed? How much of this car can I repair outside of the engine internals? Not that I have much time to do my own service, but if I believe I *can* service much of the car, then I know that a range of mechanics with varying skillsets can too. Hint — I never bought a car for which the engine had to be lifted to replace any of the spark plugs.
I’m looking for visible things that give me clues about what I can’t see. Is the wiring harness orderly and packaged? Do I respect the design and construction of the door hinges? Does the car’s drainage make sense? Again, fasteners. Where I see cotter pins are they oversized or looking too brittle?
Driving, I seek a variety of road surfaces. Rough, smooth, concrete, macadam, I am listening to the car. What does the NVH tell me about it’s integrity and assembly? How does it coast? How do the car’s mechanicals sound coasting? Does it roll freely? What does it sound like and feel like through my feet when braking? How much play is there in steering, suspension? Is the throttle well mapped? Can I feel the car dynamically through my hands, feet, butt and head? Can I sense this car well enough to anticipate its behavior? Can I drive it smoothly and fast.
Do I fit? If it’s a four door, can I “sit behind myself” when the driver’s seat is adjusted for me? Are the sight-lines effective when driving? Materials — I have been accurate at gauging materials. Those I’ve judged to wear well have, and those I identified as suspect have not. I look for fit and finish consistency across multiple samples of the same car model? Are the drivetrain subsystems well matched? Does the car feel geared correctly for the engine? Am I convinced about the car’s structural integrity? Do I believe the structure will maintain its torsional rigidity?
I am taking in the character of the car through a combination of intuitive dissection and holistic sensory impression. I temper that with direct examination within practical limits.
And if it all feels right, I buy. If it doesn’t, I walk. At the end of the whole intake process, it has to feel right. It boils down to that. Cars that feel right, are. Can’t say it’s a methodology, but I’ve never had a bad car in thirty years of buying new, and the used cars I bought weren’t trouble either.
However, once I own the car, I change oil frequently and on schedule. I replace other fluids, plus belts and hoses pre-emptively. I service brakes promptly, along with dampers and bushings. I keep my cars fairly clean routinely, and I wax them at least twice per year. I’ve never had oxidized or peeling paint. In the 70s/80s I kept rust at bay in snowbelt/road salt states. And yes, I’ve observed on the road cars I’ve rejected over the years and wondered what the owners were thinking.
Phil
Phil:
The money spent buying the models worth owning supports an entire employment ecosystem of designers, engineers, managers, sellers, builders, marketers, suppliers and yes, executives.
If it’s not already clear enough from the thread, only a small portion of those costs are “foreign” for the transplants. If anything, perhaps a smaller portion for them than comparative multi-nationals.
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What matters is whether they’re doing a good job and if they are NOT, then they should be fired and replaced regardless of their compensation.
Surely you can see the irony of encouraging others to reward a company that retains mediocre managerial talent.
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Yup, that’s me at an auto show or in a dealer lying on the carpet with my face under the car. I’m looking at the welds, the quality and size of the fasteners relative to the job they have to do. I’m looking for engineering clues.
So if this is important criteria, how exactly is it you endorse domestics?
Also, long term reliability matters. That’s likely the main reason why the transplants are kicking ass.
If it’s not already clear enough from the thread, only a small portion of those costs are “foreign” for the transplants. If anything, perhaps a smaller portion for them than comparative multi-nationals.
It’s not small, and it varies. Nevertheless, there is a net exit of capital to parent organization and the purchase of a transplant vehicle, while economically more leveraging than a pure import, still supports the thick layer of high-value headquarters jobs retained elsewhere, and contributes to profit and cash reserves controlled by the headquarters entity. A transplant purchase is not neutral to domestic well-being just for the assembly factory being here.
So surely you can see the irony of encouraging others to reward a company that retains mediocre managerial talent.
That’s a small-picture matter if the company’s general operating trend is positive. Are they doing more right than in the past? Yes. Do they offer an increasing proportion of competitive models? Yes. Is reliability going up? Yes. The retention of mediocre management is first a board issue. The near-term undermining of the D3’s economic contribution because one dislikes its management is shortsighted. We as both consumers and taxpayers funding bailouts can fix the management deficiency after we bridge the emergency, if the government offering bailouts fails to use the leverage they have now to force a change sooner. (Which they should).
Phil
So if this is important criteria, how exactly is it you endorse domestics?
Carmakers external to the US don’t have a monopoly on engineering and execution.
Also, long term reliability matters. That’s likely the main reason why the transplants are kicking ass.
Yes, and I’m saying you can have long-term reliability from D3 vehicles if you are selecting accordingly. I have for pushing three decades. Why can’t you?
Phil
while economically more leveraging than a pure import, still supports the thick layer of high-value headquarters jobs retained elsewhere, and contributes to profit and cash reserves controlled by the headquarters entity.
Yes, managerial jobs that have been done poorly.
And who cares that “Americans” control that money. They certainly don’t care about their fellow citizens even in their industry given where they’re taking the factories. Why would they care about you and me? Or more importantly, what makes you like them so much?
Btw, welcome to the era of the global corporation.
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That’s a small-picture matter if the company’s general operating trend is positive. Are they doing more right than in the past? Yes. Do they offer an increasing proportion of competitive models? Yes. Is reliability going up? Yes. The retention of mediocre management is first a board issue. The near-term undermining of the D3’s economic contribution because one dislikes its management is shortsighted.
It doesn’t matter that they’re “trending upward”. They’re very unlikely to ever catch up, never mind surpass their competition. This isn’t the special olympics.
Detroit’s problems, like most complex problems, are systematic. The real question is how much money are we willing to pump into them for minimal span of a few product cycles (that’s more than a decade) for the possibility that they might turn it around. That’s well over a hundred billions of dollars in the best case scenerio.
Usually, hoping for the best isn’t realistic, so perhaps you can go calculate the likely case.
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Carmakers external to the US don’t have a monopoly on engineering and execution.
The data shows that for the most part, they do.
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Yes, and I’m saying you can have long-term reliability from D3 vehicles if you are selecting accordingly. I have for pushing three decades. Why can’t you?
Even given more selective criteria, they are statistically less reliable. The resultant overall poor image also decreases resale value.
Basically, in the best case scenario, you still get a worse deal for more often than not a worse car.
Anecdotally, I would’ve bought a g8 had it come with a manual in the normal trims, and it’s about the only domestic I would recommend to others. They are simply very few scenerios where they win on overall value (eg. couple year old fusion if owned to EOL).
Yes, managerial jobs that have been done poorly.
I was referring to the high-value corporate jobs at HQ for the parent of vaunted transplant company you referenced.
And who cares that “Americans” control that money. They certainly don’t care about their fellow citizens even in their industry given where they’re taking the factories. Why would they care about you and me? Or more importantly, what makes you like them so much?
Btw, welcome to the era of the global corporation.
That control of corporate assets by parents of transplants represents an international transfer of wealth. That’s why you should care. Some of the D3 production will be placed elsewhere than the US, but that doesn’t negate the value of accumulating capital in domestically-owned companies. We can address the retention of jobs in the US separately, which requires a reset of the relationship between the UAW, the D3, and indirectly the states subsidizing transplant operations.
The era of the global corporation isn’t new. Nor does a multi-national operation cease to yeild cumulative advantages to its home (HQ) national economy just for being global.
It doesn’t matter that they’re “trending upward”. They’re very unlikely to ever catch up, never mind surpass their competition. This isn’t the special olympics.
Isn’t that what once was said about “foreign carmakers?” Yup. Things change. There is no intrinsic inhibitor to domestic producers “catching up” or better.
Detroit’s problems, like most complex problems, are systematic. The real question is how much money are we willing to pump into them for minimal span of a few product cycles (that’s more than a decade) for the possibility that they might turn it around. That’s well over a hundred billions of dollars in the best case scenerio.
Usually, hoping for the best isn’t realistic, so perhaps you can go calculate the likely case.
The Federal government hasn’t asserted itself yet in imposing conditions for further help, but they can. Turning around the D3 is more than a possibility. It can absolutely be done with the right change of governance, will, management execution and resources. It’s worth it. $100B+ in taxpayer assistance for climbing out of this hole is cheap compared to funding the consequences of precipitous implosion of the domestic automotive manufacturing ecosystem. $100B doesn’t concern me at all if the program instigates a holistic remedial strategy.
Even given more selective criteria, they are statistically less reliable. The resultant overall poor image also decreases resale value.
Every domestic car I’ve owned has been completely reliable. Resale value is a minor consequence if you keep cars long enough for long-term reliability to matter. We’d all be a lot better off if “poor image” faded from popular concern, and I’m not just referring to cars.
Basically, in the best case scenario, you still get a worse deal for more often than not a worse car.
My experience says otherwise. It depends on what you buy.
Anecdotally, I would’ve bought a g8 had it come with a manual in the normal trims, and it’s about the only domestic I would recommend to others. They are simply very few scenerios where they win on overall value (eg. couple year old fusion if owned to EOL).
Millions differ.
Phil
I was referring to the high-value corporate jobs at HQ for the parent of vaunted transplant company you referenced.
This is what I said in my first post.
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but that doesn’t negate the value of accumulating capital in domestically-owned companies.
Who cares. It’s not your money either way. And they’re not going to give it to you because you buy their cars.
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Isn’t that what once was said about “foreign carmakers?” Yup. Things change.
Now you’re getting it. Look how long it took them. And it was much then easier given detroit’s lackadaisical style.
$100B doesn’t concern me at all if the program instigates a holistic remedial strategy.
That’s pie in the sky dream case scenario. The cold reality is that they will far more likely fail and turn it into a quagmire. Does anyone think chrysler is viable? GM is in even worse financial shape, and ford might make if we gave 100bil just to them. But the current plan seems to be to prop up all these failures and hope for the best. I hate to say it, but this is what ultimately ruined most of the former socialist states.
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Every domestic car I’ve owned has been completely reliable.
The general logic behind human decision making is that there is a portion in each market extremity that will stick with poor decision to the end (20-30%, see bush2 fans, lol). Then there is middle that can be influenced. A great majority of them are still brand/image conscious to the extent that they will make consistent choices unless they get screwed.
Consistently selling poor cars has continuously pushed this segment gradually to the transplants. D3 has less than half the market now, with precipitous drops due to transition to smaller cars. They will likely drop to the 30%’s before they can come out with even reasonably competitive products across the line. Competitive new products only means damping the decline (due to inertia of existing ie used cars). Again a reminder this is a happy case.
This means that D3 and its fans have to realistically plan and prepare to survive in a quarter slice of the market (or significantly less if any of them fail to garner adequate gov support, which may happen). This is quite a significant shift to their fundamental model.
The real irony is that implicit fed backing will only procrastinate necessary changes, and yet it’s necessary to their survival.
Phil
Thank you for your replies.
This is what I said in my first post.
So there’s no confusion: purchases of transplant-made cars in the US by Americans supports high-value HQ jobs at the parent, foreign, company. I’d rather support high-value HQ jobs in my country, all other things being equal.
Who cares. It’s not your money either way. And they’re not going to give it to you because you buy their cars.
I care, and if you’re American you should too. It’s no longer my money — I’ve given it up in exchange for a car. But it is my economy, and yours. We have an interest in domestically-retained wealth.
Now you’re getting it. Look how long it took them. And it was much then easier given detroit’s lackadaisical style.
The means for driving radical improvement through companies are much more varied and effective now. Foreign producers changed for the better over a lengthy arc of time. Detroit can reverse their neglect much faster now, if operating practices and sufficient resources coincide.
The cold reality is that they will far more likely fail and turn it into a quagmire. Does anyone think chrysler is viable? GM is in even worse financial shape, and ford might make if we gave 100bil just to them. But the current plan seems to be to prop up all these failures and hope for the best. I hate to say it, but this is what ultimately ruined most of the former socialist states.
Be careful not to become intoxicated by your optimism. Chrysler can be saved, but it is the weak sister and the consequences of its failure are much smaller than for GM or Ford. But the cost of supporting Chrysler through reform is also relatively low. Chrysler historically brought a distinct point of view to the auto market so, sure, if we’re going to help the sector let’s see what she can do — with a different, better CEO.
Hope is not a strategy. There are two components to the bailout: the money and the conditions. Conditions can ensure we’re not banking on hope.
The general logic behind human decision making is that there is a portion in each market extremity that will stick with poor decision to the end (20-30%, see bush2 fans, lol). Then there is middle that can be influenced. A great majority of them are still brand/image conscious to the extent that they will make consistent choices unless they get screwed.
Except none of this “general logic” applies to my history buying cars. I haven’t even been brand loyal. I simply bought what was good, whomever made it.
Consistently selling poor cars has continuously pushed this segment gradually to the transplants.
Consistently selling *some* substandard cars, combined with the herd mentality and high incidence of referential buying. Put another way, too much of the market bought the bad instead of the good, and then for reasons ranging from legitimate to silly declined to consider much better products from the same makers that they should have considered in the first place.
D3 has less than half the market now, with precipitous drops due to transition to smaller cars. They will likely drop to the 30%’s before they can come out with even reasonably competitive products across the line. Competitive new products only means damping the decline (due to inertia of existing ie used cars). Again a reminder this is a happy case.
There are more than enough competitive choices from the D3 to satisfy the needs and wants of much of the non-Detroit market share. A swing of less than half of the mainstream transplant and import buyers to competitive domestic alternatives would obviate the need for a bailout, and still satisfy those new owners. Americans can choose to strengthen their economy and and they might if it dawns on enough people that there’s more than the car in an automotive purchase.
This means that D3 and its fans have to realistically plan and prepare to survive in a quarter slice of the market (or significantly less if any of them fail to garner adequate gov support, which may happen). This is quite a significant shift to their fundamental model.
The D3 must pursue a strategy to grow and gain market share, not retreat permanently into a collective sub 25% share. These companies cannot shrink their way to success. They will have to contract some of their footprint in a tactical retreat but that cannot be the objective for a new stasis. Nothing good will come of that. These companies must grow or die, and with sufficient resources and execution, they can take back some of the market share lost. The D3 and the bailout money must instigate a resurgence won on the merits in the marketplace. A 10 to 15 year restoration drive to a sustainable equilibrium with imports is entirely feasible.
The real irony is that implicit fed backing will only procrastinate necessary changes, and yet it’s necessary to their survival.
There is nothing special about money coming from the Federal government. Its uses have to be managed effectively, irrespective of the source of financing. If we can manage the bailout programs for business efficacy rather than political tinkering, then there’s a chance. Americans have an interest in retaining robust domestically-owned manufacturing. It’s a socio-economic pump essential to a large, immigrant-driven, variegated country with global responsibilities.
Really, genuinely, truly…we all know in our bones that at least half of the people who buy Camry, Accord, Passat this year can be at least as satisfied with a Malibu, Taurus or Fusion. We know a Tundra or Titan are not better trucks than a Detroit equivalent. Drive a Corolla and tell me you wouldn’t rather drive a Focus or maybe even the reviled Cobalt. More Corvettes, fewer Porsches. More HHRs and Escapes and fewer RAVs. More Cadillacs, fewer Lexus, Audi, Mercedes, BMW, Infiniti. More Lincolns, fewer Acuras.
Customer demand, even in a withered year, can keep your bailout cash at home.
Phil
Phil
I have enjoyed reading your posts on this topic and I agree with you that circulating money in one’s own native economy is worth some sacrifice. Especially in recession. This transplant behavior seems similar to the ‘Wal-Mart effect’. Where decent paying work, owning the Mom and Pop shop. Is displaced and replaced by low paying work, working at Wal-Mart. And a high paying job is created elsewhere.
More Cadillacs, fewer Lexus, Audi, Mercedes, BMW, Infiniti. More Lincolns, fewer Acuras.
This is where I beg to differ. Cadillac simply doesn’t compare with Audi, BMW, and Infiniti. This is not a better/worse comparison, the CTS is not a competitor to the 3, A4, and G35, specifically in manual. Nothing in Detroit is. For that matter, nothing from Toyota is, either. Mayhap this is an area where automakers can stabilize market share by at least offering something for the enthusiast driver.
This is where I beg to differ. Cadillac simply doesn’t compare with Audi, BMW, and Infiniti. This is not a better/worse comparison, the CTS is not a competitor to the 3, A4, and G35, specifically in manual.
A current CTS is an excellent car and it can be ordered in configurations that are competitive with German and Japanese counterparts with manual transmissions. However, Cadillac’s current product strategy in sedans puts a larger car into the 3 Series price point, so some people will understandably only want the smaller cars. “Fewer” doesn’t mean “none.”
Directly competitive products in that segment might be appreciated but as a practical matter in the near term, the manual-transmission-buying, small RWD sport sedan segment isn’t large enough to be primary to the economic problem we’ve been discussing. But keep in mind that the CTS can be ordered with a manual transmission, performance suspension and a 3.6L direct-injection V6 exceeding 300hp. Even the standard suspension is very good. And then there are the V series cars.
There are, however, many (not all) reflexive brand buyers of Audis, BMWs, Mercedes, Infiniti and Lexus that drive automatics and could be fully satisfied by some configuration of a CTS, STS or SRX.
Phil
So there’s no confusion: purchases of transplant-made cars in the US by Americans supports high-value HQ jobs at the parent, foreign, company…But it is my economy, and yours
The confusion that you continue to propagate is that this represents a significant percentage of the cost of that car. As already shown in the thread, if the latter is the goal, then buying a D3 car can easily be worse than buying transplant.
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The means for driving radical improvement through companies are much more varied and effective now. Foreign producers changed for the better over a lengthy arc of time. Detroit can reverse their neglect much faster now, if operating practices and sufficient resources coincide. …
more blah blah blah
Saying it’s possible doesn’t make it so. Wishing for more market share doesn’t make it so. Using your own self-determination is not a valid predictor of the future. If only everyone who bought transplants gave me a dollar, I’d be a wealthy man.
I’ve summarized my trending and calcs above. They are logical statements based on actual realistic datum. You are welcome to refute them. Instead you’ve given a bunch of pr hype, the dangerous kind that will waste more of our money instead of minimizing the inevitable pain.
D3 will have to make appropriate plans for a 30% or less share, and be successful secondary players in the market. Anything short will be to continue the kind of lazy and wishful thinking that got them in this serious dilemma in the first place.
The confusion that you continue to propagate is that this represents a significant percentage of the cost of that car. As already shown in the thread, if the latter is the goal, then buying a D3 car can easily be worse than buying transplant.
You’ve used this phrase before (“..as already shown in the thread…”). Except that it hasn’t. You’ll forgive me for not accepting conjecture as fact.
The percentage of cost of a car comprised of profit to the manufacturer, retained assets and support for HQ high-value jobs is not relevant to the fact that in fact that’s what purchase of said cars supports. It’s better on balance for us to have those high-value jobs in the US than elsewhere.
And it’s been shown repeatedly, year after year even by neutral sources that the jobs leverage supported per dollar by a D3 product purchase is grreater than for a transplant. Now, some people say it’s not great enough to influence their decisions when buying a car, but in an economy as large as ours, that delta has direct effects on people numbering in the hundreds-of-thousands, with indirect effects rippling to a larger population still.
Saying it’s possible doesn’t make it so.
Saying it sets an agenda. Making it so is a matter of execution. There’s a path for making it so.
Wishing for more market share doesn’t make it so.
Who said anything about wishing. I’m saying more market share can be won, and that there’s serious value in making determined effort to grow in both relative and absolute terms, even if the results fall short.
Using your own self-determination is not a valid predictor of the future.
I’m not predicting. I’m pointing a way out of a predicament. The essence of a turnaround is to change your circumstances.
If only everyone who bought transplants gave me a dollar, I’d be a wealthy man.
If only. I think you’d be wealthier still if you got a dollar from everyone who bought a vehicle from the D3, since transplants are but a subset of the entire import market. Or were all those Toyotas clogging Long Beach assembled in the parking lots they now inhabit?
I’ve summarized my trending and calcs above. They are logical statements based on actual realistic datum. You are welcome to refute them. Instead you’ve given a bunch of pr hype, the dangerous kind that will waste more of our money instead of minimizing the inevitable pain.
Actually data cited is scant. More like conjecture and numbers packaged by “likely…” Which is fine in an informal discussion such as this but you haven’t outlined anything actionable. Put another way, one can’t make a data-driven decision on the data in your posts here, if you’re inclined to be data-driven.
D3 will have to make appropriate plans for a 30% or less share, and be successful secondary players in the market. Anything short will be to continue the kind of lazy and wishful thinking that got them in this serious dilemma in the first place.
This is what a manager would suggest. A leader would have more imagination. What we have seen consistently in the auto business is that when management says “We’re not defending market share anymore, we’re focusing on profit…” market share thereafter falls faster still and profits are elusive. Even the specialist makers came to the conclusion that ceding market share is death. The auto business has become a grow-or-die, or grow-or-lose-your-independence business. The prudent thing is to take cost out of the business wherever you can in ways that don’t cripple your ability to grow. And then push hard on all fronts to grow, legitimately and sustainably.
I would not put a single taxpayer dollar forward to support companies who in the aggregate have limited their agenda to defending 30% market share. I would not support at all an agenda limited to being secondary players. However, it’s worth $100B+ to fuel a restructuring effort that springboards an effort to grow. We are not going to resolve our economic problems by settling for secondary status in auto markets. We have to mitigate the cost disadvantages, bridge sustained losses, continue new product development, fix the macro and systemic problems (restore credit, etc.) and campaign to win back share from a mitigated cost basis and more flexible manufacturing. I want something much more audacious, determined and visionary for a $25B – $125B bailout. I’ll *gladly* risk some waste to fuel a growth agenda. We grow our way out of our problems. Any lessor agenda is unacceptable. Lift your eyes. Americans don’t progress by looking at our shoes.
Phil
Except that it hasn’t. You’ll forgive me for not accepting conjecture as fact.
Look at pch101’s first comment. Or are you trying to refute the low percentage?
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The percentage of cost of a car comprised of profit to the manufacturer, retained assets and support for HQ high-value jobs is not relevant to the fact that in fact that’s what purchase of said cars supports
It’s absolutely relevant since it’s basic mathematical % of your stated goal (retention of $ in the US). At least follow your own arguments.
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year after year even by neutral sources that the jobs leverage supported per dollar by a D3 product purchase is grreater than for a transplant
Where and how much of a different?
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Actually data cited is scant. More like conjecture and numbers packaged by “likely…” Which is fine in an informal discussion such as this but you haven’t outlined anything actionable. Put another way, one can’t make a data-driven decision on the data in your posts here, if you’re inclined to be data-driven.
Are you doubting the accuracy? I’m trying to pin down your actual argument here, because up to now all you’re doing is ignoring facts and basic math and offering rhetoric.
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This is what a manager would suggest. A leader would have more imagination.
Sure, we believe you. This is BS rhetoric we’ve all heard before, year after year, about how detroit is making a comeback. Year after year their market share decline. This is the factual truth. It very clearly shows the rhetoric are lies, EVERY TIME.
So put up something other than rhetoric and you may actually have some credibility. D3 fanbois will be right for the very first time.
For example, the consensus estimate is that it’ll be ~11mil units next year with shift to smaller cars where d3 is less competitive. Their share’s been dropping like a rock in the last couple months. Show everyone how growth is possible for them. Which cars will sell more, by how much, and why.
Another important point these fanciful plans miss is that the competition doesn’t stand still. The koreans have shown sustained relative improvement, to the point where they’ll soon surpass detroit in quality, and the share will follow. The chinese will enter the marketplace in the next decade, with likely similar results. What is it that detroit can do to retain customers that others can not? The asians have done it by working harder than anyone else in the business.
The fundamental question is that against this proven performance, what has detroit ever done to justify any faith in them?
The point here is not to cheer on or hate on anything particular, it’s to predict future trends accurately and it shouldn’t be a surprise where this is going.
Look at pch101’s first comment. Or are you trying to refute the low percentage?
Actually, there is no data in PCH’s first post. There are claims with no numbers attached to them. But let’s for discussion accept the claims for a moment. They are irrelevant to the point I am making.
It’s absolutely relevant since it’s basic mathematical % of your stated goal (retention of $ in the US). At least follow your own arguments.
Transplant purchases are better for the domestic economy than pure import purchases. But transplant purchases have less economic leverage than domestic purchases. It’s the deltas that matter here. When you buy a transplant-manufactured car, you’re supporting a thick layer of high-value, high-intellectual-capital jobs at HQ that you’re not supporting here. Those jobs have disproportionate economic benefit. And the rest of the interdependent labor chain extends further with a domestic purchase than a transplant purchase. My point is that people who claim net economic neutrality (or net positive) in transplant vs. domestic purchase, to disown their role in the domestic manufacturing crisis are simply wrong. Now, you might take the position that you don’t care whether you have a role or not. Or you might take the position as some have here that they want to aid and abet the destruction of the D3. But the economics of the two purchasing paths are not a wash. The retention of wealth in the US is greater for the domestic purchase, all other things being equal.
Are you doubting the accuracy? I’m trying to pin down your actual argument here.
Because up to now all you’re doing is ignoring facts and basic math and offering rhetoric.
Uh…there’s been no math and few facts presented here.
Sure, we believe you. This is BS rhetoric we’ve all heard before, year after year, about how detroit is making a comeback. Year after year their market share decline. This is the factual truth. It very clearly shows the rhetoric are lies, EVERY TIME.
What you heard in the past was leadership language uttered by mere managers. Execution did not follow the objectives often enough. If you don’t trust existing executive management to credibly drive a growth program, I don’t blame you. The bailouts are a perfect moment of leverage to find and place executive managers who can and will.
For example, the consensus estimate is that it’ll be ~11mil units next year with shift to smaller cars where d3 is less competitive. Their share’s been dropping like a rock in the last couple months. Show everyone how growth is possible for them. Which cars will sell more, by how much, and why.
Consensus estimates in January are frequently wrong when circumstances are volatile. Estimates by pundits with alleged knowledge of the market have recently ranged from 9.5mm to 12.5mm units in the US. The expected shift is to less expensive cars, not necessarily smaller, especially if fuel remains cheap.
The market is currently price-sensitive, and also reactive to availability of financing. Markets are also sensitive to promotion and awareness. The most broken internal function in the D3 currently is marketing. Huge swaths of the market don’t know the competitive attributes of Malibu, Aura, Fusion, Taurus,, Focus, CTS, HHR, Escape, Lucerne, Lacrosse, various MKs, for example. With financial stabilization, warranty coverage becomes a viable offensive weapon. The D3 could begin making it easier for people to order cars to their taste, which imports and transplants are less able and likely to match. New product development can be accelerated rather than delayed or cancelled. It will be easier to proliferate Ford and GM hybrid systems elsewhere in their catalogs.
Twelve years ago Apple was on the ropes, wounded by several years of inept management, loss of vision, written off and left for dead. They clawed their way back, first to profitability, then to market expansion into new segments, and finally to stealing back market share in notebooks and desktop computers.
Porsche revivied from a near-death experience almost 20 years ago. Chrysler, nearly toes-up, regained market share twice within less than 20 years. Ford clawed back from the abyss in the 1980s, when many armchair CEOs advocated pulling back and Don Petersen said, “no, we’re going to grow.”
Saturn grew through a recession soon after launch. The Corvette clawed its way back from long-term neglect during two recessions (1982/3 and again in 1991/2). Toyota has managed a long-term march from crude beginnings and has done so and a vast amount of mediocre machinery, far outperforming countrymen at Honda who have consistently fielded sharply better cars.
Descendent market share of the past few to several months in no way prohibits reversal. Reversal is exactly what we have to fight for if we’re funding reform and revival.
Another important point these fanciful plans miss is that the competition doesn’t stand still. The koreans have shown sustained relative improvement, to the point where they’ll soon surpass detroit. The chinese will enter the marketplace in the next decade, with likely similar results. What is it that detroit can do to retain customers that others can not? The asians have done it by working harder than anyone else in the business. What has detroit ever done to justify any faith in them?
If you accept that the competition doesn’t stand still, then why is it so hard to see that our companies don’t have to either?
Should Korean and Chinese entries into the market discourage us from competing? So what? Let them come. As in consumer electronics, Korean automakers have made dramatic progress in 20 years. The Chinese will progress even faster, once they get in with both feet. Drive a Malibu or Aura compared to their equivalents of 2002. Same with a Fusion or Taurus. A Cobalt, a CTS, an STS, a Corvette (good as it already was then) and tell me you can’t muster confidence in the rate at which American companies can evolve products. We have plenty of evidence that the skills and resolve exist in the D3 to compete. Both have to be channeled, surfaced and allowed to bloom consistently.
The only acceptable agenda for a federally-assisted Detroit is the smallest possible tactical retreat and a strategic commitment to growth leading to market share gain. American companies do not prevail by shrinking. Detroit *must* be committed to growth, and making best efforts to make it so.
What can Detroit do that others miss? Like Italy, Detroit can build emotionally compelling cars that are accessible, dramatic, yet practical and reliable. It can revive the American car for a modern context. It can re-engineer the car. Volt is just start. Probably no other company in the world could muster the integrated innovative thinking embodied in GM’s Hy-Wire concept. Even innovative Honda hasn’t shown evidence of thinking much beyond the future powertrain. Ford has fielded deeply appealing ideas that were cast aside by unimaginative managers. The innovation and design potential locked up in these still-huge companies remains vast and under-tapped.
No one committed to growth looks at existing discouraging data to give them permission to try. The question is, who can look past the present, chart out market share gains, and execute to convert an objective into reality? I simply do not believe I’m alone in this out of 303,000,000 Americans. Despite Detroit’s past, I’ve managed to buy and own completely reliable D3 products for over 25 years. What’s done is done. It’s time to fix it.
Phil
The point here is not to cheer on or hate on anything particular, it’s to predict future trends accurately and it shouldn’t be a surprise where this is going.
This is the crux of the difference between us. Predicting future trends is management thinking. It has its place in tactical operations. I’m interested in our companies *being*, making, instigating the trends others are trying to predict.
Phil
Actually, there is no data in PCH’s first post. There are claims with no numbers attached to them. But let’s for discussion accept the claims for a moment.
That betrays an astonishingly ignorant view of the industry (auto or otherwise) for the claims made.
You should at least go do some basic research on the cost components of autos before frothing on about economic benefits.
They are irrelevant to the point I am making.
You had two points. One is that higher paying jobs are worth keeping. Some are, some aren’t. I think it’s pretty clear that a top heavy structure is what made detroit was it is.
Two is that money should be kept domestically, which component costs are the crux of.
Uh…there’s been no math and few facts presented here.
It’s not my responsibility to provide basic education on how to use google or nexis to get historical sales numbers. If you would just use the time it took to wax eloquent about “vision”, you’d find consistent trends that correlate to the lack of any such virtue.
Your examples are equality disappointing:
Twelve years ago Apple was on the ropes, wounded by several years of inept management, loss of vision, written off and left for dead. They clawed their way back, first to profitability, then to market expansion into new segments, and finally to stealing back market share in notebooks and desktop computers.
Porsche revivied from a near-death experience almost 20 years ago. Chrysler, nearly toes-up, regained market share twice within less than 20 years. Ford clawed back from the abyss in the 1980s, when many armchair CEOs advocated pulling back and Don Petersen said, “no, we’re going to grow.”
Saturn grew through a recession soon after launch. The Corvette clawed its way back from long-term neglect during two recessions (1982/3 and again in 1991/2). Toyota has managed a long-term march from crude beginnings and has done so and a vast amount of mediocre machinery, far outperforming countrymen at Honda who have consistently fielded sharply better cars.
Apple made it with the ipod and explosion of digital music. Are you suggesting the D3 can create a whole new segment other than cars? You should also note their stagnant share in their original market, one still built on relatively inexpensive (to cars) designer goods.
Porsche is likewise a purveyor of niche products where a swing of several k sales is significant. Their success was also tied to expanding their lineup significantly [downmarket], which is not possible for full line companies.
Chrysler actually had one good idea in the minivan, and I doubt a repeat given they don’t do R&D anymore. Ford is still as stagnant as it ever was. Only the worse fate of the other two can make it look good.
You can’t call whatever Saturn had growth since it only had 1 car at the time, hand picked employees, and it started with 0 sales. Then what happened to it?
And seriously WTF with toyota/honda history. Notwithstanding inaccuracy, you know this is counterproductive to your point right?
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If you accept that the competition doesn’t stand still, then why is it so hard to see that our companies don’t have to either?
Because each has a consistent record and one record is drastically different than the other.
You know, I really do wish the best to detroit, especially now that they’re on our dole. But I’m also a realist, and outside of hoping for the best, I don’t see the specific model/line sales numbers working out for them.
Concepts like the Hy-wire are pie in the sky. The infrastructural support needed for such is nowhere near feasible for companies that can’t even build competitive econocars right. The volt is already turning out to be a joke not to mention the dead end that is electric cars. Without fundamentals, and the d3 are all weak here, they cannot afford innovation in a mature market.
At this point, it’s akin to cheering for their city’s home football team. Maybe by some miracle all aspects of their game will improve, but don’t bet the house on it.
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This is the crux of the difference between us. Predicting future trends is management thinking. It has its place in tactical operations. I’m interested in our companies *being*, making, instigating the trends others are trying to predict.
Yeah ok, whatever. Ironic considering I’m in the small minority of Americans in core tech innovation. Those are the wrong words to use for an industry with gigantic legacy infrastructure and fixed costs.
That betrays an astonishingly ignorant view of the industry (auto or otherwise) for the claims made.
I’m fully aware. I just pointed out that you said there’s data there, and there isn’t.
You should at least go do some basic research on the cost components of autos before frothing on about economic benefits.
I have. In depth. For years. Decades, in fact. When Ford was making five-figure margin on Expeditions, do you think that was trivial to Ford? Toyota didn’t accumulate its deca-billion dollar cash-hoard on break-even manufacturing. The comparative economic benefits are in the multipliers, and the retention of wealth deltas are also driven in the margins.
You had two points. One is that higher paying jobs are worth keeping. Some are, some aren’t. I think it’s pretty clear that a top heavy structure is what made detroit was it is.
Detroit hasn’t been struggling because its top-heavy relative to others. It’s struggling because of their selection of personnel occupying the top. It’s probably more middle-heavy in the non-engineering areas, and if marketing is any indication, again the liability is in who sits in the chairs, not in the number of chairs occupied.
Two is that money should be kept domestically, which component costs are the crux of.
But the delta defines the difference in economic leverage between a domestic and transplant purchase, for which the greater leverage is with the D3 product buy.
It’s not my responsibility to provide basic education on how to use google or nexis to get historical sales numbers. If you would just use the time it took to wax eloquent about “vision”, you’d find consistent trends that correlate to the lack of any such virtue.
Again, you claimed there is “math” *here*. There isn’t. I haven’t said at any point that existing management carries sufficient vision and leadership. But lacking it now is no deterrent to finding people who can bring it. Look forward, not back. We know it’s broken. We want to fix it, not merely throw our hands up in despair.
Apple made it with the ipod and explosion of digital music. Are you suggesting the D3 can create a whole new segment other than cars? You should also note their stagnant share in their original market, one still built on relatively inexpensive (to cars) designer goods.
Apple’s road back began with return of its visionary, then the iMac and redesign of the Macbook, before iPod. The company established a trend line return to relevance, sustainability and growth pre-iPod, and then accelerated by applying creative hardware integration skills and superior software to a boundary market — digital music and media. Then raised the ante with phones. Both of which they in turn redirected back to their core computing business.
Porsche is likewise a purveyor of niche products where a swing of several k sales is significant. Their success was also tied to expanding their lineup significantly [downmarket], which is not possible for full line companies.
Porsche didn’t just go downmarket. They broadened scope into segments where they had no prior expertise nor brand cachet. They’re not done, for better or worse, as the upcoming sedan demonstrates. The company has moved far beyond sports cars.
Chrysler actually had one good idea in the minivan, and I doubt a repeat given they don’t do R&D anymore. Ford is still as stagnant as it ever was. Only the worse fate of the other two can make it look good.
Chrysler clawed back with the K-cars. Then the minivan. Later the RAM revamp, cab-forward, Neon and PTCru. A continuing history of recurring surge and fallback. Ford has been far from stagnant, and finally showing some ability to multi-task by advancing cars and trucks at the same time, even in a financially distressed state.
You can’t call whatever Saturn had growth since it only had 1 car at the time, hand picked employees, and it started with 0 sales. Then what happened to it?
By the time the 91/92 recession hit, Saturn was already in the market, not at 0 cars level. What happened to Saturn later is that it lost its USP and its independence within GM. It drifted from its existential argument and failed to make money. But the initial push performed against a market share growth agenda.
And seriously WTF with toyota/honda history. Notwithstanding inaccuracy, you know this is counterproductive to your point right?
First, it’s NOT counterproductive to my argument. It illustrates that companies operate to a growth agenda by ignoring the discouraging information of the present. The second point is accurate. Most Toyotas are mediocre compared to most Hondas, yet Toyota outsells them. Toyota is the more determined growth company of the two and always has been.
Because each has a consistent record and one record is drastically different than the other.
Exactly. The past is what must be overcome. Any bailout agenda that doesn’t include that is a subsidized slide to extinction.
Concepts like the Hy-wire are pie in the sky. The infrastructural support needed for such is nowhere near feasible for companies that can’t even build competitive econocars right. The volt is already turning out to be a joke not to mention the dead end that is electric cars. Without fundamentals, and the d3 are all weak here, they cannot afford innovation in a mature market.
You miss the point. Hy-wire is a completely new way to architect and build a car. It doesn’t have to be hydrogen-powered, just electric. Only a few breakthroughs put it in reach, and Volt is directly on that evolutionary path by having only one motive architecture — electric motors.
We are going to have electric cars in our automotive mix. That’s a done deal this time. The automotive market isn’t mature, it’s just not nascent. The US is on course to add 100mm people before 2050, and another 100mm before 2100. The existing fleet will be ripe for large-scale change as innovations multiply over the next decade. Developing countries will enlarge their appetites for private transportation. The present constriction in automotive demand is temporary and should not limit forward agendas. No automaker however weak can afford absence of innovation. The whole point of federal assistance is to put a floor under these companies so they can continue to innovate independent of their immediate market performance.
Live for a change. Use your imagination and nurture some optimism. None of these problems are irretrievable.
Phil
I’m fully aware. I just pointed out that you said there’s data there, and there isn’t.
I didn’t say the “data” was there. If you’re aware of the info, you should stop pretending you don’t when it doesn’t suit your point.
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The comparative economic benefits are in the multipliers, and the retention of wealth deltas are also driven in the margins.
No they are not. Things that matter like employee income are part of total expenditures, not profit. If only profit mattered, it’s flat refutation of your position since the d3 are incapable of profit.
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It’s struggling because of their selection of personnel occupying the top.
It’s struggles are with systematic selection of incompetent people for promotion, and letting those people dictate direction. Their pay gradient is higher (thus more top heavy, since you know, money==prestige in capitalism), and they get worse performance for more money.
They really can’t get anything right, can they?
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But the delta defines the difference in economic leverage between a domestic and transplant purchase, for which the greater leverage is with the D3 product buy.
Yes, a lot of repetitive business terms. We know what a delta means. Try harder for something significant instead of trying to distract when you can’t come up with anything new. Like maybe showing what your “greater” portends.
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Look forward, not back. We know it’s broken. We want to fix it, not merely throw our hands up in despair.
Legacy matters, especially when there’s decades of it. To claim different is to be ignorant of corporate culture.
Reality also matters. Which is why they need to prepare for a realistic share of the market instead of positioning [with our money] for heavy loses.
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Apple, porsche, etc blah blah
I see you’ve just ignored my points on why they’re poor examples and only choose to rehashed how on their “success”. You might as well tell us about how that mom and pop grocery down the street got more business after the new owners decided to sell ready cooked meals instead.
The business analyst PR fluff piece on apple is especially hilarious, especially coming from someone advocating innovating out of trouble (with substance I presume). You should look behind the scenes at what actual tech is going on, and if anything they’ve basic conceded their original market. Unless you’re suggesting the d3 should start making major stuff other than cars.
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The second point is accurate. Most Toyotas are mediocre compared to most Hondas, yet Toyota outsells them.
Look at your first comment:
Toyota has managed a long-term march from crude beginnings and has done so and a vast amount of mediocre machinery, far outperforming countrymen at Honda who have consistently fielded sharply better cars.
You should look up the japanese gov’s involvement with these two companies to see why toyota has been historically favored.
And your perception of what is “sharply better” is apparently quite irrelevant to the buying public.
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You miss the point. Hy-wire is a completely new way to architect and build a car. It doesn’t have to be hydrogen-powered, just electric. Only a few breakthroughs put it in reach
I’m going to stop right here, since you seem pretty intent on just ignoring my main points and repeating yourself.
I’m can’t blame you for not understanding why electric is not “in reach”, since you buy into PR hype and don’t seem to be in the business of thinking about tech/physical fundamentals like energy density and flow rate which kills electric vs ICE. (the dead weight of the ICE for insurance in the volt basically admits defeat).*
In general, I would advocate the D3 hire you in PR. But keep away from the tech or logic or numbers because it’s this same fluff mentality that’ve gotten them in trouble.
Just pretending something is possible is not enough, even if a lot of business terms get dropped. You actually have to understand if that act is, in fact, realistically possible. I’ve never seen any plausible detailed account of how detroit can conceivably turn around, and given the number of people in the industry, I would think one had to been produced if such a thing was possible. My look at fundamental say no, but hey, I’m open to new angles as long as they not just cheerleading with industry cliches.
*Anyone interested should look up storage/mass densities for fuel/energy types, and their transfer rates. Note especially the current levels (assuming reasonable voltage) required for practical “fill up’s”. Suffice to say you wouldn’t want your new car to burn down your house every time you’re in a hurry.
I didn’t say the “data” was there. If you’re aware of the info, you should stop pretending you don’t when it doesn’t suit your point.
You wrote, among other things:
“As already shown in the thread…”
“I’ve summarized my trending and calcs above. They are logical statements based on actual realistic datum.”
Both suggest there’s something persuasive and factual above. Nothing I’ve written here is in conflict with any known trends, market data, performance data. My view of what can be done under sufficient reset conditions, and why bailouts are worthwhile is not constrained by present conditions.
No they are not. Things that matter like employee income are part of total expenditures, not profit. If only profit mattered, it’s flat refutation of your position since the d3 are incapable of profit.
You either don’t, or don’t want to, understand my point. I haven’t said there’s a complete lack of economic leverage in a transplant purchase. There is and it’s clearly better domestically than a pure import. I’ve said same before. But the economic benefits of a D3 domestic purchase extend further into the economy and that is consequence of total expenditure, gross margin, net margin and the number of times those expenditures turn over in the domestic economy. The multiplier effects of a domestic purchase are greater than for a transplant purchase, and that includes the portion of the domestic purchase that supports HQ jobs. The difference in economic leverage is relative. Both have contributory effects domestically.
Its struggles are with systematic selection of incompetent people for promotion, and letting those people dictate direction. Their pay gradient is higher (thus more top heavy, since you know, money==prestige in capitalism), and they get worse performance for more money.
Hiring and promoting the wrong people is not a measure of top-heaviness. Just poor execution.
They really can’t get anything right, can they?
Well, obviously they do get some things very right because the D3 still manage to produce a number of exceptional vehicles despite their systemic deficiencies. Imagine what’s possible if the deficiencies we both agree exist are systematically corrected.
Legacy matters, especially when there’s decades of it. To claim different is to be ignorant of corporate culture.
Yes, legacy defines the problems to be solved. You seem to believe that legacy in this case precludes progress. I believe otherwise. This is a difference in worldview that can’t be bridged.
Reality also matters. Which is why they need to prepare for a realistic share of the market instead of positioning [with our money] for heavy loses.
A growth agenda doesn’t mandate heavy losses. But a full retreat in market share to restore profitability too quickly will permanently cede the market. The auto sector is not a shrink-to-success market. I’m willing to use public money to bridge a market share reversal plan through some period of losses.
The business analyst PR fluff piece on apple is especially hilarious, especially coming from someone advocating innovating out of trouble (with substance I presume). You should look behind the scenes at what actual tech is going on, and if anything they’ve basic conceded their original market. Unless you’re suggesting the d3 should start making major stuff other than cars.
Apple has been proactively growing its market share in computers for the past few years. That’s not “conceding their original market.”
You should look up the japanese gov’s involvement with these two companies to see why toyota has been historically favored.
I’m aware of Toyota’s history. Your comment is non-sequitur to my point.
I can’t blame you for not understanding why electric is not “in reach”, since you buy into PR hype and don’t seem to be in the business of thinking about tech/physical fundamentals like energy density and flow rate which kills electric vs ICE. (the dead weight of the ICE for insurance in the volt basically admits defeat).*
I didn’t say I’m a fan of the electric car. I am fully aware of the limits of battery energy density. However, we’re getting electric cars in the private transportation mix, like it or not. In the mix, not full replacement of petrol cars. And many people will like them for a portion of their mobility requirements. We finally have enough progress in battery chemistry to make an electric urban car feasible for many people. And while battery chemistry is a field of incremental progress, it nevertheless progresses. Add that mass application of truly lightweight structural materials hasn’t yet hit mainstream manufacturing and you can see that electric cars will get better.
The serial hybrid architecture of the Volt isn’t an admission of defeat, it’s a coping strategy to bring useful practical range to the electric car as a primary automobile. It’s a bridge vehicle, transitional. It might be a transitional architecture for quite some time. WRT electric cars, I’m personally likely to be a late adopter. Nevertheless, we’re getting more.
Just pretending something is possible is not enough, even if a lot of business terms get dropped. You actually have to understand if that act is, in fact, realistically possible.
I do; and it is. But that’s not a guarantee it will happen.
Anyone interested should look up storage/mass densities for fuel/energy types, and their transfer rates. Note especially the current levels (assuming reasonable voltage) required for practical “fill up’s”. Suffice to say you wouldn’t want your new car to burn down your house every time you’re in a hurry.
Everyone here understands that the energy density of gasoline vastly exceeds that of battery chemistry, so feasible portability of stored electrical energy is going to result in a lower-performance, range-restricted car. Electric car buyers will be judging their satisfaction with their purchases on different criteria.
Phil
Nothing I’ve written here is in conflict with any known trends, market data, performance data. My view of what can be done under sufficient reset conditions, and why bailouts are worthwhile is not constrained by present conditions.
This is just hilarious. So essentially you know the data, but choose to ignore it when it doesn’t suite the hoped for conclusion.
I think this is about the 3rd time I’ll have to point out this kind of wishful thinking is why detroit and its apologists have NO credibility; and that’s the level of credibility they deserve.
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But the economic benefits of a D3 domestic purchase extend further into the economy and that is consequence of total expenditure, gross margin, net margin and the number of times those expenditures turn over in the domestic economy.
You use a lot of words that have no bearing on the argument. Again, dropping and repeating accounting terms doesn’t mean anything.
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Apple has been proactively growing its market share in computers for the past few years. That’s not “conceding their original market.”
They have minimal market share that cycle like any niche fashion product.
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I’m aware of Toyota’s history. Your comment is non-sequitur to my point.
You had no point and was just grasping at straws pretending honda vs toyota mean anything in this context.
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A growth agenda doesn’t mandate heavy losses.
It does when growth isn’t achieve. Growth is only believed by the likes of Bob Lutz. It’s NEVER happened with any consistency or strategy for detroit so most would venture to say it won’t magically start happening now without extraordinary evidence to the contrary. Or hell, I’ll take ANY evidence to the contrary, which has yet to be forthcoming.
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I am fully aware of the limits of battery energy density.
No, you clearly do not. Because if you did, you’d realize just how irrelevant and niche they will remain. Let’s see you sell a car that has inferior range, molasses fill up time, much higher intrinsic cost for performance, inadequate infrastructure, to anyone other than those with a house buying it as an expensive toy.
Ironically this is where the Apple analogy does apply.
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However, we’re getting electric cars in the private transportation mix, like it or not.
Why? Because you wish it so? Electric cars are and will remain for as long as the rules of physics and chemistry apply, far inferior to ICE systems, much more so than D3 cars are inferior to their current competitor. When are you proposing the laws of physics be repealed?
Finally, you realize electric or whatever alternate propulsion is not the exclusive providence of d3 and the reason why Toyota or Honda aren’t launching one is because they’re not that stupid, right?
Why? Because you wish it so? Electric cars are and will remain for as long as the rules of physics and chemistry apply, far inferior to ICE systems, much more so than D3 cars are inferior to their current competitor. When are you proposing the laws of physics be repealed?
Inferior only by the criteria you choose to apply. If you think a car needs to go 400 miles between refills, and be refilled in less than 5 minutes, then you’d be right. However, other people may apply different criteria. My wife and I both live 6 miles from work. That’s 12 miles a day, M-F. Even with a range of 25 miles, that leaves ample capacity to do errands on the way home from work. Once we get home, we rarely go out again, so an overnight “refill” is not a problem.
As a practical matter, we’d probably have one ICE car, and one electric. Sooner or later, the average American family will realize that not every vehicle they own needs to be constantly at the ready for cross-country motoring.
IMO, the electric of the future will the the plug in hybrid. A switch will allow the car to be used in purely electric mode, or in hybrid mode. Most people will find they can go in pure electric mode, most of the time. The ICE will still be there to allay fears of being stranded.
Finally, you realize electric or whatever alternate propulsion is not the exclusive providence of d3 and the reason why Toyota or Honda aren’t launching one is because they’re not that stupid, right?
Both Honda and Toyota are in a good position to develop electrics, given they both (particularly Toyota) have years of experienc with Hybrids.
This is just hilarious. So essentially you know the data, but choose to ignore it when it doesn’t suite the hoped for conclusion.
You make the mistaken assumption that if someone is aware of data, they must agree with how you interpret it, or assign it value for decisions at hand. I’m not ignoring data we both know exists; I just don’t think it means the same thing you do, nor do I feel constrained by it.
They have minimal market share that cycle like any niche fashion product.
Apple’s computer market share gains are not cyclical. And I say this as a Windows PC user. Their market share gains over the last 5 years have been significant in a locked-up market, and they were engineered from a business and marketing perspective.
You had no point and was just grasping at straws pretending honda vs toyota mean anything in this context.
Already amply explained. I have to assume you are intentionally obtuse on this point.
It does when growth isn’t achieve. Growth is only believed by the likes of Bob Lutz. It’s NEVER happened with any consistency or strategy for detroit so most would venture to say it won’t magically start happening now without extraordinary evidence to the contrary. Or hell, I’ll take ANY evidence to the contrary, which has yet to be forthcoming.
We can take the risk that growth isn’t achieved. We should be happy to fund a real effort. That is hasn’t happened recently in no way precludes Detroit growing its market share in coming years. The intention is to fund a change, not stasis.
No, you clearly do not. Because if you did, you’d realize just how irrelevant and niche they will remain. Let’s see you sell a car that has inferior range, molasses fill up time, much higher intrinsic cost for performance, inadequate infrastructure, to anyone other than those with a house buying it as an expensive toy.
Electric cars will be embraced within their incrementally improving limits. People who don’t have long distances to travel, don’t care about sustained high speed, have a preference to reduce their oil drip, and travel lightly want them for what they can offer. That buyer is willing to judge electric cars by acceptance criteria different from gasoline-fueled ICE automobiles.
Why? Because you wish it so? Electric cars are and will remain for as long as the rules of physics and chemistry apply, far inferior to ICE systems, much more so than D3 cars are inferior to their current competitor. When are you proposing the laws of physics be repealed?
As I said, if I ever buy an electric car, I’ll most likely be a laggard adopter. We’re getting them because it will be an environmental mandate regardless of compromises, and practicality within a specific functional scope plus the interests of certain buyers are about to intersect.
Finally, you realize electric or whatever alternate propulsion is not the exclusive providence of d3 and the reason why Toyota or Honda aren’t launching one is because they’re not that stupid, right?
Electric drive cars aren’t the exclusive domain of anyone. But GM has genuine experience building and fielding them. The fucntional, durable electric car will find its place in the automotive mix.
Honda not that stupid? The FCX is an electric car. It just uses a hydrogen fuel cell to generate electricity instead of humping a battery. But its motive drive is an electric motor. Once you’ve taken that step, the means of supplying electricity to said motor(s) is changeable. This is why both Volt and FCX are important way stations to a reconfiguration of the personal automobile.
Phil
However, other people may apply different criteria. My wife and I both live 6 miles from work. That’s 12 miles a day, M-F. Even with a range of 25 miles, that leaves ample capacity to do errands on the way home from work. Once we get home, we rarely go out again, so an overnight “refill” is not a problem.
It’s not quite adequate that a car meets the 80% or even 90% usage bar. The remaining 10-20% where you need to go somewhere slightly further away once every week or two outside (or even worse, in addition to) work is not an acceptable compromise against less expensive and more performant options. Sure there’s workarounds possible with careful planning, but why settle with less for more $?
I mean, it’s already pretty clear people won’t settle for cars that die by the side of read occasionally, so how about a car that does it every time you really need to get somewhere? This is why they had to include the dead weight ICE in the Volt instead of making it a mass produced tesla.
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IMO, the electric of the future will the the plug in hybrid. A switch will allow the car to be used in purely electric mode, or in hybrid mode.
This makes assumptions about oil prices and ICE efficiency. The main draw and saving factor of a hybrid are:
1. energy source
2. regen braking
3. eliminate idling/low throttle
2 and 3 can be solved using mild hybrid or even mechanical solutions. To combat (1) the potential rise in hydrocarbon prices, ICE development is also not necessarily stagnant with development of 6cycle engines and efficient injection. Even in your ideal case that still leaves us where we are about right now.
As mentioned before, this plus the gigantic infrastructural inertia inherent in the industry makes “innovation” a limited source of growth.
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Both Honda and Toyota are in a good position to develop electrics, given they both (particularly Toyota) have years of experienc with Hybrids.
And in general our competition have show to be at least as technically competent with slightly better efficiency and a superior managed business with a mind towards the compromises consumers response to.
So perhaps the d3 can draw even over time and retain that portion of the market I’ve mention, but unfortunate there are no magic bullets in mature industries.
They’ll have to dredge through making better family and econocars, gradually winning the buyer’s confidence, instead of pretending the basics rules don’t apply to them.
I just don’t think it means the same thing you do, nor do I feel constrained by it.
That’s core psychological problem with detroit, apologists who haven’t been constrained by reality for the last few decades. The foreign competition thanks you for continuing the detroit groupthink and making their job easier.
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And I say this as a Windows PC user. Their market share gains over the last 5 years have been significant in a locked-up market, and they were engineered from a business and marketing perspective.
Sure whatever. Keep pretending they’re anything other than a minor boutique shop perpetually stuck at a few percent despite a order of magnitude faster product cycle, and it’s the best detroit can hope to be within our lifetimes if they go with your brilliant plan for depending on niche vehicles.
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Already amply explained. I have to assume you are intentionally obtuse on this point.
No, why don’t you explain how two JDM manu’s with unique history between them is relevant to anything here.
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We can take the risk that growth isn’t achieved. We should be happy to fund a real effort.
Yes, let’s fund a history of consistent failure caused by the same delusional thinking. Let’s do it with financial guarantees that only guarantee complacency. We should only be so lucky.
Listen, if you’re so enamored with Honda, why don’t we just buy them with the inevitable bailout $ and move them over here? At least then you’d have a performer out of the gate.
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That buyer is willing to judge electric cars by acceptance criteria different from gasoline-fueled ICE automobiles.
The kind of buyer that is an idiot or doesn’t care about throwing some $ away. How many of those do you figure is around? Hint: see apple computers.
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Honda not that stupid? The FCX is an electric car.
Uh, the stupid company is the one pretending the electric car is going to be their salvation. Are you claiming Honda is that stupid?
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That’s core psychological problem with detroit, apologists who haven’t been constrained by reality for the last few decades. The foreign competition thanks you for continuing the detroit groupthink and making their job easier.
I have no connection to any automaker from anywhere, whatsoever. I’m not part of the Detroit groupthink, which I’m a critic of, nor the groupthink of the line of criticism represented by you and others. My view is orthogonal to both. One can be critical of embedded deficiency in the D3, while appreciating their instances of success and the good reasons for righting the ship.
Sure whatever. Keep pretending they’re anything other than a minor boutique shop perpetually stuck at a few percent despite a order of magnitude faster product cycle, and it’s the best detroit can hope to be within our lifetimes if they go with your brilliant plan for depending on niche vehicles.
By various measures, Apple tripled or quadrupled their market share in computers in the span of several years, after extended, recurring, decline. More to the point, they *planned* that reversal and executed well when many who dismiss them as an irrelevant “boutique” counseled pessimism. They also found their way back to ecxellent profitability after a long period of poor performance. They’re not done and it shows what a company on the ropes and left for dead can do in about a decade, willfully ignoring the argument of extant “data” that argues the situation is irretrievable.
No, why don’t you explain how two JDM manu’s with unique history between them is relevant to anything here.
Toyota’s relentless drive for growth, from feeble beginnings, was far more than a JDM push. In non-manufacturing areas of business execution, they exercised a predatory growth strategy that left Honda in their rear-view mirror despite making less sophisticated cars. Companies that aren’t committed to a mandatory growth strategy tend to perform to a lesser result even if they are doing reasonably well.
Listen, if you’re so enamored with Honda, why don’t we just buy them with the inevitable bailout $ and move them over here? At least then you’d have a performer out of the gate.
I’m not enamored with Honda. I’ve never owned one and probably won’t going forward. They make nothing appealing to me so far. However, for the mainstream buyers that have embraced the Japanese flavor of bread & butter FWD sedans and suburban utes, their quality and engineering generally has more polish than Toyota’s. I mean, really. Have you driven a current Accord and Camry in immediate sequence? A Civic and a Corolla? Neither is for me in either case, but Honda’s edge is vivid in that comparo. Despite product superiority on Honda’s part, Toyota persistently advances their market share lead.
The kind of buyer that is an idiot or doesn’t care about throwing some $ away. How many of those do you figure is around?
I imagine you think a lot of people are idiots whose thinking and preferences are at variance to yours. In places like L.A. there will be significant adoption of electric cars with various schemes for power generation or storage, as second and third vehicles in a household. Miami, San Francisco, San Jose, Richmond, Dallas, San Antonio, Houston, Phoenix, San Diego, Boston, New York will see replication of that acceptance. You’re free to stay on the sidelines, and I may too, but electric cars of various types will find a significant market over the next 15 years.
Uh, the stupid company is the one pretending the electric car is going to be their salvation. Are you claiming Honda is that stupid?
Aside from the start-ups, no company is pretending that electric cars will be their salvation. If you are referring to GM, their point is that Volt will be competitive among the various transition technologies that will be fielded over the next decade, and that its entry into the market also accelerates options for changing removing the car from the environmental debate. No one at GM believes Volt absolves them of responsibility to succeed in winning customers for mainstream, ICE-based hydrocarbon-fueled cars, nor has the company said so.
Phil
I’m not part of the Detroit groupthink, which I’m a critic of
I shouldn’t have to point out that your post read exactly like every single detroit exec and PR mouthpiece. They share in common a belief in miraculous recoveries not rooted in any realistic plan.
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By various measures, Apple tripled or quadrupled their market share in computers in the span of several years, after extended, recurring, decline.
You should look at actual sales share history (here is up to 2005, http://www.jeremyreimer.com/total_share.html, with couple percent gains last couple years with 9mil units sold).
Plus you can’t stop pretending a boutique shop selling $1-2k lifestyle machines with short life cycles is in any way analogous to the D3.
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Toyota’s relentless drive for growth, from feeble beginnings, was far more than a JDM push. In non-manufacturing areas of business execution, they exercised a predatory growth strategy that left Honda in their rear-view mirror despite making less sophisticated cars.
Or that the D3 is analogous to Toyota. The hilarity just doesn’t end.
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Despite product superiority on Honda’s part, Toyota persistently advances their market share lead.
That’s because they have marginally better reliability, often slightly lower cost, and somewhat softer vehicles (which is what their customers want). This is in addition to intangibles like a more complete line of vehicles, a real luxury halo brand, etc. Obviously they’re giving buyers what they desire, which is what the d3 can’t do, thus the consistent, unerring shift in market share.
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In places like L.A. there will be significant adoption of electric cars with various schemes for power generation or storage, as second and third vehicles in a household.
I’ll assume you only say this because you have no idea how LA is laid out.
I guess electrics are more useful in urban areas in general. But then again, so are CNG and other alternates that never panned out. In fact I recall the only alternate-ish car panning out is the toyota, which is mostly a ICE.
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You’re free to stay on the sidelines, and I may too, but electric cars of various types will find a significant market over the next 15 years.
I find it hard to believe you don’t get paid for Volt PR work. But for the sake of ttac, I’ll only point out the accuracy of Lutz’s prior predictions.
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No one at GM believes Volt absolves them of responsibility to succeed in winning customers for mainstream, ICE-based hydrocarbon-fueled cars, nor has the company said so.
So where is this innovate for growth talk coming from? Did you forget that part of your speech?
I shouldn’t have to point out that your post read exactly like every single detroit exec and PR mouthpiece. They share in common a belief in miraculous recoveries not rooted in any realistic plan.
They aren’t miracles if you deliver.
You should look at actual sales share history (here is up to 2005, http://www.jeremyreimer.com/total_share.html, with couple percent gains last couple years with 9mil units sold).
2005 was four years ago. From various sources, 2008: (lots more available.)
“According to data from Gartner, Apple posted a nearly 30 percent gain in market share over third quarter sales numbers from last year to hold 9.5 percent of the US PC market.”
“Perhaps more important, however, is the story of Apple’s steady and significant growth. Gartner’s numbers show Apple’s year-over-year growth at 29.4 percent, and IDC at 32 percent. Either way, the trend is clear. The overall growth in unit shipments for PCs in the US market is 4.6 percent. As Apple COO Tim Cook said at Tuesday’s media event, “If you look at the history, the Mac has outgrown the market for the last 14 of 15 quarters.””
“Apple’s substantial growth comes despite the fact that average PC prices continue to drop while Apple’s tend to remain steady. While many analysts called for Apple to release a cheap MacBook at Tuesday’s event, Apple instead did what it always does. That is, the company released products that, while priced higher than average, represent a good value for the money. There is little evidence to suggest that this strategy won’t continue to work in Apple’s favor.”
When you grow faster than the market overall, you’re gaining market share on somebody.
Apple’s PC market share in the US was 2.6% in 2001. A nearly 4X gain in market share in seven years, that was charted out, engineered, achieved.
The company, on the brink a decade ago, is no longer trivial. It’s closing in on a $50B annual revenue run-rate if the 2009 economy doesn’t interfere.
I’ll assume you only say this because you have no idea how LA is laid out.
I…uh….live in Los Angeles….
I find it hard to believe you don’t get paid for Volt PR work. But for the sake of ttac, I’ll only point out the accuracy of Lutz’s prior predictions.
I work in the tech industry. I’m easy to research. Unlike most here, including you, I post comments here under my name. In case you didn’t notice, I’ve had trouble-free American cars in my garage for over 25 years, and have not had any trouble finding responsive dealer service, either.
So where is this innovate for growth talk coming from? Did you forget that part of your speech?
There is more to innovation than a single serial hybrid electric vehicle. Innovation hasn’t been the limiting factor at GM and Ford. It’s the rate at which innovations reach the market. All the constrictions competitive content delivery to market are susceptible to remedy.
Phil
They aren’t miracles if you deliver.
No, that’s not how “miracles” are defined. They usually involve events that happened outside our known laws of causality.
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A nearly 4X gain in market share in seven years, that was charted out, engineered, achieved.
For a change you can try using actual consistent shipped numbers like Reimer does instead of selective press releases to judge share. Apple also just got clocked last quarter.
You will note that accurate numbers place their shipped units % as similar in 2005 as 2000/2001. They outgrew the overall market by I recall around 20 percent after that, so that makes maybe 4% total share instead of 2-3%. Significant no doubt, but not unprecedented for a niche player.
Plus you seemed to have used a source about as credible as you are: http://news.zdnet.co.uk/emergingtech/0,1000000183,39284186,00.htm
To put it in context, GM also “charted out, engineered, achieved” a significant growth in Hummer sales before a downfall. Such is the reality of trendy fashion products as I’ve explained and you willfully ignored.
It’s also kind of funny you use the word “engineered”, because they seem to have completely dropped their hw dev to making fancy enclosures, and sw got also switched to generalized foundations and limited to creating a simplistic UI on top. Their turnaround is entirely image based just like any other boutique producer.
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I…uh….live in Los Angeles….
And you still won’t admit an electric car is a poor idea in a sprawled city.
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I work in the tech industry. I’m easy to research. Unlike most here, including you, I post comments here under my name. In case you didn’t notice, I’ve had trouble-free American cars in my garage for over 25 years, and have not had any trouble finding responsive dealer service, either.
Nobody cares. The D3 obviously haven’t lost you as a customer, but they lose many tens of thousands or more every year, no thanks to their products.
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There is more to innovation than a single serial hybrid electric vehicle. Innovation hasn’t been the limiting factor at GM and Ford. It’s the rate at which innovations reach the market. All the constrictions competitive content delivery to market are susceptible to remedy.
Business cliches will not save you from logic:
1. You claim d3 must grow, with innovation.
2. You can’t seem to find any existing prod lines you’d willing to claim numbers for, so it’s implied the electric or hydrogen or whatever tech you brought up must be very significant to this growth.
3. However, after this tech is thoroughly discredited, now you’re stuck with the empty rhetoric of growth and nowhere to apply it.
This is the point where you should give in and admit that your argument lacks standing instead of digging yourself a bigger hole.
To improve in the future, you should think more about causality, and try applying it more often because all I see are outrageous claims and goals discordant from the present, and nothing substantive to connect them.
P.S. The funny bit to google are the “underwear gnomes”. The visual works well in PP presentations.
For a change you can try using actual consistent shipped numbers like Reimer does instead of selective press releases to judge share. Apple also just got clocked last quarter.
“Clocked” isn’t accurate. Their market share slipped primarily due to surging netbook sales, where they aren’t playing, by intent.
“…Mac growth to have slowed to 8.3 percent during the three-month period ending December, representing 1.225 million Macs shipped domestically. Apple has still gained a over a point in market share on a yearly basis, shipping 96,000 more systems than it did during the fourth quarter of 2007. However, its performance is down from quarter to quarter with 29.4 percent growth during the September quarter, when it reportedly shipped 1.645 million units to Americans.”
“…Still, Apple is one of just three top-tier PC vendors in the US who would have seen positive growth during the quarter based on Gartner’s data. Toshiba has shipped just over a million systems stateside to boost its share of US market to 6.5 percent, representing 12 percent yearly growth. Meanwhile, netbook maker Acer is expected to have had its unit shipments surge over 55 percent in the fall to propel its share to 15.2 percent from summer’s 8.8 percent while reclaiming its third place ranking from Apple….”
Plus you seemed to have used a source about as credible as you are: http://news.zdnet.co.uk/emergingtech/0,1000000183,39284186,00.htm
No. But the data is widely available and referenceable from a long list of diverse sources.
To put it in context, GM also “charted out, engineered, achieved” a significant growth in Hummer sales before a downfall. Such is the reality of trendy fashion products as I’ve explained and you willfully ignored.
I ignore irrelevancies after reading them twice. The initial example, Apple, is not selling mere fashion products. Hummer is also not an illustration of a corporate turnaround.
It’s also kind of funny you use the word “engineered”, because they seem to have completely dropped their hw dev to making fancy enclosures, and sw got also switched to generalized foundations and limited to creating a simplistic UI on top. Their turnaround is entirely image based just like any other boutique producer.
I presume you’re referring to Apple. Apple is a master packager, which is an engineering challenge all by itself, and an elegant hardware integrator. On the software side, they have proliferated leading implementation of high-abstraction applications and UI, along with a resilient OS. You may see it as “simplistic” but its purposeful simplicity is elegant, market-expanding and elevating to the market as a whole. They’ve forced everyone’s UI game to improve while winning converts to expand share.
And you still won’t admit an electric car is a poor idea in a sprawled city.
An electric car can be an excellent second car for many in L.A. and a primary car for some. I’m not impatient for one by any means, but right now, even a latter-years NmH EV-1 would effectively handle 70% of my routine mobility needs in L.A. A Volt would easily handle 100% of my needs, though not all of my wants. A Tesla, would handle all of my home-to-office commute.
You can’t seem to find any existing product lines you’d willing to claim numbers for, so it’s implied the electric or hydrogen or whatever tech you brought up must be very significant to this growth.
You haven’t asked for any “numbers” associated with any product lines. I’ve named several D3 automotive products that can gain market share if marketed competently and their general attributes are proliferated throughout product lines. More can be done independent of products to make having a customer relationship with a D3 company more appealing and competitive. But even if you assume *everything* Detroit makes is unable to win share, the purpose of taxpayer bridging is to sustain losses while financing innovation and revising products. But it’s not that so dire that progress can’t be made with what’s on the lots today.
However, after this tech is thoroughly discredited, now you’re stuck with the empty rhetoric of growth and nowhere to apply it.
Self-referential, you’ve discredited nothing. Certainly not “thoroughly.” I’m looking hard for this and can’t find it. All you’ve offered are objections for why you don’t think alternate drivetrains represent innovation, and they’ve been answered by me and others. You’ve offered nothing persuasive so far.
This is the point where…..
There is that old adage about never arguing with a…..aw, nevermind.
To improve in the future, you should think more about causality, and try applying it more often because all I see are outrageous claims and goals discordant from the present, and nothing substantive to connect them.
You haven’t been reading. Or, let’s just accept that you long ago made up your mind and that’s that. You assume data two people agree exists has only one meaning. It doesn’t. Without knowing you, I’d have to guess you’ve never taken on the project and responsibility for a business turn-around, and succeeded. Your view of what’s not just possible, but also highly feasible in revamping a dysfunctional company is just too restricted and lacking in ambition. A manager shrinks from it; leaders step in.
Phil
agenthex
It’s not quite adequate that a car meets the 80% or even 90% usage bar. The remaining 10-20% where you need to go somewhere slightly further away once every week or two outside (or even worse, in addition to) work is not an acceptable compromise against less expensive and more performant options. Sure there’s workarounds possible with careful planning, but why settle with less for more $?
It may not be adequate for you, but it is for me, and I suspect millions of others.
Electric tech will also be more widespread simply for the performance enthusiast. If you happened to read RF’s recent article on driving the big Lexus Hybrid, you’ll have noticed that he was quite enthused about the massive amounts of torque available instantly. A hybrid of course is not a pure electric, but the technology is there.
You seem to assume that everyone’s needs are similar to your own, but one of the realities of the future car market is that cars will be more narrowly tailored to people’s real needs. I dont really need a vehicle capable of 340 miles of driving between 5 minute fillups. Lots of others dont either.
Re: the argument about market share/apple/growth. You seem to acknowledge that Apple has at least 4% of the market. VW has 2% of the American market. Do you council VW to adopt a holding strategy ? Given their numbers, is it inevitable that they can never grow their share in the US?
No. But the data is widely available and referenceable from a long list of diverse sources.
Sure, similar data for that report all lead to Gardner, which gets referenced everywhere. You should know how these PR “analyst” firms work.
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The initial example, Apple, is not selling mere fashion products. Hummer is also not an illustration of a corporate turnaround….Apple is a master packager, which is an engineering challenge all by itself, and an elegant hardware integrator. On the software side, they have proliferated leading implementation of high-abstraction applications and UI, along with a resilient OS. You may see it as “simplistic” but its purposeful simplicity is elegant, market-expanding and elevating to the market as a whole. They’ve forced everyone’s UI game to improve while winning converts to expand share.
LOL, I guess you can do analyst work for Apple, too. For someone in the tech industry, you should study how tech works when you have the time.
All apple does is put same hw in a nice case. Then they made a simple, limited UI different enough so users paying twice as much for a less functional computer can justify themselves. It’s the H2 and its ilk to a T.
Their real trick is to position themselves in the media as a fashion house selling an edgy lifestyle, so nerds and wannabes drool over their designer purse laptop.
To be fair, it works for their niche, but it’s not a mainstream product.
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An electric car can be an excellent second car for many in L.A. and a primary car for some.
It doesn’t work as primary car except for maybe 1% of the population. You should look up the ev-1’s lease selection criteria.
Anything’ll work as a second car. You can use a bicycle, a corvette, a riding mower. It doesn’t matter, it’s a toy.
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You haven’t asked for any “numbers” associated with any product lines.
You lie. From above: “Show everyone how growth is possible for them. Which cars will sell more, by how much, and why.”
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I’ve named several D3 automotive products that can gain market share if marketed competently and their general attributes are proliferated throughout product lines.
So where are your sales numbers.
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Self-referential, you’ve discredited nothing. Certainly not “thoroughly.” I’m looking hard for this and can’t find it.
And yet, you’ve stopped replying to the tech portions of my posts. Repetitive cliches do not count.
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A manager shrinks from it; leaders step in.
This is really just fitting. This isn’t a pep talk. There was nothing substantive in your entire post.* The gnomes sum them up:
1. The present constriction in automotive demand is temporary and should not limit forward agendas. No automaker however weak can afford absence of innovation. The whole point of federal assistance is to put a floor under these companies so they can continue to innovate independent of their immediate market performance.
2. ?
3. Profit! Growth!
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*ok, to be fair, there was this one sentence: But even if you assume *everything* Detroit makes is unable to win share, the purpose of taxpayer bridging is to sustain losses while financing innovation and revising products.
It may not be adequate for you, but it is for me, and I suspect millions of others.
No it is not. For electric cars, all’s well unless you need that functionality, which is more often than most people think because they only factor in the average case. Then you’ll curse yourself for buying a much less flexible car for more $. Why do you think the Volt has an ICE?
It’s a fundamentally limited niche much like a corvette, or motorcycle. Sure it’ll work as a second car, and might even attract a cult following, but no one is advocating that as a foundation for growth because it’s a stupid idea.
Plus it’s relevance to detroit is minimal since the transplants will assume their usual position of creating a somewhat more desirable vehicle.
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A hybrid of course is not a pure electric, but the technology is there.
The hybrid you refer to is fundamentally dependent on the ICE. An electric assist (and recovery) does not make an electric car.
Re: the argument about market share/apple/growth. You seem to acknowledge that Apple has at least 4% of the market. VW has 2% of the American market. Do you council VW to adopt a holding strategy ? Given their numbers, is it inevitable that they can never grow their share in the US?
1. VW is not apple. They are supported by a large market in the fatherland where they can sustain the cost of a real lineup (instead of a fancy recase, eg. tahoe -> H2 / camry -> e300, like apple).
2. If the methodology by which they create their customer base is through hype and lifestyle, then no.
No it is not. For electric cars, all’s well unless you need that functionality, which is more often than most people think because they only factor in the average case. Then you’ll curse yourself for buying a much less flexible car for more $. Why do you think the Volt has an ICE?
Um, yes it is. I know my driving habits, and I know what will work for me. The functionality needed is actually much less than people think, because they don’t factor the average case, they factor the unusual case.
It’s a fundamentally limited niche much like a corvette, or motorcycle. Sure it’ll work as a second car, and might even attract a cult following, but no one is advocating that as a foundation for growth because it’s a stupid idea.
OK, If I understand you correctly, building sports cars and motorcycles is a stupid idea, and no one has grown making such things. Oooookaaaayyyy.
The hybrid you refer to is fundamentally dependent on the ICE. An electric assist (and recovery) does not make an electric car.
But BTs and motors do. That’s the point. By working on hybrids, companies are also learning about electric propulsion. They are in a better position to make pure electrics, if they should choose to do so.
1. VW is not apple. They are supported by a large market in the fatherland where they can sustain the cost of a real lineup (instead of a fancy recase, eg. tahoe -> H2 / camry -> e300, like apple).
Neither are the D3. Between them they have almost half of the 2nd largest market in the world. Much larger than the market in the Fatherland.
Sure, similar data for that report all lead to Gardner , which gets referenced everywhere. You should know how these PR “analyst” firms work.
Quite. Gartner’s data agrees with multiple sources and differences among them are small. For some reason you have trouble accepting anything that Apple accomplished after 2005. The figures I gave you are US market share figures. The global number is smaller and closer to what you imply you believe their market share to be.
All apple does is put same hw in a nice case. Then they made a simple, limited UI different enough so users paying twice as much for a less functional computer can justify themselves. It’s the H2 and its ilk to a T.
Personal computers have become commodities that are themselves supersets of commodity components. The entire PC industry is in the same boat. Pure technical innovation on the hardware side is in chips, to some extent in base storage, and in displays (lcd, led-lcd, oled, etc.). But that doesn’t mean no PC vendors are innovators. The iPod brought no new base technology to digital music players, nor did the iPhone to phones. But they were masterful innovations in integration. Innovation comes in many forms. It’s usually hard for engineers to swallow, but reality is that what you call “tech” generally drives only the first 10 – 20% of value accumulated by a company. Marketing and business execution overwhelm the contribution of tech, in driving value. That’s reality.
It doesn’t work as primary car except for maybe 1% of the population. You should look up the ev-1’s lease selection criteria.
Anything’ll work as a second car. You can use a bicycle, a corvette, a riding mower. It doesn’t matter, it’s a toy.
Second cars are more than toys. They have to provide real transportation. Third cars might be toys, but it depends on the size of the household. It just doesn’t matter. Electric drive is going to gain market share, whether serial hybrid, battery-only, fuel cell. There are technical, environmental, social and economic trends that assure it. The auto enthusiast perspective is held only by a small minority.
Show everyone how growth is possible for them. Which cars will sell more, by how much, and why.
This is not a serious question. Turn it around: Show everyone why growth is not possible for the D3. Which cars will sell less, by how much, and why. Neither question can be answered by anything other than an opinion outside the context of an execution plan. A growth strategy resulting from a turnaround effort involves more than product. In fact product is less of it than business execution. Put another way, more effective business execution can drive more sales of existing products regardless of what you think of them. And in today’s market, macro inhibitors like credit availability, removing uncertainty about the near-term survival of the D3, and stopping the fall in employment confidence and employment itself all have to be resolved. At a product level, an extended growth strategy will be driven by products that aren’t yet in the market.
And yet, you’ve stopped replying to the tech portions of my posts. Repetitive cliches do not count.
There haven’t really been any “tech portions” of your posts. Outside of a brief recitation of energy storage density limits in batteries which *everyone* here already knows, your posts are so far tech-free.
This is really just fitting. This isn’t a pep talk. There was nothing substantive in your entire post.* The gnomes sum them up:
OK, your business education is from South Park? I can see why your view of what’s possible is constrained.
The “#2” is, use the time bought by bridge financing to complete development and productization of next-gen or next-iteration technologies appropriate to market, regulatory and environmental mandates. For both GM and Ford this means proliferating hybrid drivetrains throughout their lines, continue efficiency gains in ICE, and accelerate delivery of meaningful alt-power options. Volt is one. It might also mean expanding production of existing motive options like GM’s 2.0L Turbo and NA Ecotec and pushing them into the availability options in more lines. Use bailout leverage to revamp UAW contracts to a more sustainable footing. Preferably, use bailout leverage to change the composition of Boards, in turn addressing deficient executive management. Retool more factories for green and flexible production, and more consistent build quality. Put finance in its proper place in management. Integrate the interests and collaboration of engineering and marketing. Revive marketing as a core skill in the D3 (long lost, once superb; can be again). Use the next few years to reshape and improve public perceptions of the relevant brands. Use offensive tools like warranties, depreciation mitigation, test drive loan programs to shift consideration and demand. Continuously improve product already in production and move forward with a surge in competitive new product releases. It has to be a multi-layered attack with near-term tactics and long term strategic revisions.
Profit! Growth!
Perform at current market share or *slightly* below. Defend turf. Growth over profit initially, then profitable growth. Growth is the immediate imperative.
Phil
The functionality needed is actually much less than people think, because they don’t factor the average case, they factor the unusual case.
People don’t buy cars for their minimal requirements. Otherwise 2 passenger vehicles would be much more popular.
It doesn’t matter what you think they can get away with. Sales will be relatively poor, which is the bottom line.
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building sports cars and motorcycles is a stupid idea, and no one has grown making such things. Oooookaaaayyyy.
You should find out what a niche market means.
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By working on hybrids, companies are also learning about electric propulsion. They are in a better position to make pure electrics, if they should choose to do so.
You can’t seem to comprehend that they’d avoiding electric cars not because they can’t figure out how to make a motor, but because the tech is fundamentally flawed. See above posts, even Phil gave up on that one.
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[Apple and vw]. Neither are the D3.
You should tell Phil that.
You can’t seem to comprehend that they’d avoiding electric cars not because they can’t figure out how to make a motor, but because the tech is fundamentally flawed. See above posts, even Phil gave up on that one.
Well, actually, no. The “tech” associated with electric cars isn’t flawed. It’s the battery chemistry that hits limits, but the rate of improvement has increased somewhat. Motor tech is very well developed, and the electric car allows a creative rethinking of how cars should be built.
Electric cars will be among volume vehicles in the automotive market, and tech or economics will not be the primary drivers. Electric cars will be in the mix because people want them. They want to quiet, the smooth operation, the usable torque, and they will learn to accept performance and range differences from gasoline so long as the basic needs are covered.
One has to love gasoline. I certainly do. It’s energy density is a gift to human mobility. But an increasing number of people will want to abandon it, or curtail their consumption for a variety of non-technical reasons, ranging from environmental to political to economic. For requirements met by 80, 100, 120, 150 miles of daily driving below 60 mph, lots of people will sign up for a quiet, locally-clean car that meets that need. Second cars and primaries for people of limited transit requirements.
For others who need range, a serial hybrid is the best way to implement a dual power solution. Optimize a small hydrocarbon engine or fuel cell for electricity generation and drive via electric motor(s) all the time. Yeah, engineers look at it as inelegant because something in the equation is “dead weight” under one condition or another. But it doesn’t matter. For the person who isn’t performance oriented, it will use less fuel and give them substantial electric-only range.
It’s not the only product GM needs, but it’s on point.
Phil
The figures I gave you are US market share figures. The global number is smaller and closer to what you imply you believe their market share to be.
The Gartner figures are selective US ones. Global share matters more in the OS context anyway.
BTW, your confusion and mixing between the two sets of figures is likely why you thought they quadrupled market share.
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But that doesn’t mean no PC vendors are innovators. The iPod brought no new base technology to digital music players, nor did the iPhone to phones. But they were masterful innovations in integration.
Clever diversion from the topic. Those are quite different from their reference design PCs.
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Marketing and business execution overwhelm the contribution of tech, in driving value. That’s reality.
Spoken like a true MBA. No wonder you can’t see why the D3 is in such deep trouble, because you have the same mindset as their leadership.
And why are you still talking about Apple as if a full line auto company can turn itself into a boutique fashion house?
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A growth strategy resulting from a turnaround effort involves more than product. In fact product is less of it than business execution.
You can’t seriously expect people to believe this given the history of products from the respective camps. Between just making stuff and straight obfuscation, I can’t decide your worse vice.
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This is not a serious question. Turn it around: Show everyone why growth is not possible for the D3. Which cars will sell less, by how much, and why.
It’s an absolutely serious question. Unless you can show where growth can be achieved, they’re just words.
BTW, I hope the business plan they’re required to submit for the loans are better than the BS you’re trying to pass off here as anything meaningful.
If you want details, I don’t foresee any growth in the GM lineup. Their small lineup, which has the most potential in the industry in general, is terrible. Ford has a decent changeup with the KA, and the new Focus (which can at least hold sales like the better transplants). SUV’s and more expensive CUV are going down the drain along with profits. The worst cuts (~50% or more) are coming from these types. Family cars will trend with the general industry, and neither ford nor GM have standouts. The best they can hope for is not drop below H & T’s change numbers, but given longer term consumer thinking, reliability is going to be a major factor which the d3 can’t match.
Chrysler is about dead anyway, they have nothing in the pipe except for the last minute deal with Fiat. The 500 has potential, but it’s niche, and the rest of italian lineup is hardly better than the d3 par for course.
Your turn. Don’t dodge like you usually do.
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Outside of a brief recitation of energy storage density limits in batteries which *everyone* here already knows, your posts are so far tech-free.
Your repeated claim to already know this and subsequent dropping the topic is why there doesn’t need to be further discussion.
But nobody knows what you’re talking about, because you’re just throwing out meaningless claims. Save the BS for your clients.
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OK, your business education is from South Park? I can see why your view of what’s possible is constrained.
You can take jokes seriously if that’s your thing, like south park, or the D3.
Your whole “plan” is just what every manufacturer does as course of business. Where is the difference? The history of the d3 is stifled by the lack any competitive advantage except they’re the home team. Where is it now? How does it necessarily lead to 3?
Well, actually, no. The “tech” associated with electric cars isn’t flawed.
Electrics use batteries for the foreseeable future. Therefore they are flawed unless you go invent something to circumvent that.
I anticipate a game from you dance around what flawed and tech mean.
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It’s the battery chemistry that hits limits, but the rate of improvement has increased somewhat.
Some mba saying it does not make it so. The known chemistries are a dead end. What improvments do you see? 20% maybe?. This is why hydrogen is brought up, but that’s still pie in the sky within our lifetimes.
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Electric cars will be in the mix because people want them.
Some people say they want them due to the current trend of greenwashing. That’s only because they don’t comprehend the substantive drawbacks. Every single person I’ve fully explained the implications to has now nixed it.
Take simple examples like forgetting something at home or minor emergency after arriving at work. You won’t necessarily be able to make a trip back. Change of plans after work because some friends want to go out? Cross that out. Just driving to a city slightly further away? (and back?). No. Depending on someone else to upgrade your charging infrastructure? Sorry.
I drive less than the average american, and just off the top of my head can list a handful of situations where I’d be stuck on the side of the road in an electric, as I’m sure most people.
This is the common case.
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and they will learn to accept performance and range differences from gasoline so long as the basic needs are covered.
That must be why cars don’t get slightly better every year. Oh wait.
As I’ve said, people choose to buy more imports over domestics over differences that are relatively small compared to ICE vs electric.
The only thing needed for this to work out is magical thinking and total suspension of disbelief.
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Yeah, engineers look at it as inelegant because something in the equation is “dead weight” under one condition or another. But it doesn’t matter.
All you’re doing is adding a separate electric drive to make an overall worse car. Look at the packaging implications. These car have to be small, and lightweight (ie. less safe). The average camcord size is not going to work as an economic compromise. Two drive trains are more problem prone.
Sure a few people might justify it, but I don’t see people putting solar panels on their house “just because”.
Money and cost are sensitive matters for a mass consumer product. So are packaging and convenience and reliability.
The Gartner figures are selective US ones. Global share matters more in the OS context anyway.
BTW, your confusion and mixing between the two sets of figures is likely why you thought they quadrupled market share.
Nope. I cited like for like. Apple engineered a nearly 4X increase in US market share 2001 – 2008.
Spoken like a true MBA. No wonder you can’t see why the D3 is in such deep trouble, because you have the same mindset as their leadership.
And why are you still talking about Apple as if a full line auto company can turn itself into a boutique fashion house?
No, not an MBA. But I have actually *proven* what I say in my own life.
While I did give more examples than Apple, that company is the one you latched onto. Apple turned itself from a boutique shop into a mainstream brand that now generates more revenue than car companies used to. It is an illustration of how a company written off can reclaim its position and then grow further with strong leadership-driven execution.
You can’t seriously expect people to believe this given the history of products from the respective camps.
I don’t really care whether *you* believe it. But practices set back the D3 even more than product missteps. There was a time when Asian cars were not reliable, but their business practices in rectifying problems won them forgiveness. I think you just don’t understand business.
If you want details, I don’t foresee any growth in the GM lineup. Their small lineup, which has the most potential in the industry in general, is terrible. Ford has a decent changeup with the KA, and the new Focus (which can at least hold sales like the better transplants). SUV’s and more expensive CUV are going down the drain along with profits. The worst cuts (~50% or more) are coming from these types. Family cars will trend with the general industry, and neither ford nor GM have standouts. The best they can hope for is not drop below H & T’s change numbers, but given longer term consumer thinking, reliability is going to be a major factor which the d3 can’t match.
Chrysler is about dead anyway, they have nothing in the pipe except for the last minute deal with Fiat. The 500 has potential, but it’s niche, and the rest of italian lineup is hardly better than the d3 par for course.
In the US, what you call “small lineup” is not the meat of the market. So while Cobalt is better than people here say, it’s not best, not even better than Focus and that’s not anywhere close to GM’s biggest problem nor opportunity. Malibu shows GM can build a class-leading car and is a huge leap from what came before it. The platform attributes can be proliferated and it and its relatives can win back share with better marketing and offensive tools packed around it.
Same for Ford’s mid-size/large mid-size contenders and their hybrids. Buick and Cadillac have distinctive propositions which have untapped sales potential. And trucks will rebound to a more normal level. Escape and HHR can also be grown, particularly through powertrain variety. Ranger can be grown with a little bit of attention as well.
Chrysler is a salvage job from ground zero if it survives so moot for now on this topic.
Your repeated claim to already know this and subsequent dropping the topic is why there doesn’t need to be further discussion.
What’s there to talk about? You dismiss electric cars because of battery limits and I and others have pointed out that part of the market wants such a car and can live within its limits. Well, your view is moot. Electric cars will be in the mix for those who want them. And they *will* improve, and some will buy them for reasons that you deem irrational.
Your whole “plan” is just what every manufacturer does as course of business. Where is the difference? The history of the d3 is stifled by the lack any competitive advantage except they’re the home team. Where is it now? How does it necessarily lead to 3?
You presume that nothing will change. What I informally described is not what “every manufacturer does.” Many have no idea how to sequence these initiatives to achieve a turn-around from dire circumstances. Detroit’s first problem is managerial: how to unlock the engineering and design talent within. Its second problem is economic: how to wrestle down the cost of direct car-making and attendant economics (health care, regulatory) in the US. The second problem is susceptible to remedy if the first problem solved begins to change consumer perception, preference and moves cars. Detroit’s challenge is to rebuild a demand-driven business, which they once had, and recently enjoyed in trucks and SUVs. The competitive advantage is in design and ability to deliver accessible luxury in mainstream vehicles, along with world-class technology integration. These attributes just have to make their way through the currently thick layer of financial management. $100B or more attached to teams that can drive radical change and focus creative output would prove cheap.
Phil
Electrics use batteries for the foreseeable future. Therefore they are flawed unless you go invent something to circumvent that.
An insufficiency in energy density relative to what *you* want to see isn’t a flaw, it’s just a trait. Batteries work well if regulated, they just don’t offer enough to replace a gasoline powered car in like utility. So what? There’s a market for what a contemporary electric drive car can do, whether it’s driven by batteries, or a charging engine.
Some mba saying it does not make it so.
I’d agree if there were an MBA saying it.
The known chemistries are a dead end. What improvments do you see? 20% maybe?. This is why hydrogen is brought up, but that’s still pie in the sky within our lifetimes.
In computing we’ve grown accustomed to dramatic gains, but outside the digital realm, 20% improvements are still quite meaningful. The amount of portable electic power relative to weight of the storage medium has improved nicely over the past 20 years, just not impressively compared to digital tech. Hydrogen is just another battery in this scheme and I don’t see it going mainstream anytime soon. But we’ve finally gotten to the point where Lithium batteries are compact, light and powerful enough to nudge electric cars over a threshhold of acceptability for substantial numbers of people, and we’re going to get them as serial hybrids, plug-in hybrids and pure battery cars for reasons other than strict adherence to current perceptions of automotive utility.
I drive less than the average american, and just off the top of my head can list a handful of situations where I’d be stuck on the side of the road in an electric, as I’m sure most people.
Likewise in my case. Yet there are scores of people in my network who have or will buy an electic-drive car for secondary uses or their commute is short enough that none of these worries materialize. Between my wife and I, one car could be electric and one ICE, and all of our private mobility needs would be met. There are a lot of couples in that position.
As I’ve said, people choose to buy more imports over domestics over differences that are relatively small compared to ICE vs electric.
The early adoption of electric cars will be driven by different criteria than the small differences that pollute the selection process for commodity ICE vehicles. Early electric car adoption will be emotionally-driven, which will break down inhibitors holding back some others.
All you’re doing is adding a separate electric drive to make an overall worse car. Look at the packaging implications. These car have to be small, and lightweight (ie. less safe). The average camcord size is not going to work as an economic compromise. Two drive trains are more problem prone.
This is the classic engineer objection that just won’t matter to people who want an electric car for other reasons. There are in cities a lot of people who want to give up the noise and local emissions of a gasoline car. They want to stop supporting oil producers. They have real or imagined Green concerns. Their social affinity and political stature will rise. They’re going to overlook everything you cite.
Electric drive doesn’t have to immediately reach Camry + Malibu + Accord + Fusion sales to be a succes. “Mass consumer” isn’t what it used to be in our auto market.
Phil
Nope. I cited like for like. Apple engineered a nearly 4X increase in US market share 2001 – 2008.
Where are your numbers. I can see ~4% US only in 2001, and around 8% in in 2008. They were 8.3 last quarter. 2% numbers are worldwide.
http://answers.google.com/answers/threadview/id/214083.html
While I did give more examples than Apple, that company is the one you latched onto. Apple turned itself from a boutique shop into a mainstream brand that now generates more revenue than car companies used to. It is an illustration of how a company written off can reclaim its position and then grow further with strong leadership-driven execution.
Apple is perfect example of why your thinking is skewed. In the mid 90’s they had >10% WORLDWIDE market share, when they were quite mainstream with education and some business.
Now, they are a home fashion accessory. Luxury designer labels did pretty well in the same period, too. I’m sure sure you can just substitute LVMH or similar for Apple in your fluff pieces above.
Somehow you still like to bring this as an example for the D3, don’t see why a fashion house is not the same as a full line auto maker.
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There was a time when Asian cars were not reliable, but their business practices in rectifying problems won them forgiveness.
Yes, they business practice was to make far more reliable cars.
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I and others have pointed out that part of the market wants such a car and can live within its limits.
Yeah, whatever. You must one of the EV-1 conspiracists, too.
I’m willing to put some $ where my mouth is on volt sales numbers if you are. Easy cash I’d say. Even easier if anyone were stupid enough to release a pure electric car.
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What I informally described is not what “every manufacturer does.” Many have no idea how to sequence these initiatives to achieve a turn-around from dire circumstances.
Who might these manufacturers be? And I presume your brilliant insight on the obvious will lead them around. I guess taking credit is an mba’s strong suit.
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Detroit’s challenge is to rebuild a demand-driven business, which they once had, and recently enjoyed in trucks and SUVs. The competitive advantage is in design and ability to deliver accessible luxury in mainstream vehicles, along with world-class technology integration.
So their advantage is in something they’re at a strong disadvantage in right now. Great.
BTW, I’m still waiting on your segment growth estimates. Or I take it you agree with mine.
There’s a market for what a contemporary electric drive car can do, whether it’s driven by batteries, or a charging engine.
Sure there’s a market, just a very small one. I’m glad you’re coming around.
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I’d agree if there were an MBA saying it.
Don’t be so modest. You obfuscate with the best of them.
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The amount of portable electic power relative to weight of the storage medium has improved nicely over the past 20 years, just not impressively compared to digital tech.
Not really. Lithium’s been around for while. Hell fuel cells have been around forever. There’s not much else on the horizon. We’re stuck unless something magical happens. Improving something with volt’s size/cost to 50mi from 40mi is not a game changer.
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Between my wife and I, one car could be electric and one ICE, and all of our private mobility needs would be met. There are a lot of couples in that position.
I’m sure if this is an authoritarian country, people can make do with electrics when mandated. But the reality is people have to choose to buy them, and those numbers are very low for the cost and drawbacks they possess.
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Early electric car adoption will be emotionally-driven, which will break down inhibitors holding back some others.
Again, sure. But number of people willing to drop 30-40 large at least on something objectively inferior is not exactly plentiful. The user experience when they’re stuck on the side of the road will ensure it.
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This is the classic engineer objection that just won’t matter to people who want an electric car for other reasons.
I’m perfectly aware people often make “dumb” purchasing decisions. Otherwise why would so many keep buying domestics all these years? :-) The reality remains that it’s a niche for people with money to throw around. With better marketing, maybe you get a couple more percent to spend it here, or make it a halo or whatever, but the fundamental issues will keep it from being anything more than a side show.
I paid .50 cents on the dollar in taxes this year totaling about 40K. I feel more connected to any bailout this year because of this fact. I still feel that even though these auto makers need to be held accountable for the tax payer money they spend they still need elbow room to conduct business.
If a full page color ad saying thank you to Americans brings some people into Chrysler showrooms then maybe this is money well spent.
If I own stock in Coke I will not purchase Pepsi at the super market!