Click here for the Presidential Task Force on Automobiles’ “Restructuring Fact Sheet.” Perhaps the most relevant statement: “The new GM will have a significant focus on developing high fuel-efficiency cars that have broad consumer appeal because they are cost-effective, have good performance and are reliable, durable and safe.” I guess branding isn’t the PTFOA’s forte, as that’s about as generic a description of a car as you can get. Hey guys, pick one. Of course, they can’t say that. So we have to assume that the first on the list is considered the most important; it certainly fits in with the ruling party’s political priorities. And, as TTAC’s Best and Brightest point out below, it would be easy enough for the feds to make fuel efficiency THE key sales determinant: just hoik the gas tax. See how that works?
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Clear the way for the pre-pack; now the fun begins.
Who will broker the deals, and which parties have the most pull with the administration and congress? Stay tuned for more back room dealing than any health care plan could ever engender.
Yep. Said it a long long time ago and will continue saying it today. The only way the Big 3 will ever survive is if they have an alternative form of bankruptcy that keeps them far away from the inertias of Chapter 11 filings.
Of course, this is assuming the government and/or company cuts what they need to.
Fundamentally correct assessment, but with one huge flaw.
I agree that GM can come back strong if it can get out from under its debt and reduce its fixed costs. And that Chrysler is not viable by itself.
The problem:
“The new GM will have a significant focus on developing high fuel-efficiency
cars that have broad consumer appeal because they are cost-effective, have good performance and are reliable, durable and safe.”
What’s with the fixation on fuel economy as the solution? These companies, especially GM, did not fail because their cars’ fuel economy is not competitive. Aside from a brief recent blip, car buyers are not making buying decisions entirely based on fuel economy. Force these companies to offer only highly efficient cars, and unless gas shoots up in price these companies will fail.
Michael K,
But the gas will shoot up in price, probably past its top achieved last year. It may take a few years but when the economy recovers the gas is going up, up, up.
I think fuel economy will eventually have the same significance in NA as it does everywhere else in the world (outside of oil producing countries), it will be the most important consideration for a buyer, any buyer even the BMW 7-series buyer.
“Force these companies to offer only highly efficient cars, and unless gas shoots up in price these companies will fail.”
One small change in the federal gas tax laws can change that dynamic presto.
Today’s news seems to fly in the face of the expectation that Obama’s administration would simply hand over more money to keep the companies on life support. GM and Chrysler handed in their homework … and got the F grades they deserved.
Cheap clearance GM/Chrysler cars and Government “backed” warranty?
Ford will be horrified…..or stepping up to the Bailout trough post-haste.
@ra_pro
This economy is not going to recover for a long time.
Howes(Det News) is reporting that Gettlefinger wanted Waggoner removed and the Obama men bid his wish. So now the union is calling the shots.
GM could make cars that get 50 mpg and people would still worry about the resale, reliability and quality of the vehicle. Crappy interiors don’t endear these cars to anyone. High efficiency is what the rabid left wants and they plan to use the government to get it. The problem is people choose to buy cars, they are not issued to us by the government. Yet.
John,
I’ve repeatedly written in favor of a higher gas tax. But the government won’t have to balls to raise the gas tax as long as the economy is weak, and probably not afterwards, either.
Instead, once again the government seems to think it can increase fuel efficiency by regulating supply rather than influencing demand.
ra_pro,
And when will that be? Is the governement going to prop up GM until it does? A key reason for the restructuring is to reduce GM’s debt load. It could end up with just as much debt, but owed to the government.
“The Administration will stand behind new cars purchased from GM or Chrysler during this period through an innovative warrantee commitment program.”
Ok. That’s the clincher. Bankruptcy.
That much seems clear, BS.
This make we wonder… so Ford will not be controlled by a “Director of Automotive Recovery.” Which of the big 2.8 do you think will produce better vehicles in five years? Ten years? Will incentives put GM/Chrysler at an unfair advantage, or will the freedom that Ford has allow them to produce more competitive products?
One could just as easily interpret this as corrective action for past willful childishness on previous fuel efficiency efforts.
IE, because they sought and got damaging loopholes in past CAFE legislation, they aren’t going to be treated as adults this time around.
Since the executive branch now apparently controls them, this might actually work better – CAFE was destined for loopholedom given the composition of the legislative branch.
So the secret to selling cars at a profit lies in restructuring plans and management thinking. In the GM section, I saw nothing about the Union’s role in this. Under the Chrysler section it is stated the Union needs to make concessions. Sure, that’s going to happen.
Dr. Montgomery is a nice enough man but having the title of auto recovery czar flies in the face of the realities here. Here at TTAC we have chronicled this slide and now are at the bottom.
Fiat, a company with a reputation for quality at least as bad as Chrysler, is going to transfer technology to hapless Mopar? Just start building Neons again and call it done.
Ford already has competitive products. They just need a decent ad campaign and a better economy, and sales would take off.
Doesn’t the gas tax pay for the highway improvements?
Wouldn’t rising gas tax kill two birds with one stone: people buying more efficient cars (on average) and more money to fix crumbling infrastructure?
I live in the Cleveland/Akron metro and two main freeways taking people to work downtown Cleveland are crumbling. That’s got to contribute to poor business climate. I know it’s bad all around, but Cleveland never seemed to recover from ’98 and/or ’00-’01 slowdowns/recessions.
A rising gas tax would be swell, but it’s irrelevant, since the political party preferred by most of those sniping at Obama has made tax increases tantamount to political suicide.
This is my favorite quote out of the whole “Fact Sheet,” regarding a Chrysler/Fiat Alliance:
The product mix and geographic reach of both companies is very complementary.
I think the same thing was said a few years back; we all saw what a raging success DaimlerChrysler was…
The product mix and geographic reach of both companies is very complementary.
I think the same thing was said a few years back; we all saw what a raging success DaimlerChrysler was…
What was the joke at the time of the Daimler/Chrylser merger?
Heaven is Mercedes engineering and Chrysler design. Hell is Mercedes design and Chrysler engineering.
To update the joke…
Hell is Chysler engineering and Fiat styling.
Hell is Fiat engineering and Chrysler styling.
Wait…. something’s wrong…. :-)
“The product mix and geographic reach of both companies is very complementary.”
But they DO complement each other. Chrysler provides vehicles for the american market, Fiat for the european market. To think that Chrysler would sell a sustainable amount of cars in Europe, and Fiat likewise in the United States, is a whole another affair.
I think fuel economy will eventually have the same significance in NA as it does everywhere else in the world (outside of oil producing countries)
Not everywhere else in the world, as countries like Australia, New Zealand, and Thailand that have gasoline tax levels closer to that of the US than Europe have automobile preferences closer to that of the US as well, and they’re not substantial oil producing countries. (Yeah, Thailand produces some, but no more than Denmark, which has high taxes and small cars.) Whereas there are countries that produce and export a substantial amount of oil and gas yet have high gasoline taxes, like Norway, and prefer smaller cars due to that.
While it’s true that, all things being equal, the more oil a country produces (per capita) the less it’s likely to tax gasoline, the gasoline tax has a better correlation with vehicle preference, as the above examples show.
CAFE was destined for loopholedom given the composition of the legislative branch.
CAFE was destined for loopholes because some people actually need large vehicles for work. Since you can’t ban large vehicles, people who didn’t need them but wanted them were going to find a way to get them.
The proper way to distinguish between need and want is pricing, which a tax would satisfy. I suppose you could have the government control who could buy work vehicles, making sure that people “really needed them.” Or else set up a legally enforceable cartel of sellers so that powerful vehicles were made more expensive. The other problem is that the farm lobby, is strong, as seen in the recent farm bills, as are other lobbies that need powerful vehicles.
Every country realizes that “loopholes” are needed for work vehicles, but taxing works better than regulation. You don’t really need to exempt the work vehicles from tax for only people who need powerful vehicles to get them, but the UK (and elsewhere in Europe) alternative is to tax gasoline and diesel to a great extent, then not tax farm and construction diesel but color it red, and then regulate who can get it and punish people for using the red diesel in non-work vehicles.
And blaming Republicans for Democrats being unwilling to do the correct thing and raise the gas tax is like blaming Democrats for GWB raising spending because the Democrats made it politically impossible to cut it, and politically impossible not to have a Medicare prescription drug benefits, etc. There’s some political truth to it, but it’s hardly satisfying.
In any case, M1EK, I certainly understand being annoyed between the Republican alternative of not spending on infrastructure and not raising the gas tax, and the Democratic alternative of not raising the gas tax and breaking tradition by subsidizing roads through federal general funds (done last year and in the stimulus).
Lokki, LOL, good one.
BTW, Hell is the government in the car business. Anything less is mild discomfort by comparison.
I still remember in the movie ‘Get Shorty’ a mobster pulls a small automatic and his soon to be deceased opponent says ‘What’s that, the Wop 9? The fucking Fiat of guns?’ (Pardon the cultural insensitivity, I am quoting.) That’s the mocking attitude most people have of Fiat in NA, and rightly so. They sold cars that seemed to have some miraculous form of rust accelerant (amongst other shortcomings). That whole linkup baffles me.
Handing over GM to the gubmint is like handing over a terminal cancer patient to Dr. Kevorkian. You know just how this is going to end.
breaking tradition by subsidizing roads through federal general funds (done last year and in the stimulus).
That is, of course, a lie: roads have been subsidized for a very long time, and you’ve been corrected on this in the past.
I wonder where the Corvette, Camaro, and CTS-V will stand in Government Motors.
NickR: the only thing I remember from “Get Shorty” is the blatant and out of place GM product placement. Like a bunch of mobster-wannabe Hollywood scriptwriters would like to be seen in an Oldsmobile Silhouette? For real?
h82w28: “Handing over GM to the gubmint is like handing over a terminal cancer patient to Dr. Kevorkian.”
It’s worse. Kevorkian didn’t make us pay the bill.