Ford is starting to get pissed off at the feds for rewarding their cross-town rivals’ failure, taking bread off their table. On Monday, FoMoCo spinmeister Mark Truby pointed out that “If you’re competing against a company that’s majority owned by the U.S. government, that does raise certain concerns about what the competitive dynamic will be for the industry.” Translation: will Chrysler and GM use taxpayer money to keep customers from defecting to The Blue Oval Boyz (amongst others). Yes they can! The Associated Press reports that Chrysler is tapping into bailout bucks to launch a fresh round of incentives to keep pumping blood into the Auburn Hills automaker’s corpse: 0 percent financing for 60 months or up to $4,000 cash back on “certain” 2009 Chrysler, Dodge and Jeep models. Oh, and Chrysler owners get $1,000 loyalty cash towards a new 2008 or 2009 car. Yes, 2008. Chrysler says the promotion runs until July 1. At the least.
Still not nearly enough incentive for me.
I’d like to get my hands on a Jeep Patriot Limited 4wd (2009 with the upgrdaded interior) But I want it dirt cheap. I can wait.
Yet another reason that socialism / fascism doesn’t work.
When you attempt to have some of an industry under one set of rules (proscribed by the government) yet owned by stockholders, and another set of rules (proscribed by the government) for organizations run BY the government, it has to end this way.
It’s not just a case of Ford whining “not fair”, because it’s not whining. It’s absolute truth.
As most of us (and even most of the American citizenry) know, it would have been better in the long run, had GM and Chrysler gone Chapter 7 and closed down.
Some remnants may have been bought up and resurrected (hopefully to make a profit and provide good jobs for Americans).
As things stand now, we have a morally, fiscally and spiritually bankrupt, illegitimate government running two fiscally bankrupt automakers in competition with all the other automakers, including ones specifically and explicitly INVITED to place factories in this country instead of exporting cars into this country from their home nations of Japan, South Korean and Germany.
Not acceptible, but for now, we the people are held impotent by President Goodwrench and co.
Until late 2010, that is.
It would take me a lot more than $4,000 off to buy a Chysler. If I’m looking at a Mazda3 versus a Caliber with $4,000 off, there’s no way I buy the Caliber!
RF…
This is exactly the problem I saw and asked about when this entire bailout brainfreeze began.
How can any competitor allow consumer monies being used against it???
This is not the age old trade war thing.
That was at least used against imports, although even that doesn’t work long run for consumers.
But this is against one of our own.
Is this legal?
Is this legal?
I don’t know, but it is futile.
And here begins accelerates the Ford family’s loss of their company to the government.
If the outrage over this “fascism” is strong enough, people will vote with their wallets and Ford’s market share will increase.
I guess if unbridled capitalism had ruled, both Chryco and GM would have gone belly up, along with shared suppliers, and Ford would be King, selling us Mexican-built cars of Chinese parts.
Gotta love the pursuit of profit.
I sincerely hope that Ford does have a legally viable stand in this. This should be stopped.
Menno-President Goodwrench +1
Bunter
Oddly enough, this sort of thing could derail so called clunker culling actions by the government. Why bother with passing legislation when you can just give away incentive money via GM and Chrysler?
Not sure how the incentives are structured, but incentives to clear out old inventory like leftover 2008 models are much less objectionable than incentives on products manufactured after the government takover. It’s totally and completely unacceptable for Government Motors to buy market share using my money.
Better take advantage of it as it’s probably the only return on our “investment” that we’ll ever see.
You couldn’t GIVE me a Sebring or Caliber, and I suspect a lot of people feel the same way!
Robert, that is an excellent post, and suitably angry.
I do have socialist inclinations, but I believe that the state needs to regulate some areas of business, just like it polices the population, in order to discourage and punish behavior that proves detrimental to society. That includes assaults, subprime mortgages, and pollution.
However, I absolutely do not think that the government should OWN any private business, or compete with private business, or interfere beyond what I listed above. It is not efficient, and will generally be a short-term vision driven by political imperatives of pleasing voters. Never a good thing.
unfortunately, that same political pressure does apply to the Obama administration. I would bet that it does have second thoughts about that whole ownership business, but not propping up Detroit, blue-collar-oriented companies after propping up banks is politically delicate, to say the least.
Ford has bit their tongue for a long time. I think the gloves will come off very quickly, as they should. I see Mullaly finding the timing right to pound Ford’s chest and go for the full fight, American dream and all.
I also see them possibly teaming up with Toyota, Nissan, Honda & Hyundai, who all manufacture cars in the US, to very publicly protest against being forced to compete with the government.
I hope this gets a bit ugly. Ford needs to win, they’ve been so vastly superior in planning than the other two zombies.
1) With this bailout, they are killing the only viable American auto industry left — Ford.
2) Remember they spent tax money to investigate the Chinese for dumping cheap toys? Has the anti-dumping legislation been deleted?
Right on Shaker! The only other thing I would say here is this: A better economy with people’s wages increasing rather than getting reduced (as the so-called “free-market” conservatives love to see)along with more credit available will get sales up for all car companies. The complaints about socialism and fascism do absolutely nothing to improve the situation. If you don’t like the auto bailout (and I don’t)then don’t do any business with any manufacturer who has received our tax dollars (I won’t). Since I never have liked Ford products, I guess I will consider Toyota, Nissan, etc.
wsn :
June 3rd, 2009 at 1:34 pm
“1) With this bailout, they are killing the only viable American auto industry left — Ford.”
exactly. every time a company gets rewarded for ineptitude, it hurts all those businesses that are strong operators. strong operators can create more jobs over time than any gov’t subsidized operator. it’s the classic moral hazard, and while many say that’s not an important hazard, I would argue it’s the most important hazard for the long-run. just run through the domino consequences of this entire bailout policy. the unintended consequences will be much more severe than any of the short-run consequences we are avoiding. it’s just that the unintended consequences are so much harder for the sheep out there to see and therefore quantify.
I think a simple statement by the government that the amount of dollars given to the two zombies will be their last no matter what…so both GM and Chrysler have to figure out how to make it last.
That could change the behavior somewhat…
Ken Elias :
June 3rd, 2009 at 1:55 pm
“I think a simple statement by the government that the amount of dollars given to the two zombies will be their last no matter what…so both GM and Chrysler have to figure out how to make it last.
That could change the behavior somewhat…”
who’s going to buy that? that’s just like the gov’t used to say about fannie and freddie, that there was no explicit gov’t guarantee. we all knew there was and there will be in this case as well even if this statement is made.
Don’t you get? They don’t care if they kill off the only other American car maker (Ford). Once they have it on the ropes, they can bring into the socialist stable as well. Remember, these people believe capitalism is a four letter word.
It takes more than money on the table to buy these cars. I for one will never own a GM or Chrysler car (not even a used one) ever again. At some point the consumer thinks about their money and where it is going.
Further to that point, the easy cash destroys the resale value of the car. If you’re thinking long term ownership that is not as important but if cash on the hood leaves you a few grand upside down for 2 years your not going to be happy.
Ken, I like your thinking, but I’m afraid Obama is in so deep already he will keep the insanity going. This and the whole banking fiasco are going to be the “Obama quagmire”–regardless of the fact that the snowball was already rolling long before he entered office.
GM suppliers are Ford suppliers. That means many would close with GM and with it Ford would die.
For the last 50 years GM has run with the idea that money on the hood moves iron. Period. No matter how bad the unit stinks up the lot, slap a “SALE!” sticker on it and out it goes.
A not insignificant number of people view an automobile as nothing more than an expensive appliance they would rather not have to fool with. They form a line at the door when Chrysler offers 20-50% off MSRP on nearly everything on the lot.
They are doing this in Seattle however crowds are reported sparse.
After that sales surge is tallied, Chrysler is positively giddy with the results and crows their sales are only down 47% for the month of May.
@superbadd75
If I could BUY a new Caliber for $4000 or less, I’d think about buying one to drive to work.
“GM suppliers are Ford suppliers. That means many would close with GM and with it Ford would die.”
I’ve never really bought this line. They would have to radicaly and quickly downsize and increase their prices to reflect the loss of numbers, but Ford and remaining buyers would pay this, because as you said, there is not another seller. Its supply and demand.. just because some of your demand has dried up, doesn’t mean all profitability has. A smaller leaner company can still make good profits for the owner.
This is the essence of what’s wrong with the government bailouts. It is not so much the monumental, futile waste of tax dollars so much as the violation of Darwin’s law of natural selection.
As RF pointed out on Al-Jazeera, the concept of creative destruction, and allowing the weak to fail, is what makes capitalism so strong.
What we are witnessing these days is one of the most profound threats to capitalism the U.S. has ever seen.