The Senate’s Congressional Oversight Panel, which has been charged with monitoring the TARP program, has released its final report [PDF] before it disbands next month. Given TARP’s importance in this country’s historical sweep, we’d recommend that everyone at least glance through the document. But, if nothing else, TTAC’s readers should at least check out the section on the Auto Bailout, which not only summarizes the government’s actions, but also points out problems that arose during the bailout as well as problems that could still emerge as a result of the bailout. The “Lessons Learned” portion of the Auto Bailout section is of special interest, and so we are republishing it below the fold. For all of the hot air and ink that’s been spilled over the bailout, the reality is that it was simultaneously a success and a failure. As a purely short-term, cost-no-object effort, it very clearly prevented what could have been a messy collapse in the auto sector. But because the true costs and long-term effects of the bailout aren’t yet known, it’s still impossible to say if that short-term rescue was worth the costs or will even prevent another industry meltdown in the future.
The COP’s “Lesson’s Learned” from the auto industry bailout are as follows:
It is clear that GM and Chrysler were in dire straits in late 2008. Although it is difficult to say whether government intervention was the best option, the TARP funds the companies received provided them with at least some short-term stability. Whether the programs aimed at helping the automotive industry can be called ―successful‖ will be difficult to determine since Treasury has never clearly stated its goals in assisting the companies. To the extent that success is defined as a return of taxpayer money, it remains somewhat unlikely that all TARP funds invested will be returned. Although the outlook is currently much better than it was when the Panel released its first report on the industry in late 2009, certain factors, including the loss locked in by the GM IPO price, must be overcome before taxpayers see a complete return of the money invested.
Even if TARP funds are fully repaid, the government‘s intervention in this industry may have lasting effects. In an effort to reduce the impact of its intervention in private industry, Treasury has consistently stated that it is acting as a ―reluctant shareholder‖ and has committed to maintaining a hands-off approach to management of the companies. This position, however, may have served principally to highlight the difficult role Treasury occupied as shareholder, creditor, and regulator of the companies. Furthermore, Treasury‘s unwillingness to influence management even in its role as a large shareholder may ultimately have put the government‘s investment at greater risk than was necessary. Finally, it is too soon to say what the TARP‘s ultimate impact on the automotive industry, and these companies in particular, will be.
The domestic automotive industry was trending downward before the financial crisis hit and it is unclear whether the TARP will ultimately reverse that trend in the long term. Even if these companies were to become extremely successful in the coming years, paying back the funds invested by Treasury and creating jobs and revenue for the American people, there may be lingering and potentially harmful effects from the programs. The Panel has frequently cited the potential moral hazard if large companies, and the markets in which they operate, believe that they will be rescued by the government if they falter. Although the TARP seemed originally to target only those companies whose financial operations made them a potential risk to systemic stability, the use of the TARP to support the automotive industry suggests that a company may be considered ―systemically significant‖ merely because it employs a certain number of workers. Whether and to what extent these issues become manifest can only be determined as future events unfold.
I think the smart people have, for some time, agreed that there’s overcapacity in the auto industry — worldwide. By definition, what that means is that not every unit of production that is made can be sold at a price that recovers all costs, including the cost of capital. What this should lead to is some producers exiting the market, over time. Look, for example, at the PC business. As everything became standardized, it became a commodity business; and as the market became saturated, prices fell. So, a number of players just dried up and went away; others exited the business entirely (IBM) and others tried (or are trying) to diversify into other product and service markets: Dell, Apple. This still needs to happen in the car business, especially in the U.S. Both GM and Chrysler have shrunk, but they are still playing in a very tough market. And the question is, whether or not US workers — not to mention US taxpayers — would have been better off with a restructured GM absorbing Jeep from Chrysler in bankruptcy proceeding run according to the existing bankruptcy rules, rather than the administration and Congress’s political imperatives.
Sure, it probably would have been necessary for Uncle Sam to have provided debtor-in-possession financing to keep everything moving while the pieces were re-assembled. But the moral hazard would have been far less . . . and the automobile shake-out (at least in the US) is far from over. The aging US population and the increasing longevity of cars doesn’t augur well for future sales volumes. The same person may not own a car for 10 years, but what will happen is the person with plenty of money who wants something “new” will buy or lease a new car for 3 years. Then that car will move to a second “value” buyer who recognizes that buying a 2 or 3 year old car, especially a “luxury” car, makes huge economic sense. So, that buyer will move out of the new car market and into the used car market. He/she may keep the car for another 5 years , and then, if it’s been well cared-for, it will be bought by a third buyer who will trade a smaller upfront cost and lower depreciation for potentially bigger repair bills.
Which is exactly while I know that the death of either GM or Chrysler would have been devastating and caused a (temporary) economic panic, I think it would have been better if either one or both of the two companies went into Ch 7 Bankruptcy with the valuable parts being sold off to the highest bidder (yes even the Chinese.) I think the U.S. would have been better off for it decades from now. Heck I believe the Chinese would have bought up American factories and built cars here – why not? Hyundai, Toyota, Honda, and Nissan do it, why not the Chinese? Excess capacity would have disappeared.
This has turned into a “pay now or pay later” situation (from a pain standpoint.)
Actually Dan, it’s a pay now and pay later situation. Worldwide excess capacity is a major problem, especially with everyone trying to raise their sales to self-forcast levels and take market share in mature markets.
@Dan: in the fall of 2008, having two of the three manufacturers going into Chapter 7 liquidation in addition to the banking issues already in full swing at that time would have sent our economy to near collapse or even a complete collapse. With worldwide overcapacity, and apparently shipping across the sea being very inexpensive not to mention Mexico relatively nearby, who would bother to buy a used (car) factory In the US? If it weren’t for trade constraints, most foreign cars would still be shipped in. The existing capacity in Mexico alone would handle North America, and would work for wages that are much less than we can imagine, UAW or not. Not to mention far fewer regulations and governmental interference.
I think it’s been proven that the Obama administration has little stomach to develop industrial policy, so much so, that they made a few quick decisions at the beginning and have left GM and Chrysler to their own devices. What’s scary is that GM seems to be playing musical chairs with many management positions, but it’s a hands off policy from the Feds insofar as that part of it goes. As well it should be. In the meantime, both of the companies are trying desperately to shed the “Government Motors” sobriquet, and looks like GM will do it sooner, at least from this vantage point. Sergio may surprise. But I think larger economic forces will prevail. If one or both of these companies fail to succeed, there will not be another bailout. The politicians don’t have the stomach for it.
The overcapacity situation will only worsen. Quantitative easing will provide a boost for manufacturing in the US, at least until we get to the point where we don’t need it again, then who knows? By then VW will have built it’s new Tennessee plant (which I’m predicting will follow the same path as the Toyota plant in Mississippi-underutilized), and we can watch as the over-over capacity discount wars begin. They’re falling into the same traps as the domestic mfrs, too many plants and the need to keep them all producing.
It’s hard to say what the real fallout will be, as we have no idea if/when the Chinese or the Indians decide to join the party here at the big PX. I’m hoping the G6 lasts a long time…
This downturn is looking like it’s a ‘temporary’ one with its 9% plus unemployment that doesn’t seem like it’s going down to pre-recession levels soon, and that is with all the extreme federal spending and monetary easing.
At the time, we were facing a full banking crisis which is very, very bad for the economy if the downward spiral can’t be stabilized and things more-or-less brought under control. Letting two big auto companies go bust in such a negative atmosphere with no certainty that they, or the jobs they maintain, could be salvaged in the short term would have undermined the banking system and certainly consumer and business confidence even more.
So now we have a catch-22 situation where a banking crisis has turned into a debt crisis. Maybe it’s not a crisis at the moment, as timing is everything, but you’ve got enough debt worries in the U.S., Europe, and Japan that it’s not looking likely that we’ll be able to bail out bigger European countries if it gets worse there.
Don’t dare to ease off the money ‘printing-presses’, yet may run into some collective, financial-market limit where they suddenly decide the debt is unsustainable and shouldn’t be financed any more?
@Educator Dan- I am a free marketer, too, but the auto industry has suffered as much or more government interference compared to any other. Their financial weakness was due to their long term inability to control labor costs, entitlements in particular,under the yoke of a union empowered by law firstly to monopolize the domestic industry, then to make the carmakers continue to pay workers whose services became unneeded due to productivity increases and market share loss to global competition. They even had to fund the strikes against themselves! A simple example- imaginary health and safety issues suddenly appear in an oxygen sensor sensor plant. All vehicle production comes to a halt and workers have to be laid off and the carmakers still have to pay them 90% of their normal wages. Such a strike may technically be illegal, but there is no future in pursuing such a case in the U.S. courts under the glare of harsh media and politics. This actually happened and forced GM to chip in $200Million to settle an American Axle strike. This is not to say that GM never made mistakes, but they were constrained from taking the actions necessary to reduce labor costs, even in the face of mistakes. That is the history.
No union fan, I have to commend UAW’s leadership for finally seeing the writing on the wall and agreeing to substantial changes back in 2007. We will never know if that would have been enough because the Global Financial Crisis brought the industry down before those changes were in place, but they are large contributors to GM’s solid profitability in a still depressed market.
The transplants, from Asia, in particular, are not here because they want to be here. They are here due to political pressure from the Reagan administration. The Chinese, in particular, have absolutely no interest in providing American jobs. Besides, their only ace is dirt cheap labor. Right now, there are a lot of used assembly plants for sale, and other than Fisker, no one is buying! That was sort of a black humor joke going around among industry folks “Do you know anyone who wants to buy a good used assembly plant?” We knew the answer was no. In fact, a number of years ago when GM combined Car & Truck engineering, the transplants had already built excess capacity in the U.S. of 6 million units. That was about the size of GM at the time!
The bright future you describe can be witnessed in The UK today. Once the home of several vehicle makers with product development and mangement home grown in UK. Today, essentially all of their production is foreign owned with the gold collar, knowledge workers in foreign lands. All they have are relatively low level, assembly jobs left. If an English kid wants to be a vehicle product engineer, he has to emigrate!
We should be concerned about those jobs, and more importantly, the strategic capability to run an auto enterprise, the most complex and immense industry, recognized the world over as the crown jewel of national development. Would you really want a future where the highest jobs available to American’s are assembly line foremen?
Time will tell if the pain was only deferred, but I submit to you that the auto industry’s decline has merely been a symptom of American decline. If we don’t fix it we are really in trouble.
Geozinger, you are very wrong about the Bernanke quantitative easing benefiting manufaccturing in this country. The only industry that has and will benefit is financial services, particularly the too big to fail banks. They have made out like bandits through the whole QE process. The QE has caused inflation probably stagflation in the economy. Inflation is bad for produces and consumers especially when the wage compnemt of inflation isn’t there. Then it becomes stagflation. Think about it, costs for producers go up, wages of consumers stay the same, where is the benefit for industry in that? Margins will be squeezed and more layoffs will happen and more moving to cheap labor countries. There is no benefit at all to what Bernanke is doing if you aren’t a Goldman or JP Morgan banker.
One more thing, I see Chrysler overcoming the bailout long before GM does. If for no other reason because it doesn’t have the misfortune of having the acronym for Government Motors as its name.
@MikeAR: Now that I re-read my comment about QE it is a little off, it should have read more like: Quantitative easing will provide a boost for manufacturing in the US, due to the devaluing effect, at least until we get to the point where we don’t need it (the devaluing effect) again, then who knows?
Otherwise I agree with the rest of your post, vis-a-vis the Wall Street firms. As for who gets out of Government Motors hell first, it’s a toss up. I like what has happened in the last 6 months with Chrysler and the introduction of the Fiat 500, but there’s still a lot that can go wrong. They’re still pretty thin on product, and the updated product may or may not be a hit with consumers. Your guess is as good as mine on that one.
GM is confusing me, with all of the management changes. We’ve already seen the effects of the last management vacuum, i.e. the cadence of new model releases. More confusion in the management ranks and what else important gets held up?
For car guys, we’re living in interesting times.
@Dr. Olds: Great post. I think that many people don’t give Gettelfinger enough credit for seeing the writing on the wall in 2007. Most folks don’t realize how far the UAW traveled during that time. It would have been interesting to see what would have happened with the new contracts in place. But it was not to be.
“[govt] as…shareholder, creditor, and regulator of the companies”
Sounds like the primary industrial planning dream of progressives everywhere.
Funny how the “big bad evil government” needs to come into play and rescue the private sector’s ass ONLY AFTER the greed, shortsightedness, arrogance and general incomptence of the “all brilliant/always right private sector” idiots screw things up to the point of catastrophy…time and time and time and time again.
Curious how “perfect, unregulated free markets” could repeatedly lead to boom and bust cycles, financial disasters, and cries for big daddy to come rescue them from the effects of their own actions and decisions?
Yes, curious indeed, how all those “liberal” CEO’s and liberal corporate big shots (bullshit!) could repeatedly screw things up so badly.
Wise regulation and oversight, and yes, sometimes even government intervention can be NO WORSE than the idiocy and financial meltdowns that the unregulated free market dishes out on a regular basis.
Dennis, there is no such thing as a free market, there are laws on the books, or were (Glass-Stegall) that if enforced would have prevented a lot of the crisis. A crisis that was egged on by the Federal Reserve, GSEs and attempts to legislate outcomes by Congress and the Executive branch. Save your bs about the unregulated free market, that hasn’t worked since the 1930s.
In an effort to reduce the impact of its intervention in private industry, Treasury has consistently stated that it is acting as a ―reluctant shareholder‖ and has committed to maintaining a hands-off approach to management of the companies. This position, however, may have served principally to highlight the difficult role Treasury occupied as shareholder, creditor, and regulator of the companies. Furthermore, Treasury‘s unwillingness to influence management even in its role as a large shareholder may ultimately have put the government‘s investment at greater risk than was necessary.
If they had intervened more in management decisions then the right would have criticised that – so they could not win.
I also don`t think you can compare a car to a pc – a pc is a commodity, a car to many people is much more.
I feel compelled to comment because I was one of those Americans violently opposed to bailing out not only Wall Street Banks and investment houses, but the US auto industry as well. I cautioned a friend not to fall for that cash-for-clunkers scam but he didn’t listen and found that he was on the hook for an additional $4500 in taxable income when he filed. Not good. This does not make me a naysayer because the US government and the tax payers have no business selectively deciding who lives and who dies in business. Then there is the little matter of bailing out the UAW and their pension fund. When businesses fail they fail on their own accord. When businesses succeed they succeed on their own merit. The UAW bargained their employers into the grave with such amenities as The Job Bank, a scam if there ever was one. The lesson from this bail out catastrophe should be clear. It must not be repeated ever again. The US tax payers will never get their money back no matter how much spin the UAW puts on things. However, if you agree that the tax payers should bail out the US auto industry, then this is right up your alley and you should buy their cars, by all means. But if you disagree with how carmageddon was handled by Bush and Obama, you can make your displeasure known by not buying anything from the American car makers again, even if it is made in a foreign country like Mexico, Canada or South Korea. If you want to help Japan in their hour of need, buy Japanese! If you’re a tax payer, you’re part owner in zombies like GM and Chrysler and have extended loans that never have to be repaid, to Ford. How crazy is that?
My my, what hatred you have. So you complain that the companies will not pay us back, probably not a true assessment, but certainly would happen if everyone did as you suggest and not buy an American car. Even if it is a better vehicle! Hardly showing B&B intellect there.
GM will have pretty much paid everything back, maybe a small loss which is outweighed by the lost tax and unemployment benefits paid (unless you don“t believe in any social assistance)
@ highdesertcat……Sorry dude didn’t work out like you wanted eh?
highdesertcat- I agree with some of what you wrote, but can’t help but ask if it does not seem a bit stupid to boycott GM, since you you need it to be worth more when the remaining stock is sold so that you will get all of “your” money back?
mike978 is right- if the stock languishes in price, along with all auto stocks, all but $9B will come back to the treasury. A pretty small price to pay to avoid millions of additional unemployed. Meanwhile, GM has invested $3B in capital improvements in American in 2010 alone, not to mention the $100’s of millions in taxes paid by employees.
highdesertcat makes an extremely well-reasoned point here… certainly without the “hatred” the UAW-types would like to have us read into it. I do disagree with one point, though —
“…because the US government and the tax payers have no business selectively deciding who lives and who dies in business”
Taxpayers absolutely have the right to selectively determine which companies live or die. If the public doesn’t want to buy your widget for the amount of money you need to make a profit, then your company vanishes. Simple as that! Sure, old GM was able to push metal — but not at transaction prices the company so desperately needed to get out from under the mountain of its obligations to the UAW.
Now, I do agree the US government has no business in selectively interpreting the opinion of the US public. In 2008 and 2009, the majority of Americans opposed the bailouts. That should have been enough.
As for showing your displeasure with the situation by not ever purchasing from GM (or Fiasler) again, what’s so wrong with that? Seems a perfectly sound and mannerly response to me — the same as not voting for a candidate you disagree with. It’s not as though buyers will be depriving themselves in the slightest — despite a few (mostly foreign-sourced) gains, the competition still offers vehicles that are at least as good (and often orders of magnitude better) than GM offers.
Guys, this may come as a terrible surprise to you, but there are a lot of people who feel and believe the way that I do. For decades I drove Detroit. Never knew any better. Did all my own tooling and wrenching on them. When it came time for my wife to trade her ’92 Towncar, it was her who chose a 2008 Jap-built Toyota Highlander Limited AWD. Since then I’ve come to see the light as well. I retired the ye olde 2006 F150 and 1988 Silverado in favor for a 2011 Tundra 5.7 SR5 DC.
There’s no hatred on my part. But I think it is a bad political decision to keep 6% of the working population leeching off the rest of the 94% of the working population. It is not like we have a shortage of capable automobile and truck manufacturers in the good ole USA. The transplants would not do so well if they made crap. As it is, a lot of people happen to like what the foreigners and the transplants offer us. Just to be sure that we’re clear on this, I don’t care what people choose to buy and drive. I’m not the one paying for it. So then it falls along philosophical lines. Either you believe (and support) bail outs and lost tax money, or you don’t. I’m with the camp that does not support bail outs of any kind in a capitalist society. And as that report has indicated, there were and are some major problems with bail outs, C4C, and loans that will never have to be repaid. If any of you think that GM, or Ford or Chrysler will ever pay the US tax payer back all that money the government bestowed on them….. I have some beachfront property I’d like to sell you, right here in the high desert of New Mexico.
Long time listener, first time caller.
I’m not sure how much of a moral hazard it has created. I don’t see Ford taking crazy risks on the assumption that they will get bailed out. Shareholders like Bill Ford would be wiped out and upper management would be broomed. So where’s the moral hazard? They don’t want to risk it.
I’m also surprised that the standard of success is getting paid back. With the amount of money being given out or not taken in between various tax break deals, regulations and discount re-tooling loans I don’t see why just this pool of money is the only one important. Each of those programs have their objectives for success, namely jobs, tax revenues from other sources and social or environment benefit. The bailout of GM and Chrysler had similiar objectives, namely jobs and preventing a vicious circle of ecomonic collapse. By that standard, which was what I recall Obama (and Bush) setting, the bailouts were a success. There’s a lot of things I would have liked to have seen done differently, but that doesn’t make it a failure (the opposite of success), it just makes it suboptimal from my perspective. They said they weren’t going to intervene beyond certain conditions and they didn’t seem to (they being the administration – the congress certain took every opportunity to intervene, especially where their cherished dealers were concerned).
I agree that, long-term, the UK scenario probably would have played out, but I suspect is was the economic tide that the administration was trying to turn rather than caring deeply about the manufacturing capability of the country.
And for all those who claim the shared sacrifice was not so shared or was not shared in the traditional priority of bankruptcy law, you forget that the government put up the money beyond what anyone else would have for the 363 purchase so they get to call the shots. Surprise, surprise, workers got a lighter touch and bondholders got slammed. had the bondholders offered more money than the governmentg, they could have screwed the workers and all other claimants all day long, but they didn’t.
Through the bailout, GM and Chrysler did shut capacity – far more than Ford. Together, the three OEMs and their suppliers took out so much capacity that they are struggling to meet demand with some vehicles. Unfortunately, their factories are not fully flexible so there remains some plants well below capacity – an issue every OEM is chipping away at. A liquidation would have taken out even more, but it seems that the new capacity is coming from foreign owned OEMs. Even with the new plants, we’re still in much better shape then Europe, and might even be in a more balanced capacity situation than China. The Japanese are utilization fanatics so I doubt anyone is going to manage capacity better than them.
In light of frequent comments that GM is not building popular vehicles, here are some facts for consideration:
GM remains by far the largest in the U.S. outselling Ford by 306,000 and Toyota by 448.000 units last year despite the cloud of bankruptcy and “Gov’t Motors” label. For perspective VW group (VW-Audi-Bently-etc.) sold 358,000 last year.
GM is far in the lead in China, the world’s largest car market while Ford is an also ran there.
GM essentially tied (99.6%) Toyota in global sales last year – 30,000 of 8,000,000 behind.
Set aside the closed Japanese home market, where all imports combined measure in the few 10’s of thousands and GM outsells Toyota by nearly 2 Million in the whole rest of the world!
More currently- GM sold 108,000 more than Ford and 128,000 more than Toyota here in just the first two months of the year. That huge advantage may not continue, but if it did would lead to GM surpassing second place Ford by well over a million in 2011. To put that in perspective, Chrysler sold 1.1M, Honda 1.2M and all European imports combined only managed 886,000 last year. A betting man would bet on GM to be solidly the largest carmaker in the world again in 2011.
On top of these facts, GM is the only car maker in America to have both 3 top 10 cars and 3 top 10 trucks right now. No one else can say that.
How can you say they don’t build what people want in the face of these facts?
Well written Doctor Olds – unfortunately some of the critics (not all) don`t need facts to dispute. They just have their own gut feeling and ignore facts. Facts are tiresome for them.
GM was the biggest selling automaker before the collapse, too. The obsession with size was one of the things that got it into trouble in the first place.
And please note that a fair amount of those sales are to rental car companies. About 32 percent of Malibus go to fleet customers, compared to about 5 percent of all Accords. That is a huge difference.
Rather naive indication of a lack of understanding to assign emotion to old GM’s need to maximize volume.
Consider the reality that they had almost zero ability to reduce their labor costs. If they laid the people off, they would still have to pay 90% of their wages and then get nothing at all for it. Given only the two choices, which is worse? This is the greatest truth that many folks can not seem to grasp.
Your thoughts about GM’s dependence on fleets is dated. For the record:
GM’s huge sales growth right now is in retail sales, NOT fleet sales.
http://www.dailyfinance.com/story/autos/general-motors-gm-car-sales-february-up-46/19863077/
For the month, the Detroit-based automaker reported Tuesday that compared to February 2010, sales rose 46% for a total 207,028, exceeding analyst estimates — and even GM’s own expectations. The increase was driven largely by a 70% jump in retail, or individual consumer, sales.
See full article from DailyFinance: http://srph.it/gXnaa3
Long winded bitching about un-reversible actions is now pointless. It’s up to the auto industry to make right and more importantly its up to consumers to buy smart. That way, the cookie will crumble as it should. Let the games begin.
Beerboy12, the cookie already crumbled as it should, at the end of 2008. What we have now is an artificially held-together US auto industry that sucks the life out of our economy, all on the tax payer dime, while the members of the UAW continue to enjoy being over compensated for their past performance. If you read the report you will find there is much hidden criticism about continuing to fund failed auto manufacturers. Yeah, it’s behind us, but we can also kiss all that wasted money good bye. We should have donated GM to Red China like we donated Chrysler to Fiat-Italy. But we didn’t. Now it is up to the buying public to vote with their wallets… or their feet.
My point always was, the buying public needs to start thinking about what they buy. The auto industry also needs to show appreciation for being rescued and give the buying public some respect. If they do that they will firstly get the buying public back and secondly restore a lot of damage and help bring the economy around. BTW They are fully capable of doing this. This idea that China should own the American auto industry is just plain immature. Rather let the French own it, or better yet why not American? It’s not like it can’t be done, 300 million people, the strongest economy in the world and we can’t build a decent, successfully car?
highdesertcat- Now, exactly how are the hundreds of thousands of jobs that didn’t go away “sucking the life out of our economy”?
The fact is there is no “continued” funding of the automakers. wrt GM- Most of the “bailout” money has been repaid or recaptured by the IPO. Worst case scenario, GM stock does not go up in the near term before the remaining gov’t share is sold and we lose $9B on the GM deal. Well worth it by any rational analysis, considering the alternative of a complete collapse of all auto making in America for a considerable period of time. Juist letting them go would have cost far more than $9B.
The fact is that GM just turned down a $14B loan offered by the government because they don’t need it and are well on their way to becoming debt free.
The fact is that UAW members make the same or less than the transplant workers.
The most significant fact is that GM vehicles are selling great, running away from the competitors already and they are just filling the new product pipeline. You ain’t see nothin’ yet!
Ample proof that your view is shared by a shrinking minority.
Good luck with the Tundra- high priced and uncompetitive, Toyota had to shutter their new $1.5B plant due to low demand. You may note they can’t even break into the top 10 trucks in sales, far behind all of the domestic pickups.
Olds, I respect your pov. I don’t share it. I believe everyone should buy/drive/own what their little heart desires. I stated my beliefs. I cannot support a failed and otherwise defunct firm, and that is exactly what GM and Chrysler are. Bailing them out only delays the inevitable. I am not selling anyone on buying a Tundra or a Jap-built Highlander, but they work for us. And speaking from my own experience, they are indeed the best vehicles we have ever had. I agree, Toyota is way overpriced. But the way I see it, you get what you pay for. As a matter of interest, since we bought our Toyota vehicles, four other neighbors and friends have traded their American cars for Toyota. My neighbor traded TWO RAM 1500s (different vintages) for one Tundra Limited 5.7 4dr, while another neighbor traded her Aspen for a Highlander. All this without any input from me. Go figure! My views may be in the minority in your opinion, but what matters is sales. As long as people keep buying brands other than GM, Chrysler or Ford, that means that they must believe that they are getting the better value for their money. One other thing. If you are part-owner in some venture, like GM and Chrysler, you would expect that as part-owner you would get a better deal if you buy one of those products. Otherwise, it is like paying twice for the same product. It will be a long time before Detroit can prove that it is as good as the foreign brands are now. No amount of hype and rhetoric is going to varnish over their past performance.
highdesertcat- I respect your POV as well and agree with you in many ways. Everyone should choose what they want, and we have a lot of great choices in the market today.
I am just confused as to why you think GM is defunct.
This site is about truth, and the facts I see, and have written, do not seem to support that conclusion. It is undeniable that GM products today are selling well, particularly to retail customers, are critically acclaimed, and the company is generating strong profit right here at home in spite of depressed volumes.
IMO, the truth is that GM was well on the way to turning around before the perfect storm of $4 gas in early ’08 followed by the GFC which thrust them into the government’s arms as the only alternative to liquidation. Their hot new products were developed prior to the collapse and the labor cost structure in place now goes back to the 2007 UAW contract. I would like to remind you though, that not one of us has seen a penny in tax increases to support any of the “bailouts”. We may be “owners”, but we really don’t have any money out of our pockets in the game.
yes, it’s amazing what scrutiny has been given to the auto industry bailouts while at the same time the banks received very little criticism. The COP has been fair to all those bailed out, especially very critical to the banks.
Actually, from a political position, the auto bailouts were done so that the 2 administrations (obama and bush) could claim that punishment was inflicted on all parties involved with a company receiving bailouts. Whereas each bank received on average $50 billion in bailout funds (directly thru TARP, many are receiving billions, even trillions more thru back door FED bailouts) no bank had to endure termination of management, haircuts to shareholders and creditors, and being taken over by a “bank czar” that managed the dismantling of the bank thru receivership. Of course, it was very convenient that the majority of stock and bond holders in the auto companies were not major wall street players but employees and retirees that had purchased shares through company purchase and retirement plans.