Bail Out Automakers ... or let 'em fall?

[dungeonworks]

For the record, the money requested by GM, Ford, and Chrysler is not a bailout technically. They are requesting $25 billion in loan guarantees, secured and backed by the federal government. This is not to be confused with the $25 billion loan availability that is earmarked from the Dept of Energy, and likely the first one that you heard of. It is (by law) only for the development and production of fuel efficient cars...and it won't be accessible for a long while. They need cash to cover operating costs now. The media trys to lump this as a bailout....it is not. Bear Stearns, AIG, Lehman Bros, and some banks.....they all got bailouts and are now throwing legendary bashes at 5 star resorts along with a really posh and exclusive bird hunting trip in the English countryside. The banks that are getting this money already are using it to buy and hold, NOT free up the credit as it was intended to do.


Here's another article for ya'll. (Copied Below)

MARK PHELAN

6 myths about the Detroit 3

BY MARK PHELAN • FREE PRESS COLUMNIST • November 17, 2008

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The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists. Here are six myths about the companies and their vehicles, and the reality in each case.

Myth No. 1

Nobody buys their vehicles.
Reality
General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of about 560,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.
Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.
Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.
Myth No. 2

They build unreliable junk.
Reality
The creaky, leaky vehicles of the 1980s and '90s are long gone. Consumer Reports recently found that "Ford's reliability is now on par with good Japanese automakers." The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands' overall quality as high or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.
Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.
Myth No. 3

They build gas-guzzlers.
Reality
All of the Detroit Three build midsize sedans the Environmental Protection Agency rates at 29-33 miles per gallon on the highway. The most fuel-efficient Chevrolet Malibu gets 33 m.p.g. on the highway, 2 m.p.g. better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic. A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate.
Myth No. 4

They already got a $25-billion bailout.
Reality
None of that money has been lent out and may not be for more than a year. In addition, it can, by law, be used only to invest in future vehicles and technology, so it has no effect on the shortage of operating cash the companies face because of the economic slowdown that's killing them now.
Myth No. 5

GM, Ford and Chrysler are idiots for investing in pickups and SUVs.
Reality
The domestic companies' lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have all spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry. The most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel economy ratings than Toyota and Nissan's full-size pickups.
Myth No. 6

They don't build hybrids.
Reality
The Detroit Three got into the hybrid business late, but Ford and GM each now offers more hybrid models than Honda or Nissan, with several more due to hit the road in early 2009.

 

[dungeonworks]

General Wesley Clark on why we should help the auto industry for national security reasons:
Automakers' survival a matter of U.S. security: Clark

 

[Big Don]

How is giving the Big Three a pile of money going to make people want their cars?

 

[dungeonworks]

How is giving the Big Three a pile of money going to make people want their cars?

Myth No. 1

Nobody buys their vehicles.
Reality
General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of about 560,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.
Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.
Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.

It's to bridge the massive financial losses that hit us like a meteor after a few bad years in a row already from what I understand. They are nearly out of liquid cash.

 

[Cryozombie]

My point exactly! What the hell does the CEO of any company need that kind of money for?

Didn't you know, MJS, they work hard for that money and deserve it. If it wasn't for them, nothing would get done!

*rolls eyes*

 

[Twin Fist]

I say help them out, under the condition that the UAW goes away and never comes back.


$70 an hour to work on an AUTOMATED assembly line? kiss my butt. no wonder the american made cars are more expensive than the foriegn ones.

 

[Rich Parsons]

How is giving the Big Three a pile of money going to make people want their cars?

Actually, I think we should do exactly as the Japanese have done.

No vehicle over 5 years old. Export all vehicles older than 5 years. This guarentees sales.

Also, put tariffs on imports that make it only a novelty item for the really rich to own an import. This will then show how many people really want the Japanese vehicle as there $20,000 vehicle will now cost $38,000.


If you could site some sources other than your personal taste which is valid in your point, but only represents you and not the general population.

I understand that world wode GM and Toyota are close with GM being number 1. Some discussions about Toyota being number a couple of years ago, on if they counted fleet sales and leases. I understand that in the US it is GM Toyota then Ford.

 

[dungeonworks]

I say help them out, under the condition that the UAW goes away and never comes back.


$70 an hour to work on an AUTOMATED assembly line? kiss my butt. no wonder the american made cars are more expensive than the foriegn ones.

Automated assembly line....Twin Fist, if your statement didn't already show your ignorance of the topic, I may have been offended.

 

[Makalakumu]

Why the Bailout won't save Detroit.

This article makes some great points. Maybe we just have way to many cars in the US? If the market really is this saturated, then no amount of money is going to keep some car companies afloat.

 

[zDom]

Actually, I think we should do exactly as the Japanese have done.

No vehicle over 5 years old. Export all vehicles older than 5 years. This guarentees sales.

Guess I would end up walking then.

Not all of us can afford new cars, Rich ...

 

[Rich Parsons]

Guess I would end up walking then.

Not all of us can afford new cars, Rich ...

And does it create a sustainable market without such laws? No.

My point in my sarcasm is that it is not an even playing field between the Us Manufacturers and foriegn companies.

Nothing looks good right. I cannot tell people there is a magic bullet. I can say that it is not equal. So when people talk about coming up with a plan like the Japanese, I wish they would understand what that really means.

 

[zDom]

And does it create a sustainable market without such laws? No.

My point in my sarcasm is that it is not an even playing field between the Us Manufacturers and foriegn companies. .

Sorry I missed that it was a sarcastic suggestion.

 

[elder999]

A little protectionism in the form of a stiff, temporary tariff against imported cars might help, ala Harley-Davidson, but the U.S. automakers still have to make cars that people want to buy, and the kind of cars that the country needs right now. Of course, with the other economic considerations, I don't know how likely it is that people will be buying many new cars for the next couple of years....

...not sure bankruptcy and restructuring isn't the way for them to go..

 

[crushing]

Looking at the global economy there is a very good chance that your next new car purchase will likely be from a manufacturer that was bailed out (or greatly subsidized), independent if it is a Toyota, Saab, or GM.

Out of curiousity, any other major auto manufacturing countries seriously considering the alternatives to the bailout like the US is considering?

 

[Rich Parsons]

A little protectionism in the form of a stiff, temporary tariff against imported cars might help, ala Harley-Davidson, but the U.S. automakers still have to make cars that people want to buy, and the kind of cars that the country needs right now. Of course, with the other economic considerations, I don't know how likely it is that people will be buying many new cars for the next couple of years....

...not sure bankruptcy and restructuring isn't the way for them to go..

Elder999,


Question? Every small car that GM built before people say were bad. One was too small compared to the giants on the road and was proclaimed to be unsafe at any speed. Then a few years later it was the fault of the manufacturers because they did not have any unsafe small cars to sell. Oh wait those cars would be fuel efficient cars. Sorry.

My question here is can you point to a recent vehicle and tell me where the JD Power numbers or way off? I know that GM has more awards in the small and mid size than Toyota in the last couple of years. Saturn Aura to Chevrolet Malibu and others.

Also, if GM sells more than Toyota and Ford more than Honda, how is it that they need to make cars people want to buy.

In a "free market" competition is good. As long as all are on the same playing field. So, I support people buying a Toyota if they like the lines, or the cup holder or the color. To me that is good. What I do not understand is the general "They have to do better" comments by you and others?

 

[Rich Parsons]

Looking at the global economy there is a very good chance that your next new car purchase will likely be from a manufacturer that was bailed out (or greatly subsidized), independent if it is a Toyota, Saab, or GM.

Out of curiousity, any other major auto manufacturing countries seriously considering the alternatives to the bailout like the US is considering?

The European manufacturers are also looking into what they can get for loans as well.

In China, it is still a growing market and then the government is kind of backing many new markets as they grow.

In Japan they have a tariff closed market. Legal restictions on how old vehicles can be. They base it upon the fact that older vehicles will not have the latest emission standards. They do recognize the year the vehicle was built but what the current standards are. They also look at service costs and prefer not to have to have to carry parts for customers.
Did you know that a manufacturer is required to have service parts for 10 years after the last one rolls of the line. This is a law.

As stated by zDom, many people cannot afford new cars all the time. Many people drive older vehicles and repair them. But if it is law, then I guess we could find a way to improve mass transit as they did with teh rail system in Japan.

In Korea, there is such a pride for products that it borders on the Zeno-phobic attitude in the US in the early 50's.

India is trying to figure out what they going to do. They want to expand, but not sure where or how.

Russia is looking to expand but only in Eastern Russia, where there is no industry right. So, the labor is cheap, and very enthusiastic to work and looking for any form of a job.

Australia has Holdens and they are part of the GM global commonization, i.e. rear wheel vehicles are being designed and developed there.


That is what I know.

 

[elder999]

Good question, actually.

For the record, I'm a frustrated automotive engineer, as well as not so frustrated (to Rita's-that's the wife, also known as Mrs. Conscience, also known as the parsimonious Quaker-chagrin) car collector. And I love a lot of GM products, quite a few Chrysler products, and and a few Fords-at least, those made from 1968 back, but that's Bill Ford's fault..:lol:

In any case, I can anwer the question a lot more simply-we've got a Totyota SR5 pickup with over 300,000 miles on it, and we've only done regular maintenance. The carpet is worn, the paint is faded, but otherwise it's all good. I've also got a Dodge diesel pickup that I converted to bio-diesel that's got over 300,000 miles on it. While the drive train is good, the fit and finish on all the switches and door handles and such, was such that I've had to replace them several times-it has an odd electrical glitch, and I did have to replace the transmission. While it had a lot of miles on it when I got it (never experiment on anything under warantee!) these problems are typical of the model, and occurred early in its life.
So, that's one-an almost endemically inconsistent quality control in American models across the spectrum. I can remember test driving a Trans-Am convertible back in '93 or so, and while it was pretty nifty in some ways, being really shocked at the fit of the doors, the looseness of the handles, the chintziness of the window switches. This is due, I'm afraid, to your wages and benefits-it costs nearly $2000 dolllars more for an American car to leave the factory than its Japanese equivalent.

Another thing, since you asked about smaller models, is that while they have those same problems (some only discernible to the fanatic, some only over time) they have also been unappealing to Americans, for the most part. Their higher sales occur overseas, though they do sell here, mostly due to brand loyalty (Dad only bought Chrysler products, and I'll never buy a Ford, but that's Bill Ford's fault :lol and end of year sales.

The other thing, of course, is lackluster marketing of those cars. Saturns are a really good product, and have done well enough, but otherwise the big three have really pushed SUVs, minivans, and trucks. And, in the last couple of years, produced some nostalgic, gas-guzzlin', rootin'-tootin', air pollutin', high falutin', good old fashioned muscle cars.

(Really, really dig the new 'Cuda. Not gonna do it, though.)

I think the marketing will change-they've typically marketed those smaller cars, like the Chevy Aveo, to a niche market-entry level consumers, when they should have been more across the spectrum: sold the safety, reliability, cargo and passenger room and economy to housewives and commuters, instead of to kids.

Just my opinion, though, and what the hell do I know? Heck, you think I drive a Porsche 'cause it's economical? :lfao:

I drive it 'cause it's not a Ford, or, rather, a Jaguar-but that's Bill Ford's fault. :lfao:

 

[CanuckMA]

A lot of the problems are self inflicted, and go beyond the SUV vs small car issue.

Ford, for example, produces really good small cars in Europe. But they can't sell them here because the standards are different. It's more than time for North America to get in line with European and Asian safety standards in the automotive industry. That would allow to desing only once, and to be able to manufacture the one model anywhere.

After seeing the news clips with the Big 3 CEOs in front of Congress yesterday, I'd say let them fail. It takes really big brass ones to collect your millions in compensation and use your private jet to come in front of the taxpayers and ask for a bailout. Why don't they start by following in Iacocca's foot step and reduce their salaries to $1.00??

 

[Twin Fist]

loans only, and only IF:
the UAW backs down and makes concessions
the big three start making X percentage of thier models hybrids or flex fuel

 

[Rich Parsons]

loans only, and only IF:
the UAW backs down and makes concessions
the big three start making X percentage of thier models hybrids or flex fuel

I believe all or most of the Full size Trucks made from 2004 to present are Flex Fuel.

Hybrids are coming.