Wednesday, November 26, 2008

Why the auto industry needs a bailout

The 2010 Toyota Prius

They flew to Washington awash in luxury - these captains of the auto industry - in their limousines of the sky to kneel before Congress and beg for money to stave off the imminent collapse of their automobile companies.

The personal jet thing is emblematic of what's wrong with the American automobile industry. Ever since I can remember, the attitude of the car companies relative to the common man, has been expressed in the slogan, "What's good for General Motors is good for the U.S. of A."

Maybe not.

Why are our car companies in deep caca? Why have they been operating on such thin margins so that within days of an economic downtown, they begin to disintegrate before our eyes? No one is suggesting that the disintegration is not real -- although it's good to be suspicious of the poohbahs heading any major corporation these days -- the numbers are clear and too many local dealers are filing bankruptcy and shutting up shop.

Methinks the number one reason, as expressed in the arrogant slogan noted above, is that "Detroit," in its self-aggrandizement, has not paid close enough attention to what people want in their vehicles, and in spite of a constant and growing trend whereby Americans purchase "foreign" cars rather than American cars, the automobile industry kept building ugly behemoths like the new Chrysler line, which were not only not attractive, but failed on the driveability, reliability and safety levels too.

Thus, the editors at Kelley Blue Book, in their 2009 list of cars with the "Best Resale Value," show only three American cars: the Jeep Wrangler in the SUV category; the Chevrolet Tahoe in the Hybrid SUV category, and the Cadillac CTS in the full-size category. The 12 other categories are filled with imports.

It gets worse for the American manufacturers. In Kelley's "2009 Best Resale Value: Top 10 Cars," not one is American made. Honda takes the number one spot and Volkswagen number 10. Six of the others are captured by Toyota/Scion.

Then, there's Car and Driver's list of the Top Ten Best Cars for 2009. Only two American cars made that list, a Cadillac and a Corvette - both GM products.

There is no question that the collapse of the auto industry in the United States would wreak economic havoc. Maybe a bailout of sorts is necessary. But if that happens, it sure as hell needs to be tied to specific performance guidelines as to how the money will be used (not for executive bonuses or expensive retreats for head honchos). And it should be in the form of a loan not a Christmas present.

Most importantly, any bailout money must be related to the manufacture of vehicles that Americans will actually buy - in other words, our cars and trucks must be made to the same specs that companies such as Toyota use.

And before the first dollar is lent, the American auto industry must have in place a plan showing exactly how they intend to do that as well as the costs involved.

Well, hell, I can dream can't I?

1 comment:

Anonymous said...

More important is the role of a few industrial cites like Detroit that were the Arsenal of Democracy during WW2. Detroit produced tanks, planes, ships, weapons etc needed to win a war. We have no such city now!!!! Our heavy manufacturing capacity and the people with the skills no longer seem to exist and none have been trained to replace them. We need manufacturing to pay the wages to workers so they can buy the products we buy. Joe the Plumber needs a ob so he can pay his bills and back taxes. The millionaire can not buy enough to make up for the people that have lost a jopb yesterday! Those with excess money already have or can buy whatever they need or want. A jobless person cannot spend money. Shuffling paper produces nothing but makes money for a few. We need mass buying to maintain the standard of living that made the USA the envy of the world. We can export financial services but need to export goods that we manufacture, so our workers can buy things. We grew when consumers bought and produced. We cannot depend upon China to finance our debt and supply us with all our needs. We will need China for the foreseeable future but had better find a way to make it mutually beneficial to both the USA and China. We need each other at this point.
Detroit is needed!! Our auto industry has not competed on a need basis. They tried to sell us crap while the foreigners filled needs. They were better merchandisers than we were and still are. We are a society with multiple cars per family. We need small, cheap transportation because we lack public transportation to work and school. That takes a different car from a large luxury family car. Find what is needed and supply it at a price to sell. That is basic merchandising. We also need better gas mileage NOW.
Bob Poris

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