Comments on: More Auto Bailout Thoughts

By: KBK

KBK — Wed, 24 Dec 2008 15:05:19 +0000

“Who would buy a car from a bankrupt company?” I don’t know how much validity the argument has.

Generally, parts are available and were manufactured in the year the car was made. Warranty insurance would be a good thing – if no dealer is available to honor it, the insurance would pay for third-party warranty service. That would be a good and relatively inexpensive thing for Washington to arrange.

By: aaron4unitruth

aaron4unitruth — Mon, 22 Dec 2008 22:29:53 +0000

There are many reasons why the bailout of Wall street and the auto industry is wrong but most importantly because the federal government is far more powerful than it was ever meant to be. Now the government can be a stockholder? Sounds too much like socialism.

http://www.theartdeptchronicles.blogspot.com

By: HS

HS — Fri, 12 Dec 2008 14:57:33 +0000

Ford mortgaged everything in 2006. They are in the same boat. They did a smart move though by saying they can whether this storm because it 1) increases revenue (solution to the problem and the same argument used to avoid bankruptcy), 2) set-ups a life line just in case something happens, and 3) avoids the government’s other “help”.

By: Matthew Brown

Matthew Brown — Thu, 11 Dec 2008 18:56:18 +0000

Ford wants in on the bailout because it doesn’t want to see its domestic competitors being rewarded for failure while Ford gets to suffer for doing better.

By: HS

HS — Wed, 10 Dec 2008 15:22:52 +0000

I am torn. Part of the problem is too much government intervention in the markets and in the automotive industry which lead to this mess. Another part of this problem is the complacancy of our automotive industry.

But taking a bigger picture, I think this is the exact same thing the U.S. government is facing. I think the country is exhibiting the exact same thing GM is exhibiting. If GM needs a bankruptcy to fix itself, does the US need a bankruptcy to fix itself?

Then you get into even larger issues like this http://www.popularmechanics.com/technology/military_law/3319656.html and this http://geoff82.wordpress.com/2008/07/28/chinese-military-technology-becoming-self-sufficient/.

I agree with this, “technology is developed where the it is domiciled”.

I think people do not see that GM, Ford, and Chrysler have been building cars people want. People wanted SUV’s, big trucks and gas guzzlers but the market has changed too fast. In my experience, any company that grows or shrinks by 10% is under great strain. Friends that have sold businesses have said if they could go back, they would not have grown as fast as they did.

GM needs change from the outside but this could be going too far IMO.

By: Bobby L

Bobby L — Wed, 10 Dec 2008 15:21:23 +0000

Jeff,

I've heard that arguement over and over again, and while yes, the collapse of even one major auto manufacturer would upset the market for a bit, the whole thing WOULD NOT come crashing down.

For instance, don't those same suppliers also make parts for Toyota and Nissan and Subaru plants in the US? And even if they didn't, I'm sure they'd retool quite rapidly. Or they'd have to make the same tough decisions that EVERY OTHER INDUSTRY HAS TO MAKE RIGHT NOW AND DROP PRICES AND FIRE EMPLOYEES. It sucks, but that is the only way for a company to truly survive this - get lean and mean and kick through this recession.

Bobby L

By: Jeff

Jeff — Wed, 10 Dec 2008 15:04:07 +0000

John,

Ford's strategy is to keep their suppliers alive. All of the big three rely on the same suppliers for parts and components, if any of the automakers fail, key suppliers will fail. Ford would have delays and shortages that would put it into bankruptcy as well.

Jeff

By: Jeff

Jeff — Wed, 10 Dec 2008 14:57:45 +0000

My family owns a GM dealership, in a major market, so we have a vested interest in GM's survival. My dad has 40 years experience running auto dealerships, foreign and domestic, and we talked about GM a lot over Thanksgiving. Even he says Chapter 11 is the only way to resolve GM's issues.

The argument that no one will buy a car from a manufacturer in bankruptcy is laughable, no one is buying their cars now.

The idea that Congress can appoint a "Car Tzar" that will fix is issue is beyond belief. Who would take that position? Knowing you would have to report to multiple congressional committees? And without the power to renegotiate union contracts and retirement packages.

It's a job designed to fail, publicly, with the added humiliation of broadcast congressional hearings. What fool wants any part of that?

By: John Dewey

John Dewey — Wed, 10 Dec 2008 14:43:43 +0000

I don’t understand Ford’s strategy in all this. If GM and Chrysler fail, Ford wins. Ford has admitted it can survive this downturn without government loans. So why were Ford executives up in Washington alongside their near-bankrupt competitors? They should have been running ads showing how an American auto company can compete without government loans.

By: agesilaus

agesilaus — Wed, 10 Dec 2008 14:29:20 +0000

GM is paying $73/hr per worker on average(salary and benefits including retirement costs). Toyota US is paying $48/hr. That is the difference between making a profit per unit vehicle and taking a loss. GM loses money on each unit it sells. Toyota makes $2500/unit. UAW needs to match the Toyota costs and then the government could, tho I wish it wouldn't, consider doing a loan.

Management needs to hit the road too.