American Auto Industry (Detroit, Turner: appliances, loans, buying)
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The ramifications would be quite bizarre. Despite the fact that U.S. automakers' market share is shrinking, they still build about half of the 16 Million or so cars sold every year in the U.S., and most of the trucks. Who's going to fill that gap? There's no way foreign automakers can ramp up fast enough to fill a hole like that any time soon (5 - 10 years minimum). Prices for foreign cars will skyrocket as demand shifts, and waiting lists for new cars will become commonplace.
I really don't see the Feds letting it get to that.
2 - 3 million jobs is at least 20 - 30 billion a year in direct tax revenues lost, not to mention the trickle down. The feds would be stupid not to spend at least that to see if Detroit can recover.
It actually pisses me off to hear this called a taxpayer bailout. Who do they think the taxpayers are? The auto industry used to support at least 20% of our government and provide generous health care to millions of people. Government is willing to give nearly a trillion to the banking industry who merely took easy government money and turned it over and over for enormous profits and Detroit has to beg just to get back a portion of the taxes they're still paying.
I don't know if Detroit can survive in the long term even with a bailout. They're probably doomed to collapse under the burden of past promises to retirees (just like our own state and federal goverments). But it doesn't make sense to dump millions onto the unemployment roles right now. It's more a matter of what will cost the least in the short term. Hopefully that will give government more time to realize what it will be like trying to raise tax revenue in a country with no industry.
Getting people to buy a GM, Ford, or Chrylser is not the problem, it is getting credit for the car!! Nobody can get the credit to buy any new cars right now, not even the Japanese, German, or Korean autos. If the companies can get through these next few years and begin to make a profit then they will be up and running again.
First they need this relief money to get them through 2010.
People have to stop living on credit and start buying what they can afford. Credit is what caused this whole problem.
Why can a company like GM sell cars overseas better than here? They design and build what the people in those places want but here the same rules don't seem to apply.
That's just it - they sell the cars those people need. Little tiny go-karts that get 30-40mpg and are small enough to fit into the tightest spots. They take the quality lessons learned here on the big gas hogs and apply the same rules to their smaller cars. Voila - a GM built rat-trap that will outlast their domestic cars.
If you see a big imperialistic gas guzzler in Europe or Asia it's probably owned by some expatriate or a collector obsessed with American cars. They're just not practical cars over there.
I did see a full size Chevy van in Amsterdam though. Pretty funny - a big monster bellowing smoke amongst all the bikes and tiny cars. lol - should have seen it going over the humped canal bridges. Looked like something right out of scooby doo.
Here in the states, we have those little rat-traps but not too many want to drive them - myself being of the same mind. With all the full sized trucks and suvs out there, who wants to put themselves in a sea of giants while sitting 6" off the ground in a box a little bigger than a refrigerator? Once we get all those off the road we'll start to see the little cars become the norm. Until then though, not too many are going to sacrifice the safety. So basically, there won't be a market for those anytime soon. We kinda screwed ourselves in the beginning and left a legacy that would be extremely tough to reverse.
GlassPipe makes an excellent point. I had to drive a tiny loaner car last year while my car was in for repairs (got hit at a stop light) and it was quite scary, being almost blown off the freeway by the big behemoth Expeditions and Hummers! I was so happy to get back into my midsize American car with enough steel around me to feel a bit safer.
The auto industry has a lot of things that need fixing. Will a bailout come with caveats such as "fire all of your executives and boards of directors and start over"? Will there be some federal oversight, as a condition of accepting the billions from Uncle Sam? On one hand, I can see problems with that solution, because the overseers may not have the background or insight to actually help the auto companies. On the other hand, from the reports of how they are managed now, I can see them taking the bailout money and not changing a thing. Big bonuses for everybody at the top!
One change I'd be most in favor of is the way they sell their cars. The dealerships I've been to are a mess. I've mentioned some of my own buying experiences before. I have walked into dealerships with thousands in my checkbook, ready to buy, and have had salesmen duck into offices, twirl around in their chairs and pick up their phones; basically doing all they can to avoid waiting on a lone female. The last 3 new cars I've purchased have been from the few female salespeople working there. It's weird... I'm clean, average looking, neatly/conservatively dressed, and I shouldn't have to chase down sales people to get them to help me. As I said... personal experience only. I wouldn't generalize to all dealerships, but I can see why maybe ignoring half of your customer base might cause your sales to decline.
It will be interesting to see how this whole thing shakes out.
Julia
One change I'd be most in favor of is the way they sell their cars. The dealerships I've been to are a mess. I've mentioned some of my own buying experiences before. I have walked into dealerships with thousands in my checkbook, ready to buy, and have had salesmen duck into offices, twirl around in their chairs and pick up their phones; basically doing all they can to avoid waiting on a lone female. The last 3 new cars I've purchased have been from the few female salespeople working there. It's weird... I'm clean, average looking, neatly/conservatively dressed, and I shouldn't have to chase down sales people to get them to help me. As I said... personal experience only. I wouldn't generalize to all dealerships, but I can see why maybe ignoring half of your customer base might cause your sales to decline.
Most of the domestic dealerships I have dealt with are horrible. As a guy I have had trouble. But mostly in the service department. Sometimes I got the feeling that they were just not interested in fixing my car. Or they just did a horrible job fixing it. There are several dealers in Metro Detroit that I will no longer go to because of poor service.
When I turned in my last lease car (almost two years ago) I had to drop it off at the dealer. Per the lease I had to actually go into the showroom to find a salesperson to fill out the paperwork with (I figured this was to give them the opportunity to get me in a new car). He never even bothered to ask me if I was getting another vehicle. Thought that was strange considering their lack of sales
In theory, I'm against another bailout, but I'm scared to see what will happen to the cities and areas that will be in chaos after the Big 3 go under. Everyone in the region is affected even if they don't work directly for an auto company. The suppliers, retail, the tax base of a lot of schools - it's going to hurt a lot of people.
Actually, it's good to hear that it happens to guys, too, Sike000.
I was beginning to take it all very personally!
Isn't it a shame that all the money wasted on advertising campaigns turns to *crap* when an actual, interested, motivated buyer walks into a dealership and practically has the sales people yawn in his/her face? That's not even thinking of all the work that went into actually designing, engineering and building the cars!
By the way, I have never purchased anything other than an American car, so all of my experiences have been dealers in the Metro Detroit area.
My best car-buying experience was with the lone female sales person at a dealership in Ann Arbor. It's a bit far for me to drive for routine maintenance/repairs, so I've used dealerships closer to my home and I've been really disappointed. I would never buy a new car from them. As Sike000 says... they just don't seem to care.
The auto industry should not be bailed out. They have been in trouble long before any of this mess that hurt the banks started. Are we going to bail out circuit city and best buy as well?
Detroit needs this in the long run, what they don't need is more handouts from Granholm.
We are in a deflationary environment, not inflationary. Prices for cars are going to come down.
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