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The Current State of the US Auto Market

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  • circlewcirclew Posts: 8,380
    OK.

    Reuters) - The U.S. government has booked a loss of $9.7 billion on the nearly $50 billion bailout of U.S. automaker General Motors Co (GM.N), according to a quarterly report to Congress on Tuesday.

    Talk about drifting!:)
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,040
    Well again, and I KNOW what I'm going to say irritates some people out there, but the government was choosing the lesser of two evils here---to not fund GM and have it collapse completely, and have to deal with all the welfare associated with that massive lay-off (the rippling effect of which was completely unknown, meaning could it go down the line to suppliers, truckers, who knows what) OR to take a risk that the bail out wouldn't cost as much as the alternative.

    And, no, throwing everyone to the wolves was not a viable 3rd choice.

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  • greg128greg128 Posts: 345
    edited November 2013
    Detroit and Nissan do well. well. Gm up the most. VW a loser and Hyun-Kia an almost loser...

    http://www.ibtimes.com/here-are-october-2013-big-eight-us-auto-sales-numbers-gm-- ford-chrysler-toyota-honda-nissan-1451010
  • andres3andres3 CAPosts: 5,341
    Choosing the lesser of two evils is one theory, and your opinion. Choosing the greater of two evils is another theory, and another opinion.

    For instance, some might say they (the gov't) were bailing out GM for the sole purpose of winning re-election 4 years later knowing that Michigan and Ohio would favor the bailouts and reward the free handouts with a vote.

    They are 2 battleground States after all.

    If you say but Bush started the bailouts and he didn't have a re-election to worry about, I'd counter:

    1) Bush didn't want the collapse of GM and Chrysler to technically be during his watch.

    2) Vanity and Ego to prevent it from happening during his tenure.

    3) Keeping consistent at always doing the wrong thing; why change at the end of your 8 years?

    :)
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,040
    Well, if a bailout prevents massive welfare outlays AND wins an election, what's not to like? Think of it as the reward for doing the right thing.

    Of course, the problem in addressing critics is that one doesn't get to see how the other plan panned out (let 'em rot, basically).

    In my view, there was NO upside to letting GM collapse. Aside from airy speculation about a future filled with sunlit uplands populated with invigorated zeal among the surviving automakers just dying to employ 256,000 bankrupt GM employees, I don't see any concrete rebuttal to the government bailout that doesn't seem the greater evil.

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  • circlewcirclew Posts: 8,380
    GM failed. It cost a lot. Live with it. I am....without supporting further failure.:)
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,040
    If you mean a 2nd bailout, no, I agree---that won't happen. A political third rail.

    I do have to shake my head, though, when the rap sheet is read on the UAW, and GM management is always left out of the blame game.

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  • circlewcirclew Posts: 8,380
    edited November 2013
    The "GM Management of Failure" always spun failure into success. At lease SOME of the current management admitted they made Crappy Cars in the past.

    GM is no longer making crappy cars but it cost a lot to change the game. Too bad the past disease remains alive and well underlying a basis for failure once again.

    Not saying Toyota or Honda are any better, just for the record. They are having their fun with crappy parts!

    http://www.usatoday.com/story/money/cars/2013/11/02/honda-odyssey-minivan-recall- /3370177/
  • busirisbusiris Posts: 3,490
    "Well, if a bailout prevents massive welfare outlays AND wins an election, what's not to like? Think of it as the reward for doing the right thing. "

    From a political POV, it was a no-win situation with about 50% of the citizenry.

    "Of course, the problem in addressing critics is that one doesn't get to see how the other plan panned out (let 'em rot, basically). "

    Critics of any action can always talk about how things WOULD have been if their preferred course had been taken.

    "In my view, there was NO upside to letting GM collapse. Aside from airy speculation about a future filled with sunlit uplands populated with invigorated zeal among the surviving automakers just dying to employ 256,000 bankrupt GM employees, I don't see any concrete rebuttal to the government bailout that doesn't seem the greater evil."

    I totally agree. I don't like it, simply because the entire episode was preventable if both the UAW and management had taken earlier action (after all, economists had been predicting GM failure since the 70's if no action was taken to reign in legacy costs). But, no one blinked, and the car industry in the US drove off a cliff.

    What's done is done. Time to move on...
  • uplanderguyuplanderguy Kent, OHPosts: 7,494
    Since the '70's? That's news to me. That's when GM creamed everyone else in sales each year, by the hundreds of thousands if not more.
  • circlewcirclew Posts: 8,380
    "Since the '70's? That's news to me. That's when GM creamed everyone else in sales each year, by the hundreds of thousands if not more."

    Yes. The beginning of the long slide into Bankruptcy, Failure and Embarrassment.

    "The 1971 Chevrolet Vega was GM's launch into the new subcompact class to compete against the import's increasing market share. Problems associated with its innovative aluminum engine led to the model's discontinuation after seven model years in 1977. During the late 1970s, GM would initiate a wave of downsizing starting with the Chevrolet Caprice which was reborn into what was the size of the Chevrolet Chevelle, the Malibu would be the size of the Nova, and the Nova was replaced by the troubled front-wheel drive Chevrolet Citation. In 1976, Chevrolet came out with the rear-wheel drive sub compact Chevette.

    While GM maintained its world leadership in revenue and market share throughout the 1960s to 1980s, it was product controversy that plagued the company in this period. It seemed that, in every decade, a major mass-production product line was launched with defects of one type or another showing up early in their life cycle. And, in each case, improvements were eventually made to mitigate the problems, but the resulting improved product ended up failing in the marketplace as its negative reputation overshadowed its ultimate excellence.

    The first of these fiascos was the Chevrolet Corvair in the 1960s. Introduced in 1959 as a 1960 model, it was initially very popular. But before long its quirky handling earned it a reputation for being unsafe, inspiring consumer advocate Ralph Nader to lambaste it in his book, Unsafe at Any Speed, published in 1965. Ironically, by the same (1965) model year, suspension revisions and other improvements had already transformed the car into a perfectly acceptable vehicle, but its reputation had been sufficiently sullied in the public's perception that its sales sagged for the next few years, and it was discontinued after the 1969 model year. During this period, it was also somewhat overwhelmed by the success of the Ford Mustang.

    The 1970s was the decade of the Vega. Launched as a 1971 model, it also began life as a very popular car in the marketplace. But within a few years, quality problems, exacerbated by labor unrest at its main production source in Lordstown, Ohio, gave the car a bad name. By 1977 its decline resulted in termination of the model name, while its siblings along with a Monza version and a move of production to Ste-Thérèse, Quebec, resulted in a thoroughly desirable vehicle and extended its life to the 1980 model year."
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,040
    Those of us who lived through the 70s definitely, positively knew that the American auto industry was doing something very wrong. Aside from the usual dead horses like the Vega and Pinto, and aside from the humiliating death of the muscle car (which, I remember distinctly, was excused by the D3 by saying the government is to blame, we can't possibly make a good car with that emissions junk on it), there was the D3's non-response to the mini pickup market, the D3s contempt for Japanese and German products ("they're too small---they ride too hard--Americans won't buy them, blah blah") and lastly, the D3s laggard response to the prospect of higher fuel prices (just look at the SIZE of American cars from 1979-1985, and plot that size and weight against a graph of fuel prices 1979-1985. What do you see? You see evidence that D3 didn't even care.

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  • tlongtlong CaliforniaPosts: 4,754
    GM is no longer making crappy cars but it cost a lot to change the game. Too bad the past disease remains alive and well underlying a basis for failure once again.

    Using the cancer analogy, GM is in remission but is not really cured yet.
  • berriberri Posts: 4,202
    Can you just imagine what expensive piles of crap American cars would be today if the Japanese hadn't come over and set up assembly plants in the States? Duopoly vs. competition!
  • uplanderguyuplanderguy Kent, OHPosts: 7,494
    edited November 2013
    All the talk of the Vega won't offset the other many sales successes GM had in the '70's. The '77 B-and C-bodies were revolutionary. In its seventh year of the body and chassis, the Caprice Classic still made Car and Driver's Ten Best list (1983). No doubt the Vega was a goof, but to dismiss everything they made for that decade is foolishness IMHO. Look what so many cars of that era bring, money-wise, today.

    Personally, I much-more enjoyed shopping for new cars in that period. Way more choices than today in colors, interiors, trim levels, optional equipment, etc. We've discussed this many times before, but it was also possible for a working stiff to buy a new car every three years or so. I make ten times now what I did in 1980, but I still can't (won't) buy a new car as often now as I did then.

    All I'm saying is, I've always read about the marketplace and I remember no one saying GM was doomed for failure in the '70's. The sales reports will tell it all if one chooses to look.
  • berriberri Posts: 4,202
    I've pointed out the excellent job GM did downsizing their big car in '77 before. Unfortunately they didn't do that consistently on other vehicles. Economic Duopoly protected GM for a long time. But when the Asians moved plants here under pressure from the auto industry and the UAW, competition grew and it took Detroit way too long to adjust to the new economic model.
  • uplanderguyuplanderguy Kent, OHPosts: 7,494
    edited November 2013
    I guess that unfortunately I responded to your response, when you weren't the person who made it seem like the Corvair and the Vega were the only two products GM built in twenty years. ;)

    GM had sales successes that every other manufacturer could only dream of--even well, well into the seventies. Ignoring those is revisionist history. A simple look at sales numbers will confirm that.
  • berriberri Posts: 4,202
    Yep, but as an auditor I think you know full well the dangers of running regressions based on unadjusted history. The game changed big time in the 80's and beyond. Suddenly, D3 sales in the 70's were becoming a statistical outlier when projecting the future.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,040
    edited November 2013
    GM in the 1970s was "revolutionary" compared to a 1935 Buick, yes, but year to year market share fell and fell, with a few bumps up here and there. No one with a glance at D3 market share 1965-1985 vs. Import market share 1965-1985 could think anything other than *disaster*, unless of course you were on the 14th floor of GM headquarters. Then you thought everything was rosy and that little bright spots in 1975 and such were more significant that 20 year trending.

    This is such a common pattern among American automakers. They really suck at looking at the Big Picture and longterm performance. They produce a one-hit wonder, get a plastic trophy from a magazine, and they think it's all going to turn around.

    There are only a few possible answers to the Downfall of the D3---either they really couldn't read simple market share charts, or they really thought that American car buyers were hallucinating and would soon come to their senses or they really thought that their cars were as good as the Japanese, Swedes and Germans.

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  • tlongtlong CaliforniaPosts: 4,754
    GM had sales successes that every other manufacturer could only dream of--even well, well into the seventies.

    Yes, but you also know that perceptions lag reality. The beginnings of the GM's demise started in the '70's and accelerated in the '80's. The sales numbers reflected the historic reputation of GM, and the sales held on a long, long time after the products were going downhill. Similar to Toyota's situation today IMHO.
  • tlongtlong CaliforniaPosts: 4,754
    There are only a few possible answers to the Downfall of the D3---either they really couldn't read simple market share charts, or they really thought that American car buyers were hallucinating and would soon come to their senses or they really thought that their cars were as good as the Japanese, Swedes and Germans.

    I think there are a few reasons.

    The midwest and Michigan culture was very pro-union and pro-Amercian, and they weren't very aware of what was going on at the coasts.

    Their culture was so insular that they pretty much discounted/ignored their pesky competition from overseas making those little cars. They couldn't fathom that large numbers of customers would find those foreign vehicles appealing.

    They were too arrogant to actually look at the competing products and ask what things were better about them than their own production vehicles.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,040
    yeah I think there is an element of truth in what you say as well.

    I remember when I was living in Colorado and had recently opened a modest little auto repair shop, in the late 70s. We had a great auto parts store in town where I sourced most of my needs, and one day they were having a huge debate on whether to gear up and stock more foreign parts. The store owner was leaning towards doing it and the store manager, kind of a cowboy type, was dead set against it. He really knew American cars and was good at his job but he hated, hated foreign cars (also a young guy, so no excuse for World War II residue).

    I voted to pour on the foreign parts because even as a little guy I could see what was coming. All the mechanics in town could see it, because they were working on the cars.

    I remember the first time I took apart an engine on a Toyota pickup truck. The quality of the castings and the precision of the engine just amazed me, given the cost of the truck. Also it felt like the future of engine tech, not the past of it.

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  • fintailfintail Posts: 33,801
    edited November 2013
    I think that's it exactly - insular or even isolated in a way. People from most areas are guilty of thinking the nation revolves around their region, and I think those running Detroit were no different. On the coasts, the foreign invasion and takeover of the upper and middle markets was in full swing, while in the middle, foreign cars were still uncommon. It's like the suits never took a field trip to see what the market was embracing in LA or NY or even Seattle or Boston etc, all areas where foreign cars were big a long time ago, and areas that today are known to be early adopters.

    It'd be interesting to study where it came from...the "I've never been more than three states away, so nothing past that exists", or stubbornness/arrogance, or even thinking the coasts were wrong and it was not going to last forever.
  • berriberri Posts: 4,202
    Having grown up and lived on and off in the Midwest, I'm going to play devil's advocate on this topic with my perception of why Detroit hung on longer in the Midwest (besides the D3 and vendor factories). I'm not saying I'm right, but I think it was more a supply issue than a demand one. When Japan first started growing, most of the production was imported into the US. Japan initially had constraints in production over there, so they started on the coasts where the big ocean ports were located. As things expanded, the use of distributorships made it economical at the time to then expand through the smaller ports in the Southeast and Texas. As they started planning and building transplants over here, just then did Japan start opening many Midwestern dealerships. Trust me, there were plenty of people fed up with Detroit quality and pricing in the Midwest, but there was initially a paucity of dealerships and product available. Way more people in the Midwest have nothing to do with the auto industry than do, outside of Detroit and a few localized areas in places like Ohio. Now Chicago, where I grew up was a big GM town even though Ford had a large local factory. But when the Honda and Toyota dealerships came, they started moving product out the door by the boatloads, often at sticker or above. Today, the big Asian dealerships still do well throughout the Midwest, but it's now more about pricing I think, than quality. I believe the reason the Midwest has more D3 dealerships is two-fold; all the rural small town dealers which focus on trucks and SUV's, and the fact that Asian producers tend to have fewer, but often large, dealerships in a marketing area than D3. BTW, VW sold pretty well in the Midwestern cities prior to the Asian invasion. There were a fair number of them in the shopping area parking lots, particularly given they were a small car in an area with sometimes big people! Well, that's my take on it all.
  • berriberri Posts: 4,202
    I think that while Toyota can conveniently blame the tsunami, their real problem was the non family chief exec (Wanatabe or something like that). I'm pretty sure he was a US Ivy League MBA and seemed to start focusing Toyota more like a Detroit firm. The Toyoda family is now back in charge, so I expect to see them back to their old ways in the near future. But realistically, the quality playing field is getting more level, so pricing is going to probably start becoming more of a customer focus than brand and quality. Honestly, that may help the Koreans most.
  • stickguystickguy Posts: 14,629
    I think it is quote plausible that the "worst" new car today is better than the best from not that many years ago, in terms of quality.

    there really are no bad cars anymore.

    2013 Acura RDX (wife's), 2007 Volvo S40 (daughter stole that one), and 2000 Acura TL (formerly son's, now mine again)

  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,040
    True....there aren't any grossly incompetent cars like there were in the 1970s and early 80s (many ran like crap, ate gas, rusted away, steered and handled like mom's couch), but you can still find plently of "glitchy" cars that have built-in factory defects that require multiple attempts at sorting.

    But in terms of performance and durability, cars today are miles ahead.

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  • fintailfintail Posts: 33,801
    That does make sense, coastal dealer networks and parts supplies were no doubt better than those 1000+ miles inland. The truck tradition is a big part of it in some places, too.

    Still, I just have a feeling that the ivory tower suits dismissed the German luxury entrants and the Camcord invasion, didn't notice as these cars spread like wildfire in early adopter areas, and by the time they did react, they were playing a game of catch-up that in some ways still exists.
  • fintailfintail Posts: 33,801
    For several years now, I've heard a saying that goes something like "a 3 year old car today is as good or better than a new car was 10 years ago". I think that saying was especially true 10 or 15 years ago.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,040
    Hey even Mercedes got caught with their pants down when Lexus arrived. They were clueless, blind-sided and arrogant until their first test drive. Then their blood ran cold. I still remember the headline in Automobile magazine after they road tested the new LS400:

    "Executives from BMW and Mercedes----call your home office!"

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