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The Current State of the US Auto Market
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Comments
Doesn't your statement assume that loss of a company like GM would mean loss of ALL their manufacturing within the US? That seems really simplistic.
And here I thouth Detroit was already halfway to being an urban farm.
Alternatively, you're suggesting that coddling and subsidizing creates strong mean competitors? Also interesting...
and it looks like in that regard it is working:
The compromises will close the labor-cost gap at GM, Ford and Chrysler factories with those at U.S. plants for Toyota Motor Corp. (7203) and Honda Motor Co., Dziczek said. By 2015, GM’s total cost for wages and benefits will be about $59 an hour, compared with $56 at Toyota. In 2007, GM estimated the gap with Toyota at $25 to $30 an hour. Chrysler’s average hourly labor costs may fall by 2015 to $53, lower than Toyota’s, CAR said.
It did not change enough during BK, which was the golden opportunity.
This vehicle is the epitome of why I'm not crazy about Toyota.
I'm sure it would be a very reliable vehicle. Other than that, this vehicle screams "Old GM Styling" to me on the inside. It has cheap looking plastics, cheap shiny plood in the dash. The door trim has a brushed/textured plastic that is trying to look more upscale, but fails. The seats were not horrible but nothing great, either.
It was reasonably refined but extremely numb. To say it had no character would be an understatement.
The rear hatch area had cheap hard plastic surfaces.
Perhaps a more upscale trim is better, I don't know.
Of vehicles I've rented recently, the unimpressive ones were:
- Impala (outgoing model)
- Venza
Sort of neutral was:
- Focus (great steering, but too tight inside)
The ones that were reasonably impressive:
- Fusion hybrid
- C Max hybrid
- Sonata
A level playing field does aid in creating valid competitors. If the competition is coddled and subsidized, the home team either does likewise via issuing similar gifts, or issues penalties to compensate and level the playing field. No doubt the bailout, as issued, should have had more strings and conditions, but it not existing at all would not have been superior.
And in the real world, some coddled and/or subsidized players have indeed become strong mean competitors. A mild form of socialism works in funny ways.
I won't attempt to predict what it will look like, but I would guess (if pushed to respond) to see something along the lines of how the airplane industry has morphed over the years, with Boeing and Airbus being the major players.....both heavily into the world's governments, and the world's governments heavy into them.
Personally, seems to me most people argue one of two positions: 1) GM liquidation would have ruined America's industrial base or 2) No bailout needed because others would step in. Personally, I think the answer is a little different and far more complex. If you look carefully at what companies like Ford and Toyota were trying to convey, I think the concern, and the driver in both administrations was more about a chaotic window of time that could have some very bad ramifications. Basically, the transplants weren't going to locate in, let alone take over any UAW bastions - period, and Ford had very serious liquidity issues at that time precluding them from doing so. Over time the transplants could build new plants, but that is easily a 3 - 5 year process from start to volume production off the line (and simple expansions of their current facilities would not fill that sized void). Unfortunately, it's not like building a house or new grocery store. There wasn't, and isn't that kind of excess plant capacity overseas to substantially fill that void either, and does any one really think places like Japan or Korea were going to strangle their own economies and consumers to divert their domestic production needs to fill the US needs?. During that transition period several things would occur. Obviously vehicle prices would shoot up, simple supply and demand. Many vendors would have significant cash flow problems in the interim awaiting that transition that could damage their viability. A lot of US vendors are common to both D3 and the transplants and many of those vendors are in high fixed cost and somewhat specialized segment operations that are not easily changed or replaced if they disappear. That would curtail Ford and US transplant operations and therefore production output, which then hits the dealers. All of which starts hammering the macro economy during the transition period; job losses (including second and third derivative impacts), increases in unemployment compensation outlays, reduced tax revenues at all levels, reduced GDP, reduced liquidity in the banking system, etc. etc. So ultimately, yes a GM shutdown would significantly hurt the economy for a several year period and yes it could ultimately be replaced, but not in any quick short term time period. I think Ford and Toyota got it right and both White Houses listened and made the correct decision. Now the politics in the BK is a whole different story in my opinion.
I can agree with this.
I see new breakout innovation as being better for our competitiveness in the long run. Versus GM doing a coddled BK where not enough models/staff/management/divisions are cut, the union and its work rules remain, and the business model remains fundamentally the same.
A more massive BK with government money going to new opportunities (Tesla, suppliers, etc) could have been money better spent, in the long run.
those plants would be available for retooling to increase any other company's capacity.
But they were primarily in UAW territory. Would you have touched them if you were Toyota or Hyundai? I doubt it - it would have been a gigantic Faustian bargain with an ugly UAW backside. Mark my words, even if they weren't in the new plant initially, they would have likely bullied their way back in down the road and damaged the transplants business in the process.
The government could have made THOSE loans, instead.
Agree with that idea. I'm not fond of the government making equity investments whether auto or Solyndra. The original Chrysler bailout was through guaranteed loans. In this instance, the financial industry was also in crisis, so as I understand it, they were having problems finding underwriters to guarantee. I'm not sure why they couldn't make government direct loans to GM. Maybe there is some law or something that precludes that? I know student loans have always been through financial firms rather than government direct. If that was the case, as I said before, they should have at least gotten dividend paying special class preferred stock rather than general common.
JK....
I think people who criticize the government's action are more like "short term" investors. They want to see immediate payoffs, or they regard the situation as having no value for them. They count to ten and demand "Where is my return?"
But investing is a "win more than you lose" kind of process if you are in long-term.
My opinion is that without GM and Chrysler, the foreign automakers would have beaten the crap out of Ford in short order, forcing the government to do something even UGLIER---embargo.
Seems to me the Big 2.5 are getting the crap beat out of them right now. I suppose it could be worse.
But why would Ford be vulnerable (assuming the suppliers survived), just because they were the last man standing? I would think they'd win most of GM and Chrysler's lost sales.... and be even STRONGER today.
Why not just have the Gov't run GM and rename and change everything?
US Postal Service Volt for example. I know Amtrak and USPS aren't exactly shining examples of success, but I don't think they've bled as much money as GM has, or have they? Who has greater historical losses?
That's a good point. Although presumably with a totally defunct company, contracts to use the union wouldn't matter. But the local culture of entitlement (you know, the one that helped bring down Detroit) wouldn't help.
http://www.edmunds.com/chevrolet/corvette-stingray/2014/road-test.html
I'm happy to see one in a color I like, with silver wheels, instead of bright red or black with black wheels, like I've seen so far.
Still rich for my blood at this point in my life, but sure seems like a value in that class--as has generally been the case.
And there is no sense calling GM "government motors". The U.S. government is a minority shareholder and has always been so.
Anyone who wishes the death of GM or Chrysler will, in my opinion, come to regret that point of view.
Not that I think the gov will ever come out ahead on their stock purchase, but in all fairness that number has primarily been escalated because the dumbass government is selling off the stock too quickly. Once again gov politics trump business sense. A big reason Ford is outperforming GM right now is because they are in the midst of a lot of new product. In 3 years or so, it will be GM with the newer product and those performances may trade places. The industry and the companies tend to be cyclical.
Let's hope so. IMHO it's just as likely that in 3 years the economy will cycle down again (as it tends to do) and will GM be able to do so well in the next downturn? It could be that the stock is at it's high right now, for all we know. Your scenario is an optimistic one for GM, which is not at all a given.
Interesting that Impala beat Avalon and higher priced rivals.
GM wished bankruptcy upon itself. No regrets if the companies were called Fiat or any other name other than GM. The USA deserves better than both idiot managements/UAW gave us.
The Impala, made by General Motors, surprised the magazine's auto testers with its ride, agility, braking, high-quality materials and quiet, roomy cabin, Fisher said. Its score was 32 points higher than the previous model, a noisy sedan with uncertain handling that mainly was sent to rental car lots.
"It really doesn't fall down in any area, and it does a lot of things really well," Fisher said of the 2014 version. "The car rides better than a Lexus ES. It's quieter than many luxury cars. It accelerates and brakes better than, say a Volkswagen GTI. It's extremely roomy."
New Impala tops sedans in Consumer Reports tests
Here are the rankings:
Here is the brand list and their satisfaction scores out of 1,000, followed the top-ranked car or truck for happy owners by vehicle category :
Brands Ranking:
Porsche 884
Audi 857
BMW 854
Land Rover 853
Lexus 847
Mercedes-Benz 847
Cadillac 841
Jaguar 839
Lincoln 835
Infiniti 831
Ram 817
Volvo 812
Acura 811
Volkswagen 809
Mini 801
Buick 800
Kia 797
INDUSTRY AVERAGE 795
Hyundai 792
Honda 791
Ford 790
Nissan 790
Chevrolet 788
Dodge 787
Chrysler 784
GMC 784
Fiat 781
Scion 778
Mazda 776
Toyota 776
Jeep 763
Subaru 756
Mitsubishi 749
Smart 739
Best Cars by category:
Best City Car: Fiat 500
Best Sub-Compact Car: Chevrolet Sonic.
Best Compact Car: Chevrolet Volt
Best Compact Sporty Car: Volkswagen GTI.
Best Compact Premium Car: Lincoln MKZ.
Best Compact Premium Sporty Car: Porsche Boxster.
Best Midsize Car: Volkswagen Passat.
Best Midsize Sporty Car: Ford Mustang.
Best Midsize Premium Car: BMW 5 Series.
Best Midsize Premium Sporty Car: Mercedes-Benz SL Class.
Best Large Car: Dodge Charger.
Best Large Premium Car: Lexus LS.
Best Crossovers and Trucks by category:
Best Subcompact Crossover: Buick Encore.
Best Compact Crossover: Mazda CX-5
Best Compact Premium Crossover: Audi Allroad.
Best Midsize Crossover: Nissan Murano.
Best Compact Multipurpose Vehicle: Kia Soul.
Best Midsize Premium Crossover: Porsche Cayenne.
Best Minivan: Honda Odyssey.
Best Large Crossover: Nissan Armada.
Best Large Premium Crossover: Land ROver Range Rover
Best Large Light-duty Pickup: Chevrolet Avalanche
Best Large Heavy-duty Pickup: Ford F-250/F-350 Super Duty
APEAL
The UAW doesn't own GM. Anything the UAW got, GM management gave them. Anything GM executives got, the stockholders approved it, one way or the other.
It is one big civil war, each part taking care of #1 and trying to defeat the other.
In THAT sense, yes, they ran the company into the ground--all of them did.
And I did like the car the very first time I saw one. If I were buying a car for the family now (tuition is taking care of that, though), I'd absolutely seriously consider one.
I'd love to drive or at least ride in one, but don't want salesmen calling me all the time.
I know you're out west, but around here, there still aren't a lot of Impalas around. I saw the first one I saw being driven, only a week ago.
I realize that with a base rental car, this isn't quite fair, so I could allow for the $5 tires they put on it. :P
That's certainly possible and why auto stocks are like airlines - short term investments, not buy and hold. GM offloaded a tremendous amount of overhead and debt. They are less leveraged than Ford, although Ford picked a good time rate-wise to take on the debt. The UAW gave Ford some cuts, but refused to give Ford comparable cuts to what it shed at GM. Ford probably has an overall better management team in place right now, but I think GM has developed a pretty good bullpen. So I don't see GM diving back to low depths.
Personally, while it was admirable for Ford to avoid BK, I'm not sure they did the company a favor long term vis-à-vis their Detroit competitors. I think it boiled down more to a decision to do whatever to preserve the Family position of controlling the company with super shares that amount to a minority of equity dollars. That wasn't likely to prevail in a BK restructuring. One concern I have about Ford is that some of it's new product isn't really that fantastic. The Taurus and related Explorer are oversized, yet under-dimensioned inside. I think if you've driven both you'd find the GM Lambda's have overall better drivetrains and suspensions, as well as more commodious interiors. Ford's dual clutch trannies aren't exactly bowling people over in the US small car arena. I'm thinking their market share gains are a combination of new to the market Euro looks and sales to Ford loyalists. So I personally don't think their market share gains here are necessarily permanent, which is why I'm on the side that doesn't think GM is going to keep falling behind them much longer. Also Ford is devoid of high margin luxury products. Lincoln is no Cadillac, let alone Lexus, MB, etc. Lincoln seems like Mercury and Mercury died.
But you're right, three years can be an eternity is today's consumer market!
Cameras, electronics, computers, automobiles--we've blown a lot of opportunities in global markets in exchange for becoming proficient in making paper profits.
Geez, look at Apple. Their one visionary dies and the company practically collapses. You'd think a well-oiled company would just keep on rolling...
Same with the car companies--get one wrong guy in there and they can ruin everything.
:lemon: :lemon: :lemon:
There are no Ford's with my name on the registration, so they aren't fully forgiven for crappy quality cars. I only applaud them for managing the business of selling crappy cars well enough to have survived the bumps in the economic cycle.
I think that's ABSOLUTELY true, at least for some of the smarter executives, or at least the ones that were (or at least tried to appear to be) clueless, with their heads in the sand stuck in denial.
I full heartedly believe that the Wall Street and GM Execs purposely drove some of those companies as far and as deep underground as humanly possible, in order to help with that fallacious "too big to fail" argument. After all, if they were only mild failures, they wouldn't need $700 billion in gifts/bailouts. In GM's case, $50 billion.
It was a gamble to fail as hard and as bad as possible, but the gamble paid off for them unfortunately for tax payers.
Oh, and I recently learned that Chrysler didn't payoff all they were given. About 3 billion was "written off as a loss" or forgiven by the TARP management.
If Chrysler wasn't bailed out around the time I was born then they wouldn't have sold me a lemon around the mid-Nineties.
I can't see any regret there, other than regretting bailing them out the first time so that the 2nd could have been avoided rather than debated.
ON the other hand, positives of the bailout:
1. More selection.
2. More competition (if you can call it that).
3. Theoretically number 1 and 2 make costs and prices stay lower.
To be fair, the guy rented Camaro V6's a few times since then, and they all lasted the weekend without blowing up. I'd say the Camaro is 3 for 4 now.
A Maserati literally needed a tow before it finished one lap at Buttonwillow through no fault of the driver's. Haven't seen any of those since. 0 for 1.
My A3 has been fine for about 6 track weekends now, though it did throw a minor code towards the end of one weekend. And the last 2 times it has tended to overheat the DSG oil prior to a 30 minute session being completed (maybe 15-20 minutes in). I'm hoping a DSG oil change will solve that.