Does America Even Need Its Own Automakers?

rockylee

Hey, Rocky, where youse been, man????

Unfortunately going through a divorce and moved back home to Michigan.

Cooterbfd,

that study is just amazing pal. LEXUS being AMERICAN ????? :surprise:

What is this world coming to ? :surprise: I'm sure their are actual owners of these brands that are still convinced Hyundai is Japanese and Lexus, is American.

-Rocky

bumpy

GM
"GM North America (GMNA)...adjusted net loss of $779 million (reported net loss of $4.6 billion)"
"GM Europe (GME)...adjusted earnings of $227 million for 2006 (reported net loss of $225 million)"
"GM Asia Pacific (GMAP)...adjusted earnings of $441 million in 2006 (reported net income of $1.2 billion)"
"GM Latin America Africa Middle East (GMLAAM)...adjusted earnings of $533 million in 2006 (reported net income of $490 million)"

Ford
"For the full year, Ford's worldwide Automotive sector reported a pre-tax loss of $5.2 billion, compared to a pre-tax loss of $993 million a year ago."
"North America: For 2006, Ford's North America Automotive operations reported a pre-tax loss of $6.1 billion, compared to a loss of $1.5 billion in 2005."
"South America: Ford's South America Automotive operations reported a full- year pre-tax profit of $551 million, a $152 million increase from 2005."
"Ford Europe: Ford Europe posted a full-year pre-tax profit of $469 million, an improvement of $396 million from a year ago."
"Premier Automotive Group (PAG): For 2006, PAG reported a full-year pre-tax loss of $327 million, compared to a pre-tax loss of $89 million a year ago."
"Asia Pacific and Africa: For full-year 2006, Asia Pacific and Africa reported a pre-tax loss of $185 million, compared to a pre-tax profit of $61 million a year ago."
"Mazda: For full-year 2006, Ford's share of the pre-tax profit of Mazda and associated operations was $168 million, compared to $255 million a year ago."
"Other Automotive: Full-year 2006 results included a pre-tax profit of $247 million, compared to a loss of $207 million a year ago"

Mr_Shiftright

Thanks bump....GEESH, those NA losses are staggering...Asia looks good for GM.....

tlong

Rocky, we missed you.
So sorry about the family situation, hope it all works out OK.

You're back in GM country now.

iluvmysephia1

sorry to hear about your situation, man. I have thought of that in the last few days, too...where's rockford? Glad to have to you back here and hang in there, man.

Yeah, it must be mentioned that GM's are selling like hotcakes in China and their buyout of Daewoo in 2002 was one very, very sharp move by GM. I don't know if South Koreans are buying up GM Daeoo Auto and Technology Co. products in South Korea, but, they are made there in South Korea in the former Daewoo factories. Lots of Daewoo workers were allowed to keep their jobs and those resources are still being utilized. I was glad to see that happen for Daewoo and GM was smart to enter the Asian market from this important route.

Now their Chinese inroads are pert-near secured for more imports there from old Daewoo facilities and the Chinese automotive market is absolutely huge.

Like has been said, what is going to be interesting is what is GM gonna do to pull itself up by it's enormous bootstraps in America and pop to no.1 again?

I actually looked at the 2008 Chevy Malibu for a bit but noticed that they didn't offer a manual tranny. Then I went and bought a '08 Mitsu Lancer that has a CVT automatic anyway! But the new '08 Bu is improved in the styling category IMO.

british_rover

Isn't it though. I know the US auto market is supposed to be the toughest market in the world but come on...

How can you be fairly successful, or at least break even, all over the world but fail utterly and completely in their home markets?

It looks like GM is finaly getting the idea by integrating some of their global operations better but ford still seems to be clueless.

bumpy

I don't know if South Koreans are buying up GM Daeoo Auto and Technology Co. products in South Korea

Daewoo had about 10% of the South Korean market in 2006 and has been making some impressive sales gains lately.

http://www.theautochannel.com/news/2006/01/18/207649.html

iluvmysephia1

their share in their home market was more like 5 or 6% IIRC. So they are making inroads. I would think that some of those former Daewoo employees now working for GMDA&T CO would buy some Daewoo-built products for their own rigs.

GMDA&T CO also makes the Suzuki Forenza and Suzuki Reno and I believe they make the Suzuki Verona, too. I looked for a long time at the Daewoo Kalos(Chevy Aveo)for the longest time and at the start of that project was really excited and wanted to possibly buy one of them. The new Chevrolet Aveo sedan looks decent to me and is priced smartly by Chevy. That car can't hurt the GM cause.

scape2

Yes, we need to be able to design, test and manufacture all aspects of the automotive industry here in the U.S. What people don't seem to get is we are all connected economically. If I don't work, I don't pay taxes, government looses revenue. I don't work, I cannot buy or use the services/products you offer at your job. If you think Toyota/Honda are going to care or want to save an American job.. I have a great big red bridge on the West Coast that is for Sale.. real cheap... Wake up! These are Japanese companies, NOT AMERICAN as they have done a great job in the PR arena in getting the American public to believe so... :surprise:

jeffyscott

One reason they may be more profitable elsewhere is the higher prices that they seem to be able to get for cars. In the UK the Focus starts at about $19,000, Mondeo starts at over $26,000.

If Ford could get anywhere near $26,000 for a Fusion with a 1.6L, 110 HP engine and manual transmission in the US, I think they might be profitable.

fintail

But how much of that is tax and how much is seen by Ford?

Also, the dollar being so weak makes comparisons difficult. Wages are equivalent in raw terms, I believe.

Mr_Shiftright

Given the benevolent tax structure for corporations here in America, and given that the productivity level of the American worker is as good as the German or Japanese, one might come to the conclusion that American management is a primary, though perhaps not sole, source of the problem.

Why stockholders in the Big Three aren't surrounding the headquarters holding pitchforks and burning torches, is a mystery.

MrShiftright
Visiting Host

nvbanker

We would have to put on the table THIS rather uncomfortable thought:

That, perhaps, the culture of the Big Three is such that they are condemned to mediocrity---that is, from the Top, they don't know how to compete anymore.

A similar situation could be found in British management of their auto industry in the 1960s--80s. It's not unheard of that a corporation becomes concretized and unchangeable.

BRILLIANT! Had no idea you were that smart, Shifty....but you're right.

iluvmysephia1

is gonna have to show measurable improvements in Ford profits in NA fairly close to now, or even yesterday. He'll be fine financially(DUH!)but thousands of Fo-Mo-Co workers won't be all right.

Alan is my former boss(big big big boss)at The Boeing Company. As usual most all of us didn't really hear that much about him as a person(except for a few meetings where his fist had to come down at high velocity on the table in order to drive home his point...but that's bid-ness, eh?)but his reputation never suffered the same maladies as Phil Condit and/or Harry Stonecipher. Both of those CEO's had affairs at work and were promptly fired from Boeing. Oh, that's too bad. Most of us SPEEA(engineering union)members cried rivers when that happened. Actually I think both of them occurred after I was already laid off so I had to cry those nasty rivers on my own recognizance. Pretty tough to take.

Right.

But my point is that Alan had a decent reputation at Boeing and being the big 'ole CEO at Ford Motor Company presents some big challenges to him helping Ford become profitable again.

I do think it would be a grand shame if either GM(I think they will be around a long time BTW)or Ford(not so good of chances to stick around)or Cerberus/Chrysler(not sure what is gonna happen with them piloted by Cerberus)tanked in the next few months or years. I do feel that America needs its own automakers...thinking simply economically.

The solution to their survival will need some creative thinking and huge effort expended. Also, some more sharing or merging may very well be required in order for these automakers to survive and make a profit.

cooterbfd

Well, I'm sorry to hear that, man. Yet, I guess I'm happy for you if you end up with a better quality of life. Best of luck!!!!

jeffyscott

Those were pre-tax prices.

lemko

Here's a funnier one - I gave a girl a ride to work in my Cadillac Seville STS and she didn't even know GM built Cadillacs. In fact, she thought Cadillac was a foreign make!

british_rover

You can't convert directly from GBP to USD though.

For example a LR3/Disco 3 in the UK costs 36,489 GBP or about 72,427 USD.

That is before VAT and C02 offset charge.

Disco price list

The LR3 is built and designed soley in the UK. The exact same vehicle, just LHD, in the US is less then 56,000 USD. In the UK they are paying almost 30 percent more for the exact same vehicle.

gagrice

I noticed that with Jaguar pricing. Is it all tax in the UK?

bpizzuti

Why stockholders in the Big Three aren't surrounding the headquarters holding pitchforks and burning torches, is a mystery.

Most stockholders don't care. The short term holders are there to flip it quick to make quick money. The long termers and large-scale holders just want to see their dividend checks. And many of said long termers are actually GM upper management.

louiswei

In fact, she thought Cadillac was a foreign make!

I think that's a compliment to Cadillac...

british_rover

I specificly quoted prices without VAT(Value Added Tax) or the C02 off set program. I think VAT is 17.xxx percent on vehicles so that does add a huge amount.

I have no idea where the rest of the price differance comes from. At my dealership we tried to figure out what the baseline cost on a LR3 is just for materials and labor. We figured a stripped model not including the factory warranty cost probably costs Land Rover between 20,000 and 25,000 USD.

dill

Does America Even Need Its Own Automakers?

I remember an auto expert say about 15 years ago that roughly 1 in every 5 manufacturers in the US is at least in a small way dependent on the US auto industry. I would think that that stat is probably less than 1 in 5 nowadays than it was, but still that is significant when you look at the number of jobs cut by the Big 3. When you get right down to answering the question"Does America Even Need Its Own Automakers?" Yes they do need it. The American automotive business adds mightily to the GDP (gross domestic product) the auto industry has also added alot to the production and efficiency numbers and the technics used to help other industries outside the auto manufacturing business.

bumpy

The American automotive business adds mightily to the GDP (gross domestic product) the auto industry has also added alot to the production and efficiency numbers and the technics used to help other industries outside the auto manufacturing business.

True, but there's no reason that business has to be conducted by General Motors or Ford, versus Toyota or Hyundai.

stever

thought Cadillac was a foreign make

I think it also shows that many people consider cars to be interchangeable commodities nowadays. People are cross-shopping the Outlander vs. RX350 for example (the enthusiasts that care about cars are grumpy about it, but there you are).

jeffyscott

You can't convert directly from GBP to USD though.

Why not? The car manufacturers can certainly do that with the currency they collect from sales. Do you think the manufacturer is making the same profit per unit on the LR3/Disco in the US as they are in the UK?

The market sets the prices, no one is guaranteed that the market is going to pay enough to cover the cost of manufacturing plus a certain profit margin. In order to sell these vehicles may have to be sold at a lower profit margin in the US vs. the UK. At times, if a manufacturer wants to sell in a particular market, they may even have to do so at a loss (they hope temporarily).

Mr_Shiftright

Maybe I should have titled the topic "Can America afford to keep its automakers?"

In other words, at what price do we prop them up as they bleed money and when do we cut them loose if they can't turn a profit?

Nobody rushed to save the American VCR industry or camera industry for instance, or Packard or Studebaker or Kaiser and even companies like IBM were really on the ropes and there was no talk of intervention. Sink or swim was the message.

iluvmysephia1

a similar situation affected Kia Motors of South Korea in 1998. They were in debt bad and there was going to be no bailing out for them by the government of South Korea.

But it has been noted that if Hyundai is having financial problems then that does perk up the ears of the South Korean government and they will come to their aid.

So, in 1998 Hyundai buys 51% of Kia and the problem is solved. Provided Kia returns to profitability under them and this has happened. My point being that the South Korean government indirectly came to the aid of Kia through Hyundai. Too many jobs to lose and Kia was the first manufacturer of automobiles in South Korea. Too much history involved and too much economic hardship to endure because of the trickle-down effect with suppliers and other industries connected to car manufacturing.

It doesn't seem to work that way in the U.S. The U.S.government will let a domestic carmaker fall and fail. Lee Iacocca had to preach and preach and scream and yell for quite some time and promised to pay back every penny to the Fed. Chrysler did pay back every penny but under these circumstances today it will take more than asking the U.S. government for a bailout...I'm thinkin' that's not gonna happen in this day and age.

GM should survive because of their thinking ahead and buying Daewoo of South Korea. Survive overall..but turning to decent profitability here in the U.S. and fending off the imports remains to be seen. Ford's future in the U.S. appears even grimmer and Chrysler/Cerberus is really going to be the one to watch with wonder.

Chery is going to meet with Chrysler and Cerberus officials and get some of their questions answered. They've yet to talk to Cerberus yet. The Chinese government is carefully reviewing terms of the Cerberus purchase of Chrysler and once that's done agreements can be hammered out between Chery and Cerberus on small car dvelopment details for Chrysler. The Hornet is still on gentlemen and yes I think that is just mah-vel-us!

grbeck

Mr. Shiftright: I think then we'll have to condone nationalization of the auto industry, like they do in Banana Republics, (at your expense) because how else can you keep a profitless massive enterprise going except by charity?

What the domestics really want is for the government to nationalize health care, to transfer the cost of providing it (especially to retirees) from them to taxpayers in general.

In other words, large corporations will work with those on the left - who are ready to blame large corporations for virtually everything - to achieve one of the left's main goals, which is an American single-payer health care plan in one form or another.

When it comes to politics and public policy, if you live long enough, you'll see virtually everything...

Mr. Shiftright: That, perhaps, the culture of the Big Three is such that they are condemned to mediocrity---that is, from the Top, they don't know how to compete anymore.

This is true, but one person in Detroit IS trying to change this - Alan Mullaly of Ford. He is asking lots of hard questions, demanding answers when none are immediately forthcoming, and seeking changes in the Ford corporate culture, which was truly poisonous to the effort to build better vehicles. The questions are whether he will run out of time, and whether he can really force enough change to set Ford on the right track.

As for Packard and the Soviet Union - there was an interesting article in the Packard club publication in the 1990s that analyzed the immediat prewar "senior" Packards and the Russian ZIL (or ZIS, I can't remember which) supposedly made from Packard dies. It showed that while the Russians were obviously inspired by the Packard's general lines and shape, the ZIL had too many variations to be made from Packard dies.

The 1955 Packard sold rather well, but it was plagued with engine, suspension and body fit problems, so sales plunged for 1956 (and the 1956 models weren't much better). Combined with Studebaker's mounting troubles, something had to give, and it was decided to shutter the Packard plants and base the 1957 Packard on the Studebaker body. Studebaker was basically bankrupt when it merged with Packard in 1954, and it used what was left of Packard's money to stay in business for a few more years.

Mr_Shiftright

Well it was the conservative government (economically conservative I mean, you know, "true" conservatives) who first insisted that corporations be HMOs as well. There's no blaming the left for it as it is a traditionally conservative notion, classic textbook manifestation of wanting a smaller, de-centralized government. Perhaps an outmoded form of thinking in the 21st century, I don't know.

Packard: yes, you're right! The 1955 Packard V-8 engines had severe engine oiling problems (correct in '56).

The Independents I think just could not compete with the ferocious marketing schemes and quick product turnover of the Big Three; besides, the Big Three products were so much sexier and modern.

MrShiftright
Visiting Host

bpizzuti

Are you telling me the Big 3 had QUICK turnover at one point? They sure don't know...how long was the Taurus around? how old is the Focus? How about the Cobalt? Trailblazer?

Mr_Shiftright

Yes back in the Dinosaur Age (1955-1975, before the comet hit and there was the great Die Off), the Big Three was crankin' em out, a fresh-looking car practically every year---true, some were coyote ugly, but they were very "vital" in their designs even if not all successful. Car designers in Detroit were like graffiti artists back then.

...I think we started seeing monotony in Big Three product lines in the 70s.

MrShiftright
Visiting Host

grbeck

I'm not blaming the left for the Big Three's current predicament - just pointing out that politics will ultimately produce strange bedfellows, as the two forces pushing for nationalized health care will be large corporations (even Walmart has said that the government must address this issue) and those traditionally on the left side of the political spectrum, who don't especially like corporations.

fezo

And wade through everything....

Rocky - sorry to hear that. Hope for the best for you.

It is kind of stunning to those of us who can remember when the big 3 could turn out new product like crazy. Used to be you could easily tell any models say 58 from a 59. They'd put the new cars in the showroom with covers over them until the actual release date of the new car. Heck, my nearest shot at marrying into money was this girl whose parents used to have release dates for the new Cadillacs marked on their calendars. They'd take the day off, go take their old (1 year to the day) Caddys and get the new models. One sedan and one convertible. When she got her license they bought her a year old Chevelle. She was majorly steamed that it wasn't new. I think that was about when I realized I was not going to keep up with her "needs."

I am trying to figure out when it was we decided that a car could look exactly the same as last year's model and we were fine with that. It certainly wasn't the world I grew up in.

Mr_Shiftright

There is no anti-corporation left in American mainstream politics. You couldn't even get elected to national office if you were anti-corporate. What you do is choose which corporation to sleep with. Corporations and all national politicians are very comfortable bedfellows indeed-- although they do like to leave the bedroom by separate entrances :P

Point is, relavent to this topic, is that even with nationalized health care, all you'll accomplish is that the Big Three will lose money more slowly--at least until they figure out how to make better cars that people really want.

Breathing space? Maybe. Solution to the problem? Don't think so.

MrShiftright
Visiting Host

stever

I am trying to figure out when it was we decided that a car could look exactly the same as last year's model and we were fine with that

Remember the Beetle ads back in the late 60's/early 70's? 3,000 improvements were touted but you had to squint to tell if the head lamps had been changed or something. (link)

grbeck

I can't necessarily buy that...Michael Moore (who received a place of honor at the most recent Democratic National Convention), and several of urban Democrats are quite anti-corporate in their words.

Now their actions may be different, but that is more hypocrisy than anything else. It has less to do with the corrupting power of corporations than the desire of said politicians to milk the system - including the business community - for everything that they can.

fezo

Oh, I remember those ads!

So even out tendency to run a model so long is an import idea? :P

Mr_Shiftright

Michael Moore is no less a capitalist than Sam Walton. It just annoys conservatives when a liberal gets rich :P

As for GMs reputation in the media, I think they've shot themselves enough in the foot that they don't need help from anti-corporate people of any stripe. They are an easy target, you can hardly miss.

MrShiftright
Visiting Host

jeffyscott

It's also a mistake to think that the mangers of existing gigantic corporations are supporters of anything resembling laissez-faire capitalism. They'd of course love to have the government take financial burdens off their hands. They are also more than happy to have government meddling in the market, if it will stifle competition, increase their profits, or prop the business up so that they continue in their all-important role of over-paid corporate executive.

I don't think they even really mind complicated government regulations as these often create a barrier to anyone new coming in.

The benificiaries of a free an open market (on the business side) are often busnesses that don't exist.

nippononly

"You're generally viewed around here as a reasonable guy, nippon but really - you don't give a rip if Ford & Chrysler die?.......In fact, you may have just turned me a little more toward a Buy American stance"

I do apologize, nv, but you know, I think practicality more than anything dictated those words of mine.

I cannot see, in my wildest imaginings, a future beyond 20 or 30 years that contains the Big 2.5. I think Chrysler is weakest, and if they now jump into bed with the Chinese under Cerberus guidance, they could turn a profit selling Chinese-built cars in America as Dodges and Chryslers. Meanwhile, Jeeps will be bastardized and sold wholesale in China under the Chery brand name. Is that a lasting formula? Does it even matter if future Chryslers are just Chinese imports? What's in a name exactly?Outside that scenario, I think Chrysler's prospects are pretty much :sick:.

As for the whole Ford and GM thing, I don't see Ford ever pulling out of its current malaise, so I was just backing the stronger horse. I think Ford brands may survive, some perhaps under the GM umbrella, and with them may survive many American jobs, so all is not lost there. But if I look a generation or two out, I see one behemoth American carmaker, and I think it will probably be GM. And honestly that doesn't bother me that much. America keeps its hands in car manufacture, just as it has in plane manufacture, and instead of three large companies constantly dragging each other down, we have one large company standing alone and offering a uniquely (I hope) American alternative to other nations' automotive offerings. One that can actually operate profitably.

I may be too optimistic, based solely on a current group of execs at GM that have hung in there through thick and thin, that know their stuff and have forcefully offered a guiding hand and insisted on a turnaround. If a piece of that rock crumbles too soon, GM may be right back in a quagmire. But the Big 2.5 are tearing each other apart more than the competition, very often, and that needs to end before they all drag each other into oblivion.

Oh, and for the record I don't support government intervention to "rescue" these corporations any more than I favor the government bail-outs that have been proposed for all these fools that jumped in over their heads in sub-prime home loans and now find themselves in default. It's bad enough when it's an individual, but when a huge corporation makes bad decision after bad decision for the sake of short-term profits, which are then richly reaped and wasted, why should my tax dollars then go to patching their boat when their failure to plan for the future bites them in the [non-permissible content removed]?

Mr_Shiftright

These articles are interesting:

Obama Urges Detroit to Reform and Falls Flat

The Torque Report Finds Little Sympathy for Automakers Except From....Jerry Brown?

MrShiftright
Visiting Host

iluvmysephia1

maybe Chrysler was like a third wheel back in the 70's and 80's and there were no other ways for Iacocca and company to stretch and squeak profits out of a car lineup that not enough people wanted?

So they needed an eventual buyout and the rest is history. But might history be repeating itself here in the 2000's? I mean look at how many choices we have in automobiles these days?

Do we need Chrysler any more? If so because of Jeep? The latest Sebring? Now if you're talking the new Hornet then I perk up my ears a little. The new Caliber has a niche of buyers in the U.S. that are happy with them as they are built but with a tweak here and there.

Survival of the fittest could pop us out a new world order Chrysler that will be able to compete, but something tells me that more new product besides the Hornet will be required.

Ford is a tad late to the game...perhaps import some of their European ideas for lightbulb torches in to America, don't really know.

cooterbfd

I think we started seeing monotony in Big Three product lines in the 70s.

About the same time Japanese cars came into prominance. As much as it would boost sales to freshen up a car every year, I'd bet tooling costs would offset this gain. Even today, as it was back then, there is pay disparity between the U.S. companies, and the foreigners.

imidazol97

Jerry Brown

What office is Moonglow going to run for now?

Mr_Shiftright

Jerry's okay. He's smart and not an ideologue, and he was popular in office. At least he throws out ideas and has guts. He's not mired in the same old thinking. I'd appoint him CEO of Ford. He couldn't do any worse. You think the original Henry Ford wasn't wildly eccentric?

If a creative person throws out 10 ideas and 3 of them are stupid, 1 unworkable and 1 too expensive, that's still a pretty good average compared to the person who thinks of nothing and does nothing IMO.

I wouldn't want types like Brown as Sec'y of Defense but geez, American automakers need forward-thinking execs, especially on the 14th floor at GM.

MrShiftright
Visiting Host

imidazol97

I can recall the 3 stupid, 1 unworkable, and 1 too expensive type of things we read about from afar rather than instate California during his tenure and run for pres. Were there 5 the were workable?

I understand your point about a free thinker is what some businesses need.

grbeck

Mr. Shiftright: It just annoys conservatives when a liberal gets rich.

I think it's deeper than that.

When someone repeatedly lambasts corporations and politicians for only presenting the part of the story most favorable to their side, and repeatedly implies that the wealthy got that way only through mistreating others, and then engages in those same behaviors, it's fair to call him out on hypocrisy.

As for Jerry Brown running Ford - that would no doubt be interesting, and it's true that Henry Ford I was not only eccentric, but also quite creative.

The problem is that his eccentricity not only built up the Ford Motor Company through the early 1930s, but also almost destroyed it in the late 1930s, when he refused to modernize his cars to meet the competition from Chevy and Plymouth, and allowed the notorious Harry Bennett to battle - literally - the UAW with lead pipes and billy clubs.

Sometimes "eccentricity" has to be channeled and harnessed to avoid serious long-term damage to either companies or bureaucracies.

stever

The off-topic rich/political/taxation thread has been dumped; let me know if you'd like a copy of your missive.

Please continue with the automaking.

Mr_Shiftright

Well don't believe the trash you read in the papers about California. Brown did *exactly* some of the things Arnold is doing now, to great praise...ironically.

That includes tougher environmental laws and fuel conservation laws, the squandering of which should be rightfully interpreted, as they are by Arnold today, as "hidden taxes on future generations".

American automakers fought emissions and fuel economy regulations tooth and nail from the get-go; they even almost violently resisted the installation of PCV valves!!

I think the Japanese saw these same regulations as *opportunity" and good fortune, and man oh man did they ever make hay while the sun shines.

I'm a real believer in the theory that all genuine creativity comes out of *restriction", or design limits as it applies to cars or even to business in general.

Nothing has hurt the Big Three worse than their turning of their backs on opportunity.

MrShiftright
Visiting Host