Auto Repair In the White House
Of Detroit’s three automakers, Chrysler may be the most challenged. The company had a rocky relationship with its former owner, Germany’s Daimler. On one hand, some products benefited from a few nice bits and pieces picked out of the Mercedes-Benz parts bins. Even a couple of entire vehicles, the Chrysler Crossfire sports car and Dodge Sprinter van, are essentially Mercedes products under different sheet metal.
Today’s Chrysler, under Cerberus Capital Management ownership, can only recover with a product-led comeback. That’s not new to Chrysler, since the venerable automaker has been strapped to the railroad tracks of financial disaster twice before. So the company needs cool, smart new vehicles — and leadership that can compel people to buy them.
Chrysler CEO Robert Nardelli asserts that the company is well on its way to restructuring its business, a process that began in 2007, and plans to launch 24 vehicles from 2009 through 2012. What’s more, the company claims that it’s in a position to make a major splash with electric vehicles based on its experience with GEM, a producer of electrics that are limited to slow city transport.
The trick for Chrysler is to pull this off with $4 billion of our money and an additional $2 billion from Cerberus. That money will be tasked to pay suppliers and employees and to fund the new products and marketing efforts. At the same time, Chrysler has too many dealers and is in the middle of combining them into fewer, stronger stores that sell all the brands — Chrysler, Jeep, and Dodge. While it’s hardly a bright spot, some of the weaker dealers have already failed and more will succumb to the dramatic sales downturn, so at least Chrysler won’t have to buy them out. (GM learned how expensive the buyout proposition was when it killed Oldsmobile.)
If Chrysler can generate some product excitement, perhaps Jim Press, the ex-Toyota executive who serves as co-CEO and chief marketing officer, can try his hand as the voice of the newly reformed company. The mysterious Robert Nardelli doesn’t seem to be the right candidate, and if Press isn’t up to it, they might consider recruiting Lee Iacocca. It worked years ago and Lido could combine Chrysler’s past comeback with selling future iron.
General Motors has made slow, steady improvement in its reformation. The General would like to move faster, but between labor agreements and a few too many franchises, it’s not the kind of rework that takes well to a corporate cattle prod. Hummer needs a small, nimble Wrangler-style vehicle to be relevant, or it needs to be sold to people who love the faux military style. I suggest the Russians as a likely candidate. And GM may not have time to change Saturn into a franchise selling European GM products along with a plug-in electric vehicle or two. But killing the brand may be even more expensive.
GM’s good news is that it has focused its model lineup as it reworked brands. In 2005, Buick offered eight models, most based upon keeping factories running, not consumer demand. In 2009, there will be three Buicks to choose from: Lucerne, La Crosse, and Enclave. The Enclave crossover is a hit from this season and a new La Crosse looks just as promising for next year. Cadillac has a newly focused lineup and Chevy’s new Equinox looks like a real challenger to Toyota’s RAV4 and Honda’s CRV models. And the Volt, Chevy’s plug-in, extended range electric is still on track for November 2010 launch. It could be a game changer for GM if the price isn’t too high.
Ford is in the best position to weather this perfect storm. The company is launching compelling new products with lots of surprises in the works. Ford sold assets including Aston Martin, Jaguar, and Land Rover when there were still buyers and its finance arm is solvent. And since it doesn’t need a government loan, management can run the business without trying to please an assigned bureaucrat.
The next three months will be decisive. If the UAW comes to the table and moves its 2010 contract up a year, Congress keeps itself from turning GM and Chrysler into Freddy Mac and Fanny Mae and the Obama administration helps by keeping all the special interests at bay, we just could see a newly revitalized domestic auto industry.
That’s a lot to bank on, but if we want a vibrant automotive marketplace, it’s worth the risk.
The forgeign Auto makers with plants here have an edge. You can buy thier cars with zero 0 percent loan from financing overseas. Then the profits go back to Japan and Germany to build up thier Infastructure, schools, and programs. GM cannot get financing. A car loan from GM right now must have almost perfect 700 credit to get a 5% loan. This has got to change for GM to recapture thier market.
The banks alias Citi Bank of America AiG got “Grant Money”. They have stuck it in thier safes and bought other banks, and still will not loan to the Big Three. GM got a loan and will be accountable. We need to get the banks back on line with money for GM and Chrysler so that the recovery can go forward. So the secret to the Big Three’s sucess is really all about the Credit Crisis. And of course no body mentions we had a year of $4.00 a gallon for gas that bankqrupted everybody before the credit crisis even hit. And the gas caught GM with vehicles people used to want with 1.50 gal gas, but then they had to change gears mid-year to make new models in “small” size. Now with 180 billion going back into the economy from the price back down to 1.50 gal gas, this too will help the big Three. More money not going in the tank all year, so that one can again afford a new car payment. And I bet Exion will still be making a healthy profit in two weeks when thier 4th quarter report is made public.
Finally GM Ford and Chrysler have been in business for 100 years. If that is not a good test of reliability, than our country is probably destined for desolve, as it is only a bit over 200 years plus in existance in of itself. GM will be just fine if we can get the banks to loan the money back out they took in, and the lost money on Wall Street from the Unregulated Traders slippery fingers. But that is going to be a very hard “Repo Man” Gig. Too bad we can’t just call a safe cracker and hookup for a Boston Tea Party style Repossesion.
Mr. Douglas:
“Does Washington DC have a clue how Detroit works?”
I’d ask if Detroit has a clue how Detroit works?
Because it’s apparent that it ISN’T working.
And is it REALLY Detroit we’re talking about, or just their white-collar corporate headquarters?
Just how many of their assembly plants are located in Mexico and Canada,(and will presumably be subsidized by the US taxpayer), anyhow?
I find it highly suspicious that the UAW hasn’t been screaming about the Big 3 Maquiladoras to Kingdom Come. It shows that the UAW is perfectly happy to keep the South of the Border plants running…as long as UAW leadership gets it’s cut of our loot, too.
It’s hard to tell when you’re in the middle of it, but I suspect that we’re experiencing a paradigm change…our economy has been based for too long un unsustainable levels of consumer debt, and now the old business models are of questionable value.
For all their moaning about approaching insolvency, I’m still subjected to the Big 3′s advertising budget at least once an hour on any TV channel I tune to…and ads on NFL Sunday aren’t cheap.
You bring up a valid point, though, when describing the pig shampoo that,(usually), issues from Pelosi’s soup-cooler.
Despite all their eco-friendly caterwauling about hybrids and electric cars and low-emissions this and that, there apparently isn’t nearly the market…yet…out there for those kinds of products. If there WAS, they’d have made ‘em.
What’s the best seliing vehicle in America for how many decades? ,(c’mon…it’s not like you HAVEN’T seen the ads enough times to memorize this factoid, is it?).
But given the way WASHINGTON works, they’ll mandate production of “eco-mobiles” anyway…and then blame the Big 2,(or the Big 1), when the only people who will have purchased them will be urban metropolitan area journalists…
Look, if you live in Brooklyn and work in Manhattan, I’d agree that you don’t really need a SUV,(essentially, a 4WD mini-van or station wagon, when you think about it), but if you have a family, and live outside of a public transportation network,(especially where the snow may not get cleared off the roads for a week or so), you DO.
“Bailing out our domestic auto industry is not an easy task. ”
Nor should we. Period. End of UAW story.
Hmmm.
Interesting news:
“In an unusual move, General Motors and the Canadian Auto Workers union reached a tentative agreement on a new collective bargaining contract on May 15, 2008, a full four months before the existing contract was due to expire. As part of the agreement, GM pledged to maintain production at the Oshawa, Ontario pickup truck plant and made other production commitments.
On June 3, 2008, less than three weeks after ratification of the new contract, GM announced that, due to soaring gasoline prices and plummeting truck sales, it would close four additional truck and SUV plants, including the Oshawa pickup plant.[4]
In response, the CAW organized a blockade of the GM of Canada headquarters in Oshawa. The blockade was ended by an Ontario Superior Court order, after 12 days. Further discussions between GM and the CAW resulted in an agreement to compensate workers at the truck plant and additional product commitments for the Oshawa car assembly plant.”
from:
http://en.wikipedia.org/wiki/General_Motors_Canada
The ink’s not even dry on their contract with Canadian unions, and they slam the doors on the factory that they had specifically PROMISED to keep open.
And some people want to bargain with these people?
Can you trust them?
Another item:
“MEXICO CITY – General Motors of Mexico says it will temporarily idle three factories because of the worst auto sales slump in a quarter of a century.
The company says its plant in the central state of Guanajuato will shut down from Dec. 22 to Jan. 7, and its plants in the northern states of San Luis Potosi and Coahuila from Dec. 22 to Jan. 2.”
from:
http://www.startribune.com/business/36205249.html
And what happens after January 7th to justify the resumption of production of the GM Maquiladoras?
Oh, yeah…they get their US taxpayer subsidy.
Riiiiiight.
And meanwhile, back at the UAW Union Hall:
“1. It’s good news that loans have been released to keep America’s auto factories open.
• Good news for workers and their families at automakers, dealers, suppliers and others who are part of the auto industry that emergency bridge loans have been released to help America’s auto companies weather the current financial crisis.
• This will help save millions of jobs, thousands of companies and hundreds of billions of dollars for taxpayers.
• All this could have been lost if one or more automakers were forced into liquidation.”
from:
http://www.uaw.org/auto/12_20_08auto1.cfm
Tell that to the Canadian GM employees at Oshawa.
And remember that Mexican GM workers go back to work after the New Year.
These people are NOT trustworthy.
I couldn’t pass this one up:
“GM is already confidently moving into a bright future. See how GM is a leader in alternative fuel and fuel economy, technology, design, safety and quality”
from:
http://www.gm.com/corporate/
Ah….yup. That they are.
A bright future” of perennial taxpayer subsidy.
For your reading pleasure, the guy I’ve been waiting to hear from:
http://www.bestsyndication.com/?q=20081203_michael_moore_message_big_3_bailout_package.htm
(I didn’t wanna, but I finally got off MY lazy dead *ss and googled it).
The Big 3 bailout is about D.C., not Detroit. The intended results will occur in D.C. Anything that happens elsewhere is secondary.
The bailout is votes for politicians. Canada gave those idiots 4. Million in addition to our 13 billion. I don’t want to bailout these companies I hate what most of Washington is doing to our country I hate what the politicians are doing to Illinois. Thank you Mr Bush and Mr Cheney for protecting our country. The rest of you can go screw yourselves. Our future can only be saved by our Republican Governors such Sanford, Jindal, Palin, Perry, and Pawlenty.
The idea that the Big Three can be fixed is like saying the Titanic could be fixed after it hit the iceberg. The time to fix Detroit was in the past(1970-85) when there was still time. Now its too late. The Big Three are doomed. This is not surprising. In most industries there are only two or three major players and a few niche companies. This was true of the American market when it was protected by tariffs. Hence the Big Three who eliminated other competitors like Packard, Hudson, etc. In a globilized market there will inevitably be only three major firms probably Toyota, Honda and one of the German companies. Giving Detroit taxpayer money is simply throwing it away in a hopeless cause.
Let Detroit secede from the US and become a third world country.
As I see it; These leaches will take blood or money to continue their mugging of the American People because they cannot find another
<addendum;
………..sucker to consume!