11 Votes

Boost it!

The 7 Worst Ways to Rescue Detroit (usnews.com)

mscottc1 submitted on 12/5/2008 Official Bell & Ross Timestamp: 3:19:58 PM

19 user comments | Category: Misc News | Source: www.autospies.com

Commence Kabuki.



With the Detroit automakers in the late stages of supplication, a predictable ritual will now take place. The CEOs of GM, Ford, and Chrysler will do as instructed: travel like common men from Detroit to Washington and present the government with new-and-improved restructuring plans showing that this time, they really are serious about slaughtering sacred cows and right-sizing their businesses. Members of Congress will deliver a few lashings about overpaid CEOs and overentitled union workers. Then, in the end, the feds will pony up at least $25 billion—and maybe $50 billion or more, eventually—to help stave off automotive Armageddon.

There are many routes to a Detroit bailout, however, and some go straight through Follyville. Here's how the feds could mishandle the automaker rescue package:


http://www.usnews.com/blogs/flowchart/2008/12/2/the-7-worst-ways-to-rescue-detroit.html

About the Author

mscottc1

Besides, everyone knows apples taste better anyway.

— mscottc1 (View Profile)


User Comments

mscottc1

Sorry for the link- could't get the new format for posting an article to work for some reason. Very good article though- far more insightful than I've come to expect from the "mainstream" media or even non-car-biz media.

— mscottc1 (View Profile)

Posted on 12/5/2008 4:26:13 PM | reply to this comment | Votes: 1   

thstone

My thoughts ...

1. Do not treat the Detroit 3 all the same. What? Are you kidding? Are we supposed to tailor the bailout to each car company as they see fit? Who makes the distinction of what each company gets? Ever heard of the saying "beggars can't be choosers"?

2. Don't force them to build green vehicles. Hmmm. If they were going to do it on their own don't you think that they would have so already? Left to their own thinking they will be back at SUV's in 12 months. We have to FORCE them to make the changes that they cannot make on their own.

3. Don't pre-empt the possibility of bankruptcy. This one is as wrong-headed as it gets. If there is any reasonable chance of bankruptcy then no one will buy a car from that maker. Its that simple.

4. Don't appoint a federal car czar. Wrong. Wrong. Wrong. If they want $25B of taxpayer money, then it has to come with some serious federal oversight.

5. Don't place the whole restructuring burden on Detroit. This is a smokescreen to focus the issue off of the carmakers and onto someone else. Ignore it. Crappy domestic cars is what created this mess, not some arcane state laws about dealer franchise rules.

6. Don't subsidize cars. Why not? This allows some of the taxpayer money to flow through directly to the people who are funding the bailout instead of all of it going into the back pockets of the carmakers never to be seen again. Why shouldn't the consumers who buy these new super-efficient cars that are supposedly coming from Detroit 2.0 get something too?

7. Don't penalize their competitors. Finally, one idea that actually makes sense.

— thstone (View Profile)

Posted on 12/5/2008 5:56:29 PM | reply to this comment | Votes: -2   

neutral

We want these companies to be profitable so that they can pay back the loan. You state:

"Left to their own thinking they will be back at SUV's in 12 months. We have to FORCE them to make the changes that they cannot make on their own."

If Americans want big SUV's (since gas is about $1.50 a gallon), then they SHOULD make and sell SUV's. The trick will be not letting the Big3 waste profits. The way things look now, the detroit automakers are very efficient with their R&D and have huge plans for all types of vehicles.

You my friend, aren't thinking strait if you want to give automakers a loan and then dont want them to make moeny.

Also,
"Crappy domestic cars is what created this mess, not some arcane state laws about dealer franchise rules" 1) if you still think that domestics of today are the domestics of 20yrs ago.. you might need to check out Edmunds, Car&Driver, etc (hell even worthless consumer reports is finally helping). Big3 vehicles are on-par, often a bit better, sometimes a little bit worse (depending on what you are judging on) than all of their competitors.

2) State law DO prohibit automakers from just shutting down excess dealerships. Why do you think GM is still fighting court battles over Oldsmobile?

— neutral (View Profile)

Posted on 12/5/2008 6:06:50 PM | | Votes: 3   

mscottc1

Thank you , neutral- you are 100% correct on both points.

Furthermore, we as a country simply cannot afford to nationalize the auto industry. Bailout this and bailout that is heading to a VERY slippery slope. I guarantee that the big 3 would be back begging for more in less than 6 months if they get this bailout & don't make the fundamental changes that are necessary to survive (i.e. dissolution of labor contracts & regluations regarding dealer relations and dealer networks, amongst many others).

— mscottc1 (View Profile)

Posted on 12/5/2008 7:35:52 PM | | Votes: 0   

1UAW

OK evreyone is focused on what The Big 3 does with 25 to 35 Billion and is kickin htem while they are down. So let me ask you this, what is going on with the 700B we just gave wall street with no strings attached about 2 months ago. And yet nothing has changed and why is there oversight on 700B vs 25B?

— 1UAW (View Profile)

Posted on 12/6/2008 10:17:24 AM | | Votes: -1   

markanthony0419

First thing is all these cafe standard and left wing environmental bs is hurting the big 3 now. You global warming fanatics trying to push these electic cars that cost billions in r and d will never be profitable why do you think they will need a govt subsidy its cause nobody will buy them. the chevy volt will never ever be profitable. second every single country except ours taxes their imports. thats why the japanese ship 4million cars a year here and we only ship 400k there because they tax our products to death so they make sure their people buy their products. Like harley davidson when they were going to go bankrupt reagan taxed the japanese bikes so if you wanted a motorcycle you had to buy harley bring that back. finally it cost about 4thousand more to produce an american car due to the unions then a foreign car so jack up the price of your accord 4k at the final price see if you still want it. Its not rocket science

— markanthony0419 (View Profile)

Posted on 12/5/2008 8:52:25 PM | reply to this comment | Votes: 0   

veyron1001

I dont remember anyone telling the failing 3 to make suv and trucks that can barely manage 11mpg. Not even 95% of the people who own one do not use it to its full potential. Recently after about 10 years the dumbasses finally realized this and want a more economical car. I believe the govt for a first thought way ahead on this and the CAFE is a great thing. Either they meet it or they will go under by the govt or competition. Why the hell punish honda for thinking ahead?

— veyron1001 (View Profile)

Posted on 12/5/2008 11:17:46 PM | | Votes: -2   

1UAW

veyron1001 ... They ade them because people wanted them, whey dose BMW and Toyota have a a dozen suv's between the both of them? They reconized how much money they could make on them and once again PEOPLE BUY THEM, do we look down on these two companies no America THINKS they do everything right.

Stop the double standards please.

— 1UAW (View Profile)

Posted on 12/6/2008 10:11:42 AM | | Votes: -1   

neutral

veyron1001,

Once again, an un-informed comment from you. I have an offer for you... Find me the mafia-gangsters that Detroit hired to force people to buy SUV's, and I'll go out and buy a toyota camry.

Also, 9mpg?!?! What planet are you living on. New Chevy Tahoe gets about 21-22mpg on the hwy, no hybrid. Beats the Toyota Sequoia, but nobody wants to talk about that.

— neutral (View Profile)

Posted on 12/6/2008 1:57:13 PM | | Votes: 3   

neutral

markanthony0419,

VERY WELL PUT!! I agree 100%, but nobody seems to care. The word "green" is currently what "september 11th" was a few years ago. People will justify any stupid thing and just talk about it being "green" and the public is too stupid to understand what the hell is going on. Then the public goes along with the green crazies.

If we really want to stop global warming, we need to keep methane emissions down. The methane from cows/cattle alone more than doubles the greenhouse gasses produced from all of the world's cars.

We also need an intercity train system, especially in California. The airplane traffic into/out of california causes more pollution than all of the cars there. California won't put in a high-speed intercity train system b/c it would hurt their aircraft industry.

— neutral (View Profile)

Posted on 12/6/2008 2:02:39 PM | | Votes: 0   

1UAW

http://seekingalpha.com/article/107263-six-myths-about-the-big-three

— 1UAW (View Profile)

Posted on 12/5/2008 11:18:34 PM | reply to this comment | Votes: -2   

1UAW

http://boards.hbo.com/topic/Maher-Member-Created/Bunking-6-Myths/1900011052

— 1UAW (View Profile)

Posted on 12/5/2008 11:18:45 PM | reply to this comment | Votes: -2   

mercuryguy

It is not a car maker crisis. People just simply don't have the money to buy cars anymore.

We need a stimulus in the form of a deduction.

Allow people to deduct the new American Car purchase off thier Income Tax, just like Business owners get.

Bottome up economics is the way of the future.

— mercuryguy (View Profile)

Posted on 12/6/2008 11:45:56 AM | reply to this comment | Votes: 2   

mscottc1

Why not give people the credit on any car, not just "American Cars"? What if I wanted to buy an X5 or an Accord? Those are built here and support American auto workers...

— mscottc1 (View Profile)

Posted on 12/6/2008 3:05:24 PM | | Votes: 1   

neutral

mscottc1,

I do have to partially agree with you. However, we need to stimulate domestic car buying, we should NEVER subsidize foreign businesses.

At the same time, as much as I'd like to see the Big3 own 75-80% of the market, Id hate for the investments that the foreign automakers have made to go to waste.

1) Big3 get bailout
2) "new" New Deal.

Detroit has made massive gains to the point where they're on par or better than the Japanese/Koreans, and sometimes the Germans (no flamewars please). They need short-term capital to get through these tough economic times (since they WERE ALREADY in restructuring before the oil crisis).

Thing is, we need economic stimulus to sell vehicles. If Obama is smart, there will be a massive wave of work done on bridges/railroads/highways/water/waste/power/etc. All of these projects would create millions of jobs and these construction oriented jobs would generate tons of truck sales. These sales would tide Detroit over, funding their other short-term projects which are un-profitable (Chevy Volt, EREVs, etc).

— neutral (View Profile)

Posted on 12/6/2008 5:38:18 PM | | Votes: 2   

thstone

In reponse;

(1) The problem that we're trying to fix is for Detroit to sell cars that will sell NOW. Yes, SUV's previously sold well, but when consumer choice changed, the Big 3 had NOTHING to offer. They ignored the reality that gas was going to go up and even though its down now, its going to go up again.

The reality is that the Big 3 refuse to accept THAT reality.

(2) My point was not to say that domestic vehicles of today are like those of 20 yrs past in terms of reliability, but that the Big 3 keep hawking the same old crap year after year. When market conditions changed, where were their hybrids? Where was their hydrogen car? Where was their electric car?

Heck, they STILL don't have a Prius fighter! Instead, Chevy brings out the Z06 and next: a new Camaro! The mindset of the Big 3 MUST CHANGE!

(3) There is no way that a few small lawsuits over Old dealerships caused or contributed to the current demise of the entire domestic auto industry. Definitely a red herring issue.



— thstone (View Profile)

Posted on 12/7/2008 11:00:37 AM | reply to this comment | Votes: 1   

neutral

Z06 is a halo car, new Camaro is a sports car, theyre not everyday mainstream vehicles.

How about the Malibu 4cyl w/ 6spd? Cobalt XFE? Tahoe/Yukon/Escalade 2-mode? Escape hybrid? etc etc etc

You can't take a few halo cars and say that these awesome cars which the public wants are whats hurting the Big3. Just the same, you can't fault the Big3 for building big SUV's when the public wanted them.

You can blame the Big3 for not focusing more on small/midsize cars a few years ago, but current lineups of midsize cars are good from GM & Ford.

As for hydrogen/electric, all manufacturers have prototypes and R&D, but NO manufacturers have large scale production of electric or hydrogen.

Chevy volt looks like it's going to be the first real mainstream EREV, and hydrogen is a LONG way out. Theres still tons of work in terms of producing hydrogen, solid state storage and distribution.

EV's are still far out as well b/c of the same basic problem that has haunted electrical engineering for years... battery life and capacity!!

— neutral (View Profile)

Posted on 12/7/2008 11:39:50 PM | | Votes: 1   

thstone

My point is that while Toyota and Honda were working the the Prius and the Clarity (respectively), Chevy was drunk on SUV money and dumping it into MORE SUV's, the Corvette, the Camaro, etc.

Again, where is their Prius fighter? Why wasn't the Volt already in dealerships this year?

Well, it looks like those making the decisions agree with me...

EoD.

— thstone (View Profile)

Posted on 12/8/2008 3:12:54 PM | reply to this comment | Votes: 1   

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