Should the government bail-out include domestic automakers?

[JuneBug]

Wow, just read this whole thread! All I can say is it doesn't matter a tinker's damn what we all think. But if it makes you feel better, at least that counts for something.

[citizen arcane]

The 15% Solution


One possible approach to dealing with the auto crisis - The federal government should give any one who buys a fuel efficient car from the Big 3 a 15% rebate back on the selling price. This program could have an 18 month time limit.


The total of the rebate dollars might then constitute a loan the auto makers would have to pay back.

If effective, this solution would immediately jump start US auto makers by giving them a huge advantage over the competition while they work on the remaining legacy issues. Auto makers would stay employed and no money would go directly to the car makers.


The feds might also think about underwriting an extended warranty program for this period. Again, the total dollars to do so, could constitute a loan to the auto makers

[MotorCity]

Originally Posted by citizen arcane

The 15% Solution


One possible approach to dealing with the auto crisis - The federal government should give any one who buys a fuel efficient car from the Big 3 a 15% rebate back on the selling price. This program could have an 18 month time limit.


The total of the rebate dollars might then constitute a loan the auto makers would have to pay back.

If effective, this solution would immediately jump start US auto makers by giving them a huge advantage over the competition while they work on the remaining legacy issues. Auto makers would stay employed and no money would go directly to the car makers.


The feds might also think about underwriting an extended warranty program for this period. Again, the total dollars to do so, could constitute a loan to the auto makers

One thung is that due to the credit freeze that may not stimulate much sales

[citizen arcane]

C'mon let's give 'em a chance...Ford is coming to market with Eco-boost engines, and the version that will be on the Ford Fiesta will beat Civic for fuel economy. The new Ford Fusion Hybrid beats Toyota’s hybrid Camry for fuel economy. The 2010 Ford Explorer with EcoBoost will beat the Toyota Hybrid Highlander on fuel economy. The Ford F Series pickup is more fuel efficient than the Toyota Tundra. The Chevy Volt will have an electric range of 40 miles, while Toyota’s will have a range of around 12 miles. Even today, The Honda Accord gets 22/31 mpg, while the Chevy Malibu gets 22/33. The Civic gets 26/34, while the Ford Focus gets 24/35. Ford’s ECOnetic Fiesta, a turb-charged diesel car launched in Europe this Fall is rated at about 65 mpg according to European fuel efficiency testing.

[citizen arcane]

Originally Posted by MotorCity

One thung is that due to the credit freeze that may not stimulate much sales

That's supposed to be addressed in the bailout package for lending institutions though may not affect dealer's inhouse financing.

[Len_A]

Apparently, contrary to the naysayers, I'm not the only one who thinks a GM, Ford, OR Chrysler bankruptcy filing will cause severe problems in the supplier community:

THE AUTO INDUSTRY BAILOUT

Cooper-Standard executive chairman outlines plight of supply chain

Robert Sherefkin
Automotive News
November 20, 2008 - 4:16 pm ET

DETROIT -- Auto parts executive James McElya said the bankruptcy of a major automaker would cause a chain reaction that would reach from suppliers down to the neighborhood diner, the barber and even the schools.

McElya told a congressional committee yesterday that a bankruptcy would cause "a chain reaction of unpaid payables with subsequent additional bankruptcies that will severely and negatively impact the entire sector."

McElya's comments were eclipsed in media reports by testimony from the Detroit 3 CEOs and UAW President Ron Gettelfinger. McElya was the only supplier leader to testify on the impact of the auto crisis on the supply chain.

"Today's auto industry," said McElya, executive chairman of Cooper Standard Holdings Inc. and its principal operating company, Cooper-Standard Automotive Inc., "is so interdependent such that it is economically impossible to separate the economic success of the suppliers from their manufacturer customers."

At the same time, suppliers must have an infusion of working capital to continue to operate, he said in testimony for a hearing before the House Financial Services Committee.

The committee held a hearing on legislation that would provide $25 billion in emergency federal loans to the Detroit 3 and possibly suppliers. The Senate Committee on Banking, Housing and Urban Affairs held a hearing on similar legislation Tuesday.

McElya also is chairman of the Motor and Equipment Manufacturers Association. The organization has urged Congress to pass legislation immediately that provides direct financial assistance to the automotive industry, including auto manufacturers and suppliers.

McElya said the dramatic and sudden contraction of the auto industry would also hurt transplant automakers. "Toyota, Honda and Nissan will likely have to close or limit production while waiting for new sources of supply to be developed."

[SamIam]

Len,

Am I to understand that now the T1 suppliers have their hands out?

[Len_A]

Originally Posted by SamIam

Len,

Am I to understand that now the T1 suppliers have their hands out?

Looks that way. What did I post earlier, and I was called Chicken Little for posting it:

The way the automakers, GM, Ford, Chrysler, Toyota, Nissan, Honda, Mercedes, and BMW, rely on the network of suppliers, and the way most of those supplier are disproportionately dependent on GM, Ford, and Chrysler (or as I've been calling them, here in Detroit, The Three Stooges), auto manufacturing in North America is a house of cards, built on a foundation of sand. Pull a card or let the economic tide shift the sand around a little, and it all comes crashing down.

The naysayers will be seeing more and more of this coming from the suppliers, and will be seeing even some of the transplants react with extreme caution, if not panic in a few cases. Keep in mind, Delphi is still in Chapter 11, and hasn't been able to line up the financing to borrow enough to exit bankruptcy, since about March of this year - BEFORE the credit crunch. GM, Toyota, and Ford get a lot of electronics (and Ford's upcoming Fusion Hybrid gets it's electric motor) from Delphi, and GM pays Delphi a lot of money every month, money that gets automatically tied up in a Chapter 11 filing. Most of those parts, you don't find a new supplier for them in a month or two. Your supplier tanks, you in BIG trouble.

[citizen arcane]

And guys it's not just the US automakers asking for help:

Push for European Auto Bailout Gains Speed - BusinessWeek

[Awsomeshine]

Ford are doing realy well in the UK, new models and are recruiting. The difference is smaller cars and diesel cars.

Ford offer one of the best diesel engines for most euro cars, a 4 cyl 1.6 turbo unit that does 83mpg, or about 74mpg for an auto. Thats why most europeans prefer to self shift.

Toyota are launching a family diesel that will do 100mpg that will seat 4 plus luggage. Not a truck but 100mpg, thats amazing.

I love America but a vehicle designed to carry 8 people used as a daily commute with one on board with a V8 is just daft, my company 1.8 Turbo Diesel Panel Van does over 50mpg.

I could solve Americas fuel problem in one, use diesel, it's not smelly and delivers 25% more economy.

My own car is a Volvo V40 1.9D, it does 52mpg, the 2.0i Petrol does 32mpg, plus my diesel is faster and delivers more torque, so better for towing. It can outrun my wifes 2.5 V6 Petrol. Only the petrol is faster once over 100mph, but who drives that fast.

I think it is about time you guys woke up to the super diesel engines we have in Europe.

[citizen arcane]

Originally Posted by Awsomeshine

I think it is about time you guys woke up to the super diesel engines we have in Europe.

Here in the States taxes aimed at commercial trucks mean diesel costs anywhere from 40 cents to $1 more per gallon than gasoline. Furthermore, Americans still associate diesel to clattering engines and the smelly stuff that powers tractor trailers, even though the new "clean diesel" is clean or cleaner than gasoline and at least 30% more fuel-efficient.

[artm3]

isn't that socialism?
using public money to prop up poorly run companies whose executives have reaped profit even though they lost money?
doesn't this entitle the government a stake in the company?
then it becomes partially 'state' owned?

25% of the country already works for the government...now the private companies will be govenment funded to stay in business? it's madness...

we need to stop wasting money and prolonging the inevitable...
these companies are doomed to fail...
their time has passed...
let them fail and be reformed in a more sustainable fashion...
it's the American way...
don't waste the $$$$
they have been living off of our money (stock losses, ie, 401's, IRA's, etc.) for the last 10 years...
now, since we won't buy their junk we must support them with taxes?
and for nothing in return?
it's downright un-american