Should the government bail-out include domestic automakers?

[Mr. Clean]

Len_A, again I "get" your personal involvement with the Chrysler situation. Still my concern, as I have expressed here before, is that 1) they are a privately held entity and 2) they have been here before. What makes me, an investor (read taxpayer) believe that they won't be here again. After all I (we) want a return on my (our) investment. They obviously learned nothing in the ensuing decades.

Who can say that these loans will be sufficient to buy enough time to get these companies to turn themselves around? I hear a lot of noise about "credit crunch" being the reason that people aren't buying new vehicles. I don't buy that. People I know personally have had no problem getting auto loans/home mortgages etc. Of course, these people have good credit. Perhaps the lending institutions are looking a bit harder on those with less than good credit. Rightfully so. I believe a lot of people are not buying new vehicles because they are worried about the economy in general and their own personal finances in particular. How is the industry going to benefit by putting people to work (and/or keeping people working) building new vehicles when they can't sell the units already produced?

I don't see how these companies are going to be able to continue to support the employees (direct/indirect) and still return to financial viability. IMO there will be a significant number of people associated with the industry displaced.

[Len_A]

Originally Posted by Mr. Clean

Len_A, again I "get" your personal involvement with the Chrysler situation. Still my concern, as I have expressed here before, is that 1) they are a privately held entity and 2) they have been here before. What makes me, an investor (read taxpayer) believe that they won't be here again. After all I (we) want a return on my (our) investment. They obviously learned nothing in the ensuing decades.

Who can say that these loans will be sufficient to buy enough time to get these companies to turn themselves around? I hear a lot of noise about "credit crunch" being the reason that people aren't buying new vehicles. I don't buy that. People I know personally have had no problem getting auto loans/home mortgages etc. Of course, these people have good credit. Perhaps the lending institutions are looking a bit harder on those with less than good credit. Rightfully so. I believe a lot of people are not buying new vehicles because they are worried about the economy in general and their own personal finances in particular. How is the industry going to benefit by putting people to work (and/or keeping people working) building new vehicles when they can't sell the units already produced?

I don't see how these companies are going to be able to continue to support the employees (direct/indirect) and still return to financial viability. IMO there will be a significant number of people associated with the industry displaced.

I think you're right - there's no doubt that a significant portion of the people directly within the industry and in the support/supplier community will get downsized out of a job. We agree on that.

We also agree, in part, on the credit. It looks like only the best credit scores are getting loans, and I don't think that applies only to the Big Three dealerships. From what I'm reading in Automotive News, it's the same thing happening to the import brand sales decline. It looks, and I have no absolute numbers here, but it looks like the people with just under the best credit scores are being locked out of the market. And let's face it, with eh economic news that we've been seeing, a portion of the market will take a wait-and-see attitude on that big a purchase.

Whether these loans will be enough is a damn good question. It depends on vehicle sales. Ford isn't asking for a loan, and last month, best selling vehicle in the United States was the F-150. Ford makes a lot of profit on the F-150 and that has to have a positive effect on cash flow. In Ford's case, the Lincoln MKS was selling real well at it's introduction, then the gas prices spike above $4 a gallon, credit Flex as well, polarizing as it's design is, was just starting to gain some traction and then gas went even higher than the $3 a gallon at it's intro. Those are two vehicles that don't have to sell in huge numbers to have a positive effect on cash flow.

I'm going to go out a bit on a limb here, and say that if the loans for GM & Chrysler come through, and gas prices don't spike above $2 a gallon, you may see the same thing happen at those two companies. Enough profitable light truck sales, Cadillac CTS & STS Sales, and maybe Chevy Traverse to make into 2010, when they labor costs kick down to close to , if not on par, with the transplants.

Big problem is, and this lends a lot of creditability to your concern about viability, is that no one is going to do well financially at a 13 million vehicle sales a year level. Damn, Toyota lost $336 million last quarter in the USA and is trimming their support of NASCAR, Nissan scrapped coming to the Detroit Auto Show (and it's still the premier event in auto shows), and Honda bailed out of Formula 1 to conserve cash. And now we have foreign governments helping their industries.

Speaking of foreign governments, let's not forget that all three Detroit automakers, and Toyota and Honda have big Canadian operations. Looks like Canada might also step up and help:

Federal government, Ontario appoint adviser on auto industry

reportonbusiness.com: globeinvestor.com - Detroit 3 seeking $6-billion from Canada

If Canada steps up as well, they may just pull this turnaround off.

[Len_A]

Originally Posted by Mr. Clean

Len_A, again I "get" your personal involvement with the Chrysler situation. Still my concern, as I have expressed here before, is that 1) they are a privately held entity and 2) they have been here before. What makes me, an investor (read taxpayer) believe that they won't be here again. After all I (we) want a return on my (our) investment. They obviously learned nothing in the ensuing decades.

Who can say that these loans will be sufficient to buy enough time to get these companies to turn themselves around? I hear a lot of noise about "credit crunch" being the reason that people aren't buying new vehicles. I don't buy that. People I know personally have had no problem getting auto loans/home mortgages etc. Of course, these people have good credit. Perhaps the lending institutions are looking a bit harder on those with less than good credit. Rightfully so. I believe a lot of people are not buying new vehicles because they are worried about the economy in general and their own personal finances in particular. How is the industry going to benefit by putting people to work (and/or keeping people working) building new vehicles when they can't sell the units already produced?

I don't see how these companies are going to be able to continue to support the employees (direct/indirect) and still return to financial viability. IMO there will be a significant number of people associated with the industry displaced.

I know we've been here before with Chrysler, but let's not forget that Daimler owned Chrysler for about eight years (correct me if I'm wrong on that), and prior to the so-called merger of equals that turned out to be a Daimler takeover, Chrysler had a decent product development department. The LH cars were good sellers (and gave GM & Ford a run for their money in the large sedan segment) and Neon was a good seller. Jeep and the minivans were handled pretty well by the product development folks at Chrysler. Under Bob Lutz (who was at Chrysler before he moved to GM) they turned the Dodge Ram pickup from an also-ran to a contender in the light truck market.

What did Daimler do for Chrysler? The Chrysler 300 and Dodge Charger, and...

That's it. The rest of the product development decision making (not the engineering) was shifted to Stuttgart, where all they did was second guess everyone here in Detroit. Right after the acquisition of Chrysler, the Mercedes side of Daimler's business ran into quality problems that the German shareholders started blaming on Chrysler. Never mind that the first three years of the "merger" Mercedes profits tanked, and it was the growing Chrysler profits that kept the company afloat. Never mind that Chrysler had nothing to do worth the Mercedes Alabama plant, or that's plants continuing quality problems. The German shareholders ousted CEO Jurgen Schremp (who was nicknamed Neutron Jurgen, for his cost cutting at Mercedes), Dieter Zeche was moved from Chrysler back to Germany to take over as Daimler CEO, and the shareholders hammered Daimler management to dump Chrysler. The Dodge Caliber and the two front-wheel drive based Jeep counterparts, the Patriot and the Compass - those have Daimler's fingerprints all over the product planning process. Great selling replacements for the Neon, they aren't.

They sold 80.1% of Chrysler to Cerberus at a loss, and now there is lawsuit by Cerberus against Daimler alleging some kind kind of cover up while Cerberus was performing their due diligence (something I have a hard time believing). Still, Bob Nardeli made a comment during his Congressional testimony that Daimler "hollowed out" Chrysler's product development department.

I hate to see Chrysler disappear because the German shareholders forced Daimler to bail on them, and they left the company in far worse shape than when they bought it. And considering how profitable Chrysler was initially to Daimler, it has the appearance now that Daimler ran Chrysler into the ground.

And now I hear from family of mine in Europe that the same German shareholder groups are crabbing about the Alabama plant's quality problems, and there have been some snide comments to German media that it isn't the unions in the USA that can't make things right, it's just Americans in general.

[Mr. Clean]

Originally Posted by Len_A

...
We also agree, in part, on the credit. It looks like only the best credit scores are getting loans, and I don't think that applies only to the Big Three dealerships. From what I'm reading in Automotive News, it's the same thing happening to the import brand sales decline. It looks, and I have no absolute numbers here, but it looks like the people with just under the best credit scores are being locked out of the market. And let's face it, with eh economic news that we've been seeing, a portion of the market will take a wait-and-see attitude on that big a purchase.
...

I don't know about "the best", and I didn't inquire about what the credit scores were (I assumed in the 700 range). I still see quite a number of brand new vehicles driving around, so a lot of somebodies feel confident enough to purchase and are obviously getting financing. Personally, I am waiting until after the new year to decide what we are going to do about replacing one of ours. I don't think I'm in the minority as every automaker foreign and domestic are seeing a significant slump in sales.

Originally Posted by Len_A

...
Whether these loans will be enough is a damn good question. It depends on vehicle sales. Ford isn't asking for a loan, and last month, best selling vehicle in the United States was the F-150. Ford makes a lot of profit on the F-150 and that has to have a positive effect on cash flow. In Ford's case, the Lincoln MKS was selling real well at it's introduction, then the gas prices spike above $4 a gallon, credit Flex as well, polarizing as it's design is, was just starting to gain some traction and then gas went even higher than the $3 a gallon at it's intro. Those are two vehicles that don't have to sell in huge numbers to have a positive effect on cash flow.
...

From a taxpayer (investor) standpoint that is a major concern. I don't want to throw good money after bad if all we are going to do is to delay the ineviteable. I don't believe that either Ford or GM will simply go away. They have products that (at least some) Americans want. I still believe that we are mostly a country of "Can Do" people. There must be good leaders, and I don't know if those leaders are in place in these organizations.

From what I've read, Ford did do some good things financially to put them in a better cash position. And again from what I've read, GM could have (should have?) exercised some of the same strategy and might not be where they are today.

And good for the F-150! IMO, one of the best vehicles around. The Flex...I'll pass. I fear that when the economy begins to ramp up again (and I believe it will, but not as soon as I would hope), the gas prices will rise accordingly. So we will have people willing and able to purchase new trucks, but may not feel like buying one because of operating costs.

[MSOsr]

The new CTS-V is a BEAST! I have a 2005, but the new one has the best of everything starting under $60K. 556 HP and 551 lb.ft. of torque.

Some of the car magazines say it has replaced the M5 and MB as the top sedan in the world.

Mike

[Mr. Clean]

Len_A, I am admittedly not a Chrysler product fan. Their new Dodge Rams may be alright, but have lingering doubts about their reliability (appearance/mechanical) long term (I normally keep my vehicles for a minimum of 7 years and >100k miles). I like the Dodge Charger, but it does not fit my needs for transportation. Other than that I don't see that Chrysler has anything to offer that can't be found in a GM or Ford product line.

Just let the good folks at Cerberus put the required monies in, I feel certain that they have the ability. They will be the ones to ultimately reap the financial rewards. Risk/Reward. I know that is how my investments seem to go.

[Len_A]

Originally Posted by Mr. Clean

I don't know about "the best", and I didn't inquire about what the credit scores were (I assumed in the 700 range). I still see quite a number of brand new vehicles driving around, so a lot of somebodies feel confident enough to purchase and are obviously getting financing. Personally, I am waiting until after the new year to decide what we are going to do about replacing one of ours. I don't think I'm in the minority as every automaker foreign and domestic are seeing a significant slump in sales.


From a taxpayer (investor) standpoint that is a major concern. I don't want to throw good money after bad if all we are going to do is to delay the ineviteable. I don't believe that either Ford or GM will simply go away. They have products that (at least some) Americans want. I still believe that we are mostly a country of "Can Do" people. There must be good leaders, and I don't know if those leaders are in place in these organizations.

From what I've read, Ford did do some good things financially to put them in a better cash position. And again from what I've read, GM could have (should have?) exercised some of the same strategy and might not be where they are today.

And good for the F-150! IMO, one of the best vehicles around. The Flex...I'll pass. I fear that when the economy begins to ramp up again (and I believe it will, but not as soon as I would hope), the gas prices will rise accordingly. So we will have people willing and able to purchase new trucks, but may not feel like buying one because of operating costs.

The 2009 F-150 is even better than the previous generation. Here's a link to Dan Neil's review (LA Times)
Ford F-150 pickup is king of the mountain - Los Angeles Times

Laser welded roof seams and body panels?!?!? I was just in the metal fabrication - that is not a cheap way to build. One huge advantage, in addition to what Dan Neil wrote about, is that you can take pieces of different grades of steel, with different metallurgy, and laser weld them into one solid piece of metal with different metallurgy in different zones. Wild.

The Flex, and the GM three-row crossover counterparts, Enclave and Traverse, fill a gap for people tired of the minivan look and not wanting the gas consumption of the big SUV's. But I'm thinking the same thing - economy improves and gas prices go up again. I hope we're both wrong.

[Len_A]

Originally Posted by Mr. Clean

Len_A, I am admittedly not a Chrysler product fan. Their new Dodge Rams may be alright, but have lingering doubts about their reliability (appearance/mechanical) long term (I normally keep my vehicles for a minimum of 7 years and >100k miles). I like the Dodge Charger, but it does not fit my needs for transportation. Other than that I don't see that Chrysler has anything to offer that can't be found in a GM or Ford product line.

Just let the good folks at Cerberus put the required monies in, I feel certain that they have the ability. They will be the ones to ultimately reap the financial rewards. Risk/Reward. I know that is how my investments seem to go.

I have family who works for Chrysler, and GM, and my dad retired from Ford. I could have bought a 300. The Ford Five Hundred and Mercury Montego may have been plain by comparison, but I'll take the higher seating position, and the trunk space any day over what passes for a trunk on a lot of cars these days, 300 and big GM sedans included. So far, the all wheel drive and all speed traction control hasn't let me down, and get this - same 3.0 liter 24 valve, aluminum block V-6 as the 1996 Taurus I replaced (I'm like you - 7+ years, 100+K miles), and with all wheel drive - I get real world gas mileage that's at least two MPG and most of the time three MPG than the lighter 1996 Taurus I had. Not bad for a car that parks in the same space as my old Taurus, but has as much room as a Crown Vic.

We'll see what the Senate hammers out. Hopefully something useful.

[Inzane]

Originally Posted by Len_A

I have family who works for Chrysler, and GM, and my dad retired from Ford. I could have bought a 300. The Ford Five Hundred and Mercury Montego may have been plain by comparison, but I'll take the higher seating position, and the trunk space any day over what passes for a trunk on a lot of cars these days, 300 and big GM sedans included. So far, the all wheel drive and all speed traction control hasn't let me down, and get this - same 3.0 liter 24 valve, aluminum block V-6 as the 1996 Taurus I replaced (I'm like you - 7+ years, 100+K miles), and with all wheel drive - I get real world gas mileage that's at least two MPG and most of the time three MPG than the lighter 1996 Taurus I had. Not bad for a car that parks in the same space as my old Taurus, but has as much room as a Crown Vic.

Have you or do you own any Japanese or European cars? All I see you mentioning is domestic models.

[Len_A]

Originally Posted by Inzane

Have you or do you own any Japanese or European cars? All I see you mentioning is domestic models.

With all of my past customers in the Detroit area being either the Detroit auto companies or their suppliers, driving a Japanese or European car wouldn't be a good idea for me as a supplier sales rep. Plus with those jobs that provide company cars, Toyota and Hinda won't sell to the fleet companies like Mike Albert Leasing or GE Capital, so there's no chance of getting one as a company car.

That said, at one time, my sister had an Accord, an Acura Legend, and a Subaru Outback. The Accord and the Legend were fairly reliable vehicles, the Subaru Outback was a POS. I detailed all of them repeatedly, and the Subaru she had sucked. That said, they were also some of the most boring cars I've ever driven or rode in. The two Honda's were solid as hell, but boring. For most of my family, immediate and extended, all cars are is an appliance that you drive. Serves a purpose. My wife and I are a bit above that, but never to the point where the whole "car as status symbol" ever influenced us.

My brother-in-law is a GM engineer, at a high enough level that there are vehicle ownership requirements for employee and spouse (believe it or not - my brother was a zone manager with Ford, down in Mr. Clean's neck of the woods - Ford has no such requirements), and now she has a Chevrolet Equinox. I'll take my wife's six year old Escape any day.

Like I said in a previous post, I've test driven a lot of cars. The newer Accords and the newer Acura's, especially the TL and the RL, are sweet. The Toyota Camry and the Lexus ES, I don't like either. The Avalon? Yuck. It's like Toyota tried to copy the ride from an eight year old Buick.

[Inzane]

Originally Posted by Len_A

Like I said in a previous post, I've test driven a lot of cars. The newer Accords and the newer Acura's, especially the TL and the RL, are sweet. The Toyota Camry and the Lexus ES, I don't like either. The Avalon? Yuck. It's like Toyota tried to copy the ride from an eight year old Buick.

I share your dislike for Toyota products. The last few years at the annual auto shows I haven't even bothered to cross through the Toyota booth. Now THAT is a boring product line-up.

I am mildly more interested in Lexus, but not much. It's highly unlikely I'd choose an IS over a BMW 3 or an Infiniti G. There's just so little sporty DNA in Toyota products these days, across the board.

[Len_A]

Originally Posted by Inzane

Have you or do you own any Japanese or European cars? All I see you mentioning is domestic models.

Toyota, Honda, and Nissan didn't give me any reason to buy or lease anything they make, either, Toyota's has an engineering office in Ann Arbor they just expanded, and Nissan has an engineering center in Farmington, MI. Both are less than thirty minutes from my home.

I called on Toyota once a month for over four-and-a-half years. Spoke to an engineer maybe twice in 2005, because I called. Not one returned phone call in fifty-four months. Not one chance to quote any prototype work, for what prototyping they do in North America, not one fixture, in over four-and-a-half years.

Nissan, my former employer did some prototype work for the original Quest (and it's twin, the Mercury Villager) minivan, that was built in Ford's Avon Lake Assembly Plant, back in 1991, 13 years before I was hired. I even went there to meet with purchasing and the prototype engineers, complete with prints that had Nissan's name all over them & letters of commendation from Nissan, to prove that we were a supplier at one time. In over four-and-a-half years, not one inquiry.

Honda? Those guys are located down in Marysville, OH, out in the cornfields. Unless you're going to spend a lot of money on gas, making repeated 157 mile drives down there to make repeated cold calls, they won't give you the time of day either.

No way I'm inclined to patronize someone who wouldn't give me the time of day.