Should the government bail-out include domestic automakers?

[longdx]

I find the statement from the EU very ironic. France has assisted in essentially subsidizing its auto industry for years until they were able to be profitable (re: Renault, Peugeot, Citroen,. In Germany, Porsche, VW, Audi all have an interconnected relationship.



The essential problem with bailouts is that it rewards failure. IF the Big 3 receive such a bailout, then there needs to be stipulations of how the money is to be appropriated. The Big Three do not have a problem building reliable cars, its building cars in a cost competitive fashion (re: legacy costs). They have to overcome decades of shoddy workmanship, shady dealer networks, in a business model that relied of rebates/incentive rather than competitiveness to move metal.

[Lenny]

I find the statement from the EU very ironic. France has assisted in essentially subsidizing its auto industry for years until they were able to be profitable (re: Renault, Peugeot, Citroen,. In Germany, Porsche, VW, Audi all have an interconnected relationship.



The essential problem with bailouts is that it rewards failure. IF the Big 3 receive such a bailout, then there needs to be stipulations of how the money is to be appropriated. The Big Three do not have a problem building reliable cars, its building cars in a cost competitive fashion (re: legacy costs). They have to overcome decades of shoddy workmanship, shady dealer networks, in a business model that relied of rebates/incentive rather than competitiveness to move metal.

And you have to conclude that any country with national health care, regardless of how you feel about it, and strong national pensions, to be a form of subsidizing their businesses. Yet, we can`t make loans or loan guarantees? Are they kidding (and I`m first generation - my family is from Europe).



The so-called bailout is a bridge loan, to get them through to 2010, when the last provisions of their most recent contract kick in, and their labor rate drops to near Toyota levels. No one ever said it was a grant or a handout. If the feds can bailout AIG and AIG doesn`t produce a thing, why shouldn`t they loan money to three companies that manufacture?

[Lenny]

the the big 3 make hundreds of thousands of cars in a year for the MASSES. They are not a boutique manufacturer like the BMW`s, MB, Porsche, Audi`s, Vdub, infiniti, lexus type manufacturers who make tens of thousands of cars that are marketed to a higher income bracket. In order to make those cars affordable to the masses, the big 3 can`t load them up with top grain leathers, and have 1micrometer gaps in body panels, etc etc etc. (however, GM does make a lot of innovations that beat the boutiques to market: MSRC, heads up display, PDC, onstar to name a few). If they did, the average american wouldn`t be able to afford them, it`s a simple concept.



Also, the US economy is heavily reliant on the big 3, 1 in 8 US jobs is in some way related to the automotive industry. It`s everyone`s right to be critical, but to be undeservedly critical of a US manufacturer that has come a long way in the last 10 years and is part of the foundation of the US economy is absolutely short sighted and ignorant.



Do I buy American exclusively ? Nope, I`m a car guy, every car has it`s pros and cons for different lifestyles, but I won`t completely disregard US brands because of historical stereotypes that no longer hold true for many models

Well said. Very well said.



And don`t forget Ford`s (and Microsoft`s) SYNC - voice command over your nav, phone AND your music. Sweet.

[billium]

If the feds can bailout AIG and AIG doesn`t produce a thing, why shouldn`t they loan money to three companies that manufacture?

Len: This is my opinion. GM, Ford & Chrysler`s business models have stunk for more than a decade. I don`t have any of their profitability statistics at my fingertips, but none were profitable BEFORE the current worldwide financial meltdown occured. The current pullback in consumer spending/lack of financing has certainly accelerated their problems, but they didn`t cause them.



AIG`s (along with the major banks) problems were, arguably, caused by the financial crisis. Some say they were the cause. The arguement is that they were all viable businesses UNTIL the crisis and when (if) the financial crisis passes and financial markets return to a more normal condition, they will return to being viable businesses.



I`m just under 50 years old and have owned 1 Detroit manufactured car in the past 23 years. In my youth, I owned a GMC, a Ford and 2 Chevrolet pick-ups, and a Pontiac sedan and coupe. Detroit abandoned me, every one of those vehicles had multiple significant problems. In every single case, dealerships patted me on the head and sent me down the road. The GMC pickup, purchased brand new in 1979 (my 1st new car purchase), spent 87 days in the dealership`s service department during my first year of ownership. I was told by the dealership`s service manager and our region`s service manager that burning a quart of oil every 400 miles "was within the acceptable range".



I`ve owned 16 Nissans, 3 Hondas, 1 Toyota, 2 Subarus, a BMW and 2 Benz since then. Biggest problem of the bunch, I had to replace a rear differential in a Nissan pickup at 132,000 miles.



In 2003, I decided to give Dodge another chance and purchased a new leftover 2002 Dakota club cab 4x4. I owned it less than a year. Multiple problems (none major) were capped off by a God awful rattle inside the dash (there from day one). The dealer finally agreed to track down the problem. When I picked up the truck a day later (they had to remove the dash to resolve), the technician showed me a large bolt (imagine something the size of a bolt used in the suspension or to attach the cargo bed to the frame) he found loose inside an enclosed area of the dash. When I asked how something that size fell inside the dash, he said it was intentional based on where it was found and the paint on it.



When Detroit builds stuff I`m willing to buy because of styling and quality, I`ll vote to send my tax dollars there ONLY if senior management in all three are replaced. Until then, I don`t see their business model changing, I don`t see any of them as viable. I see any money loaned/given as simply stalling the inevitable.

[Lenny]

Len: This is my opinion. GM, Ford & Chrysler`s business models have stunk for more than a decade. I don`t have any of their profitability statistics at my fingertips, but none were profitable BEFORE the current worldwide financial meltdown occured. The current pullback in consumer spending/lack of financing has certainly accelerated their problems, but they didn`t cause them.



AIG`s (along with the major banks) problems were, arguably, caused by the financial crisis. Some say they were the cause. The arguement is that they were all viable businesses UNTIL the crisis and when (if) the financial crisis passes and financial markets return to a more normal condition, they will return to being viable businesses.



I`m just under 50 years old and have owned 1 Detroit manufactured car in the past 23 years. In my youth, I owned a GMC, a Ford and 2 Chevrolet pick-ups, and a Pontiac sedan and coupe. Detroit abandoned me, every one of those vehicles had multiple significant problems. In every single case, dealerships patted me on the head and sent me down the road. The GMC pickup, purchased brand new in 1979 (my 1st new car purchase), spent 87 days in the dealership`s service department during my first year of ownership. I was told by the dealership`s service manager and our region`s service manager that burning a quart of oil every 400 miles "was within the acceptable range".



I`ve owned 16 Nissans, 3 Hondas, 1 Toyota, 2 Subarus, a BMW and 2 Benz since then. Biggest problem of the bunch, I had to replace a rear differential in a Nissan pickup at 132,000 miles.



In 2003, I decided to give Dodge another chance and purchased a new leftover 2002 Dakota club cab 4x4. I owned it less than a year. Multiple problems (none major) were capped off by a God awful rattle inside the dash (there from day one). The dealer finally agreed to track down the problem. When I picked up the truck a day later (they had to remove the dash to resolve), the technician showed me a large bolt (imagine something the size of a bolt used in the suspension or to attach the cargo bed to the frame) he found loose inside an enclosed area of the dash. When I asked how something that size fell inside the dash, he said it was intentional based on where it was found and the paint on it.



When Detroit builds stuff I`m willing to buy because of styling and quality, I`ll vote to send my tax dollars there ONLY if senior management in all three are replaced. Until then, I don`t see their business model changing, I don`t see any of them as viable. I see any money loaned/given as simply stalling the inevitable.

I can understand the frustration with the Detroit 3, and their product decisions in the area of passenger cars, but the critics are as narrow minded and short sighted, as they are accuse the Detroit 3 management of being. None of the non-Detroit automakers try to do anything for the law enforcement sedan business; none of them pay a bit of.attention to the livery business either, and those two markets have no adverse effect on the resale value of regular passenger cars.



The market pushed the SUV`s, by switching to them as large cars were downsized, not the Detroit 3 - otherwise, explain Toyota`s and Nissan`s multi-Billion dollar investment in big body-on-frame pick-ups and SUV`s.



Your Dakota experience is unfortunate, but repair technician`s conclusion have no validity for one very big reason - you bought it used. What did the prior owner put it through and what repairs were done before you got it?



Detroit`s quality is questionable? Then why did VW select Chrysler for their minivan? The VW Routan is a Chrysler Town & Country, with VW trim and front end styling, built by Chrysler in their Windsor, Ontario minivan plant, with all parts coming from Chrysler`s suppliers - LINK HERE. Furthermore, Nissan`s Canton, Mississippi truck production ends in a few years, and Nissan switches their next pick up truck to Chrysler`s Dodge Ram platform, styled by Nissan, but built in a Chrysler plant, starting in 2010 or 2011 assuming Chrysler makes it). Chrysler, in return, is supposed to ne getting their small and midsize cars from Nissan. LINK HERE



Complicating this whole situation is that ALL North American auto production shares the same group of financially distressed parts suppliers. Not only will a GM bankruptcy adversely affect the viability of those suppliers, threatening Toyota`s, Nissan`s and Honda`s production. Long term, we have to have car production in the USA & Canada. We can not turn the second largest consumer purchase made into an import supply only product. Furthermore, if GM`s failure brings down any suppliers, even for a few weeks, the domino effect of rising unemployment, even short term, will make the post 9-11 downturn pale ghostly white by comparison. We`re ALREADY seeing rising unemployment in all sectors of the economy, and the same thing happening world wide (killing off the chances of our economy`s export sector leading us out of trouble). Let GM fail, and the slow down, if not out right failure, of even a few suppliers, and all the ancillary businesses that depend on them - the gas stations, dry cleaners, office supply store, industrial products supply houses, grocery store, restaurants, etc., all start laying people off.



One GOP senator insisted on asking "When does it stop?", alluding to industries asking for help. My response is when does the government mistakes that froze the credit markets stop? If they, in government, had been properly minding the store, industry would have normal credit markets to get loans from, and not have to come to Washington for help. As it stands, the potential 3 to 5 million layoffs that would be triggered by a GM bankruptcy is either prevented by government now, or we deepen this recession to the point where it lasts a decade. Basic macro economics says that real wealth is the result of manufacturing. 3 million manufacturing and manufacturing related service jobs lost, is not acceptable.

[Lenny]

An interesting point-of-view. http://home.comcast.net/~Babies3/GM.htm

[stilez]

No.



General Motors Death Watch 212: An Open Letter to President-Elect Barack Obama | The Truth About Cars

[salty]

Just a quick thought, i haven`t down any number crunching or such, but maybe the US Feds should add their own discount on cars for the big 3. Instead of giving them money, have a one year Fed sponsored discount on cars. Everyone might be able to afford a new car or a fresh trade in. Keeping everyone employed including financing companies and the new car would need service down the road so it wouldn`t be a one time thing.













Off the OP`s topic but, the cities of Philadelphia, Phoenix and Atlanta have joined the bailout barrage. They want money because less mortgages means less taxes.

[billium]

Your Dakota experience is unfortunate, but repair technician`s conclusion have no validity for one very big reason - you bought it used. What did the prior owner put it through and what repairs were done before you got it?

Len, re-read my post. The Dakota was a NEW leftover (unsold previous year model). I believe it had less than 5 miles on the odometer when I picked it up and it came with the full factory warranty.



But you`re correct with your "unfortunate" comment. "Unfortunate" for me to have the same experience with the Dakota that I had years earlier with Detroit`s offerings. Not just the quality of product issues, but the same cavalier response from a dealership to my problems. "Unfortunate" for GM, Ford and Chrysler that I don`t believe in "third" chances, regardless how cheaply they offer their product or what rebates/incentives are offered. "Unfortunate" for these same three manufacturers that both of our kids are in the market for new cars in the next 6 months. Neither are considering any Detroit products.



I don`t dispute your arguments as to whether a GM bankruptcy will have a big local, state and federal economic impact (although I disagree as to the extent of the impact at the national level), but again, I see any federal loans/bailout/leg up as simply delaying the inevitable. No one will be sending checks to me if I run my business into the ground and I don`t expect them to. My employees make informed decisions every day as to whether it`s in their best interest to continue to work for me or take a job with a competitor. No one can tell me that UAW employees haven`t seen the writing on the wall with GM for years. What other company can you name that has made mutilple cash offers to non-retirement eligible employees to go find another career?



And I can and I do blame management. G. Richard (Rick) Wagoner, Jr., Frederick Henderson the Board of Directors specifically. Bob Lutz to a lesser degree. These folks were paid tens of millions of dollars to make the hard decisions that are best for the organization. Every one of them, to a person, should look up the definition of fiduciary responsibility. I`m sick of seeing no accountability from these big corporate CEO`s, CFO`s, COO`s and their Board or Directors.

[Lenny]

Len, re-read my post. The Dakota was a NEW leftover (unsold previous year model). I believe it had less than 5 miles on the odometer when I picked it up and it came with the full factory warranty.

I stand corrected. Sorry to hear that. I`ve owned nothing but Ford`s, except for one company car a few years ago from GM. We routinely put over 120,000 on our cars before I trade them in. Some have had some problems, but recent model years go by, problems

But you`re correct with your "unfortunate" comment. "Unfortunate" for me to have the same experience with the Dakota that I had years earlier with Detroit`s offerings. Not just the quality of product issues, but the same cavalier response from a dealership to my problems. "Unfortunate" for GM, Ford and Chrysler that I don`t believe in "third" chances, regardless how cheaply they offer their product or what rebates/incentives are offered. "Unfortunate" for these same three manufacturers that both of our kids are in the market for new cars in the next 6 months. Neither are considering any Detroit products.

Dealers are independent business people, and caviler attitudes toward customers aren`t only the the purview of the Detroit 3 dealers, and bigoted as hell to imply or say that. As any Toyota owner who had engine problems due to oil sludge (something that affected models from Corolla to Lexus LS), and the caviler way dealers blew them off with charges of owner abuse, even when owners had receipt records of oil changes. Lot`s of other problems that non-Detroit dealers have had with their customers too, and it doesn`t more than two or three minutes with Yahoo or Google to find them. Toyota Engine Problems Link and Brake Problems Link Here and Highlander problems here



Honda transmission problems here and more tranny problems here and transmission failure here



Nissan Problems here and more Nissan Problems here and Nissan Titan Frame Problems Here



That took all of five minutes. All auto makers have problems. My wife is a paralegal who on processing discovery requests for one Detroit auto maker`s law suits. She has access to NHTSA`s information on recalls. Guess what - all automakers have investigations going against them. All auto maker dealers have problem children who mistreat customers. Your bad problems and everyone else on this board who have complaints are your experiences, but proof of an absolute fact.

I don`t dispute your arguments as to whether a GM bankruptcy will have a big local, state and federal economic impact (although I disagree as to the extent of the impact at the national level), but again, I see any federal loans/bailout/leg up as simply delaying the inevitable. No one will be sending checks to me if I run my business into the ground and I don`t expect them to. My employees make informed decisions every day as to whether it`s in their best interest to continue to work for me or take a job with a competitor. No one can tell me that UAW employees haven`t seen the writing on the wall with GM for years. What other company can you name that has made mutilple cash offers to non-retirement eligible employees to go find another career?

Mercedes in Alabama is offering $100,000 buyouts to their employees (link here) and Nissan in Tennessee is offering $100,000 buyouts as well (link here ) - not multiple yet, but it`s starting none-the-less.

Apparently the bad auto industry news that sinks in with people is when it`s from Detroit. I have twenty-five years experience, a bachelors degree, plus extra skills in web site development and some basic IT work (basic network) - I`ve been unemployed for fourteen and a half months, and counting, and now the prospect of a Chrysler Chapter 11 filing or Cerberus selling off parts of Chrysler piecemeal threatens my wife`s job. Our home that we paid $212,500 for ten years ago this past summer, won`t go for $165,000 today. We didn`t over buy - our employment position was decidedly better ten years ago, and we went the traditional 20% down, 30 year mortgage route. Selling today would mean wiping out all our equity, and my unemployment is burning through our savings. That`s the human cost of this situation, and the condescension I see, from politicians, regarding what amounts to a loan to the Detroit is rapidly getting on my nerves.



Consumer Reports has had high marks for Ford products, putting them nipping at Toyota`s heels on quality. Takes time for reality to sink in with the market place.

And I can and I do blame management. G. Richard (Rick) Wagoner, Jr., Frederick Henderson the Board of Directors specifically. Bob Lutz to a lesser degree. These folks were paid tens of millions of dollars to make the hard decisions that are best for the organization. Every one of them, to a person, should look up the definition of fiduciary responsibility. I`m sick of seeing no accountability from these big corporate CEO`s, CFO`s, COO`s and their Board or Directors.

So punish them, not the employees, suppliers and everyone that is dependent on these companies for a living. I agree - management screwed up - does that mean my risk of losing my house should go up?

[Lenny]

No.



General Motors Death Watch 212: An Open Letter to President-Elect Barack Obama | The Truth About Cars

That`s really funny. Not one of those people live in my subdivision, which besides active hourly and salaried Detroit 3 employees, includes several people working for suppliers

including tooling suppliers.



And if you check the , thetruthaboutcars.com FAQ`s, they`re aren`t very open to criticism of their point-of-view.

[soccerjunky]

i`ve only owned one nissan .. my wife had an armada and for two years the whole suv would shake when braking despite how many times i took it to the dealer..they finally had a recall and replaced pads/rotors but it was never perfect...Also i would not trust nissan .. they lied about the performance of the gtr



i only purchase american brands now (other than an F430)



i saw a red srt8 challenger over the weekend .. that thing looked beautiful...may get one this week for my daily beater



This country has been living beyond its` means...we all need to make sacrifices but i don`t have the answers..i`m to busy enjoying american cars before they go out of business



Len A my prayers are with you and u`re family....

[billium]

Len:



My opinion is based on personal experience with Detroit`s offerings, their delerships and those dealership`s employees. I thought some of those experiences might have been because of my youth, so decided to give Detroit another shake in 2003. That experience was no better than those in my younger days. If my opinions now, based on those experinces, make me a bigot as you define the word, I`m guilty as charged.



When I was a Ford stockholder, I did vote management out. Obviously, I was in the minority.



You have much more skin in this outcome than I do, Len. I`ll chalk up you getting personal to your situation. If it`s worth anything, it`s not that I`m not empathetic to you, your family and thousands of others in the same boat, but I have little simpathy. I see more harm than good coming from government help in this case.

[Lenny]

Len:



My opinion is based on personal experience with Detroit`s offerings, their delerships and those dealership`s employees. I thought some of those experiences might have been because of my youth, so decided to give Detroit another shake in 2003. That experience was no better than those in my younger days. If my opinions now, based on those experinces, make me a bigot as you define the word, I`m guilty as charged.



When I was a Ford stockholder, I did vote management out. Obviously, I was in the minority.



You have much more skin in this outcome than I do, Len. I`ll chalk up you getting personal to your situation. If it`s worth anything, it`s not that I`m not empathetic to you, your family and thousands of others in the same boat, but I have little simpathy. I see more harm than good coming from government help in this case.

Then you & I voted the same way. I also regularly voted against their choice of CPA firms for the required audits. I figured someone has to vote against management`s recommendations. Looks like we were in very small company on that one.



How do you not get personal when you live in a 120 home subdivision and 6 homes got foreclosed on - that`s 5%. Only heaven knows what a Detroit 3 chapter 11 filing will do.



You think the economy is bad now. These loan requests get turned down and GM files Chapter 11, talk to me six weeks after that. Just six weeks.



And things are getting worse now. Motor and Equipment Manufacturers Association, the association of parts makers, is now requesting aid. Most of the members of that trade group also supply Toyota, Nissan, Honda, BMW, Hyundai, and Mercedes.



And Fitch Ratings is warning Toyota that they may strip them of their AAA credit rating, in part due to Toyota`s losses here in the USA. I guess "welcome to the party" is in order.

[Inzane]

I plan to buy a new car next spring/summer, an entry level sports/luxury sedan. I will be looking at BMW (3), Audi (A4), Infiniti (G), Acura (TL... um, scratch that, it`s ugly) and maybe Mercedes (C). (and if I forego the luxury aspect... the Subaru Legacy GT might be on the list too). But even that list might have to be shorter based on the abscence of manual transmissions in a lot of product lines. (side rant :hairpull )



No one else is making something that I would want right now. And I can`t be alone on this. :nixweiss