“If all AIG did not have to pay out on the financial insurance obligations it took on (with taxpayer money)it would still be a private company.”
And then we would have taken over several of the largest investment banks. The ones AIG sold the policies to. It was one-stop shopping for the government. And it did not appear to be as bad. What would have happened if the Treasury took over JP Morgan Chase? It would have sent the world credit markets into a far greater tizzy than we’ve seen so far.
Nonsense.
1.GMC and Chevy are the same, just “badge engineering”. The savings are in reduced marginal costs, that is development costs are spread over more units. There is nothing to merge as they come from the same assembly line.
2-5. Sell what to whom? As if someone wanted Hummer for instance, they are Chevy SUV’s with trim added. There isn’t much to sell except the brand name. Again, each H-2 sold makes the Chevy pick-up slightly cheaper.
I still wonder about the credit default swap market. Now that AIG has the U.S. Treasury as its reserve is it business as usual?
Just about everyone is now an expert on the auto industry.
That the Detroit companies have too many brands and too many dealers has been widely known for years. It is very expensive to break contracts.
There is no new technology imaginable that will cause cars to sell in enough volume to make GM profitable. If you invented a new Cadillac that got 1000 MPG, and you sold a million of them at $1000 net profit each, the General could hang on another week or so. Reallity check: Detroit has never been able to make a profitable small car. Remind me how many million sellers have been produced EVER.
Import what key technology? From where? Were such pie in the sky available, you think engineers don’t keep up with developments? You probably think the 200 MPG carburetor is waiting for introduction.
Why is everyone so ready to break labor contracts??? When you read about $70 an hour labor costs, this includes retirees and their healthcare. New hires make about $15 per hour, a fraction of the median US wage. Now, I agree, the old folks will have to take hemlock, but they call me a misanthrope. And no, those people don’t need decent healthcare. It is odd that the socialists who usually support the workers are so quick to axe their brothers in the car biz. And yes, if the govt can fire the head of GM, if taxpayers can buy 170% of AIG, and candidate Obama wanted to go after the oil companies and “TAKE their profits” then kindly show us how this isn’t out of Hugo Chavez’s song book.
Cars aren’t selling due to the TRILLIONS lost in the housing and stock markets. People simply don’t feel as affluent as before. There is no technology that can be imported to make up for this fact. The retirees are going to get their benefits paid by the taxpayers if GM and Chrysler go broke. Any effort to avoid bankruptcy is only to keep the bondholders paid. Little concern is made for the few remaining taxpayers paying unemployment benefits to the millions and millions of component suppliers and others who rely on the US auto industry. In the short run, twenty or thirty billion in a bailout is much cheaper than unemployment.
One last scary thought. What expertise does any govt bureaucrat have in the car business??? How about we merge the DMV and the Post Office? Surely the great minds there can figure it all out. If there was someone with the training and experience to even grasp the magnitude of the problem they haven’t shown themselves. If there was someone smart enough to figure this out (only a slight chance) they are not in Washington D.C.
Our leaders think better fuel economy can simply be legislated and the deathtraps made in China and India are wonderful. In a perfect world Nancy Pelosi and Diane Feinstein would commute every morning in a Tata or a Cherry.
Thanks for the post. The possible need for imported knowhow was referring to Chrysler’s inability to even design a good small car, let alone build one. Small diesels are not designed anywhere in North America, for example.
Agree with your overall remarks that GM and Chrysler ar working with a broken business model, and the sooner there is a fundamental change the better.
However, if markets were to return to normal, all three Detroit companies are still losing money on small cars, while the others are Making money, no matter where they build them. Ford lost $1400 on every Escort they built while Toyota made $800 profit on every Corolla they build in the US or Canada. Similar for the Honda Civic and Nissan Sentra.
The Detroit 2 can sell small cars at a profit in Europe and other foreign markets where the selling price of these cars is higher. They have more of a level playing field there.
I think the Obama government is secretly hoping for a quick Chapter 11 restructuring with GM dumping its unprofitable assets and product lines, and Chrysler marrying its remaining assets to Fiat.
Of course we have a financial crisis that is affecting the market. It’s interesting that used car sales are holding up relatively well, since many new car buyers have downtraded. The current low sales volume will eventually have to pick up since US car owners would have to keep their cars on the road for 27 years if the present new car sales volume did not increase!
Today, on WNYC Public Radio, one of their hosts interviewed the GM executive in charge of development of GM’s new “city car” joint venture with Segway. Designed exclusively for urban personal transport, this electric vehicle is claimed to have a top speed of 35 mph, and a range of up to 40 miles on a charge.
While this vehicle would probably not meet the needs of those who are fond of old technology and traditional politics, this innovative new vehicle for urban dwellers represents something that GM could sell in fairly large numbers to people on every continent. In Europe and in Asia, this vehicle could be really popular.
It is important to note that the prototype has not yet been given body work, but since the technology for Segways has been in use for several years, this two-passenger vehicle could see production within two years, and could really help to save GM through the marketing of a vehicle that is relevant to many people.
Clearly, this is not the only type of vehicle that GM should produce, but as one offering among many, this could be a winner. Incidentally, when pressed for a price, the GM spokesperson stated that it is projected to sell for ~1/3 of the price of a traditional economy car.
Take a look at:
http://www.youtube.com/watch?v=qY4msj5Q05Q
We are mearly brainstorming no one is claiming to be a expert. I have been stimulated by the ideas presented by people that are less than experts. Those ideas have been stimulating even if those ideas are wrong. Value does exist in this kind of dialogue.
Our Forum places value on any well presented position regardless of the persons formal education. We have all had experiences with book smart people that can’t find their a** with a map and a flashlight.
Your post would have had only a postive impact if you would have omitted that first line.
With respect to fuel economy, it is “legislated” through either MPG or the tax system and now by tailpipe enissions in the following countries:
and a whole lot more countries. You either specify maximum tailpipe emissions, miles per gallon or put a prohibitive tax on both gasoline and thirsty cars (purchase tax and road tax). None of the above countries have Chinese cars on the road, and all have very tough safety standards for motor vehicles.
The US is one of only a handful of developed countries that do not tax thirsty cars; the only mileage driver at present in the US is the CAFE standard (Corporate Average Fuel Economy)which is gradually being tightened up. There is a gas guzler tax for extremely thirsty cars.
In the future, Americans will be driving much smaller cars; GM is even planning a 2 wheel unit! Twenty years from now the US car scene will be very different, almost unrecognizable.
“The US is one of only a handful of developed countries that do not tax thirsty cars; the only mileage driver at present in the US is the CAFE standard (Corporate Average Fuel Economy)which is gradually being tightened up. There is a gas guzler tax for extremely thirsty cars.”
Someone with an H1 would dispute your first assertion above. There are taxes on fuel, and they are significant. Not as much as many other nations, but not as small as some others. IIRC, you informed us that Saudis pay only a little over $1.00/gal. That’s not to say that we couldn’t have higher fuel taxes to instigate the use of more efficient cars.
I’d also like to extend the guzzler tax to trucks. I registered my minivan as a truck in 2003 so that I did not have to pay the guzzler tax just like everyone else. It seems to me that if someone has a 3/4 ton pickup they can afford the tax. Those who need them for business can either buy used or pass the cost to the customer as a business expense. A Suburban would cost an additional $3700; less than 10% of the MSRP. I think that now is a good time to restart my whine to my congressmen and senators to push this along.
Thanks for your comment. To explain some background. Fuel taxes in the US and Canada were supposed to pay for the road system maintenance and expansion. Eisenhower’s 4 Cents/gallon tax financed the Interstate Highway system. I am referring to extra taxes to curb consumption, and these we need badly. The countries listed all have a system designed to curb gas use.
There are countries where gasoline prices are political tools to keep the dictator in power. Venezuela, Saudi Arabia, Iran, Indonesia, and a number of other countries all SUBSIDIZE gas prices. Venezuela is still at 8 cents/liter (30 cents/gallon), Saudi Arabia a little higher. If Venezuela and Saudi Arbia used the world oil price and cost of refining and marketing to sell their gas there would be a revolution.
If you buy the latest National Gegraphic Special Edition on Energy for Tomorrow, you will see that the Middle East countries are real gas guzzlers.
Countries with aggresive policies are France, with a steeply rising ANNUAL tax on horsepower and engine size ($1800/year for a 5 liter V8), $5/gallon gas, and a high initial purchase tax also based on car weight and horsepower. Owning a Ford Crown Victoria in France would make anybody think you were a millionnaire.
The US as a future have-not oil country, needs this type of system in the future.
“The US as a future have-not oil country, needs this type of system in the future.”
Well, we’re all future have-nots. It is nice to know that the USA gets most if it’s imported petroleum fuels from Canada and Mexico. The bitumen deposits near you are becoming a big supplier. I believe that the western US; Wyoming, for instance, also has considerable oil locked in shale. A tax would have other advantages - we could buy back those bonds from the Chinese!
As Inspector Clouseau would say, "Perhaps a little song to keep up the ker-rage’?"
http://spoonercentral.com/2009/Obama_Motors.html