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The GM/Ford/Chrysler car industry is plagued with overcapacity, me too product offerings and product cycles that take years to develop in response to market trends in an industry where consumers can change their minds (trends) overnight. Gas was $4.50 six months ago and is closing on $2.00 now. How do you plan for that?
No one was forced to buy an SUV due to marketing, no one is forced to lease a luxury car when they should be buying an Impala that meets their needs at the same monthly payment. Leasing disrupts the true value of the company sales as customers rent their cars and consider them disposable. There are fools on all sides of this equation, (present company on this board excepted, of course).
Let Chrysler go bankrupt, the fat cat hedge fund and minority foreign ownership take the majority of the hit. (I’m still pissed at them for learning how to drive on their damn sloppy recirculating ball steering box back in the 70’s, they deserve it for that alone). That eases the overcapacity.
Have a pre-packaged GM and Ford bankruptcy to abrogate onerous union contracts (like redundancy payments to workers “laid off’ from the lines but still drawing full pay), shut marginal facilities and recast labor force more in line with realistic sales numbers. Abrogate long term supply contracts that have minimum quantity provisions that, along with the labor contracts, force the factories to run even if there is no demand for a car. Recast them with contracts that match real world sales demands. Force the industry towards the Japanese business model.
Avoid lease financing to individuals and provide financing that requires a meaningful down payment. That would stop stealing future year’s sales into the current year via financing incentives and will slow GMAC’s defaults. That will make year to year sales forecasts more predictable. Plan to sell fewer cars that make a profit on each car. Recovery would be a slow, bloody process and many would feel the pain, but it could correct the excesses of the industry.
Since no one is making any money in the car business, not the manufacturers, not the dealers, not the suppliers, not the advertising agencies and media, not the finance companies, why try to save it?
What you see today with all the bailouts is private capital waiting on the sidelines to see if the government will fund all of the risk. There is no point to bailing out the current business model other than to kick the can down the road to placate the unions and voters. How does that make it better?
Oh, and drill off shore now for our oil instead of paying enemies for the stuff. Congress is soley to blame for energy prices because they prevent us from utilizing our own proven supply in our country. Predictable energy prices would help long term auto sales.
posted by 216.187....
, Sun, 17 May 2009 17:24:54
, Wed, 12 Nov 2008 19:54:21
, Sat, 15 Nov 2008 05:53:37
, Thu, 13 Nov 2008 08:29:22, Wed, 12 Nov 2008 19:55:21, Wed, 12 Nov 2008 08:43:06
, Wed, 12 Nov 2008 11:04:12, Fri, 14 Nov 2008 02:34:39
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