Your Auto Industry Bailout Update

Jeeps

As executives head to Capitol Hill today to discuss a potential bailout of the U.S. auto industry, we figured it was a good time to recap some of the latest news from around the web. If you find something interesting on the interwebs, please share it in the comments with a link. If it’s worthwhile, we’ll add it to the post itself.

  • Over 100 CEOs of auto suppliers send a letter to the House and Senate to request relief. Many insiders point to the intertwined supplier base as a major source of trouble if any of the Detroit Three go down, sending ripple effects to every U.S.-producing auto company, including imports.
  • Opel, GM’s German subsidiary, will not share funds of a German government-backed bailout with its parent company. Opel is liquid, unlike its parent company, but is applying for aid as a “precautionary measure.” Opel employs 26,000 people in Germany. GM employs 96,000 in the U.S.
  • Retired Army General Wesley Clark says “What’s Good for G.M. is Good for the Army” in a New York Times op-ed. It’s an interesting piece focusing on history, but even Clark concedes the modern military doesn’t rely on the Detroit Three directly for its forces. 
  • If you didn’t know already, this is a great time to buy a new car if you have credit, a steady job and faith that the brand you buy will be around in a few years. One dealer: “If they want to buy a car, they are going to leave with a car.”
  • The public doesn’t seem so keen on a bailout.While a poll shows lukewarm support.
By David Thomas | November 17, 2008 | Comments (18)
Tags: In The News

Comments 

I agree with some of the myths, but in the junk myth, they are citing an INITIAL quality survey which is taken 90 days after purchase. 90 days isn't enough time to truly see the quality of any vehicle.

Amuro Ray

I utterly oppsed the bail-out.

(1) This is America. We're a capitalist country, and this "model" of capitalism for the entire world! This bailout is a socialist move, so what are we telling the others?

(2) The bailout money from tax payer - if it's used to, say, improve products and R&D for the companies, then there will be valid arguments to the issue (but still, I don't agree due to #1). But take a look at the links and in there, it states where the money are going to
- much to benefits for UAW (like healthcare, retirement pensions, etc. for both on-the-job and retirees);
- remaining to pay for creditors of the companies.
My money - in the form of taxes - SHOULD NOT go into another person's pocket in the form of healthcare or pension (and etc.). I pay for my own h/c, 401K, etc. I earned my income by working hard. Why the heck should someone just get my money for FREE?

If the CEO and executives screw up those companies, then get the money needed for those expanses FROM THEIR SALARIES. They each made million dollars, and when combined, we are talking a LOT OF MONEY they have received through their incomes. I don't. They are the ones who ran the companies down, costing millions of jobs and debts, not me. Charge to those responsible, not the innocent ones.

The other Dan

Here's my hypothesis on how the American iron can return to profit.
Build the same crap they built in the 50's and 60's. The buy American folks who will still continue to buy will have to replace them every 2-4 years like they did back then. Planned obsolescence if you will...
My first car was a '61 Olds 98 convertible bought in '71. It was rusting out, burned oil like there was no such thing as peak oil and was junked all of 12 years old. I have two cars on the property that are 8-10 years old. No rust, no oil burning and still run like the day I brought them home.
This is tongue in cheek but today's quality and engineering must be hurting them in the long run.

^^^^
I think most cars on the road, Import or Domestic, back then would have had similar issues at 12 years old.

Broq

What Congress, the Senate, and the President are arguing about is whether or not 10 million more Americans will lose their jobs and whether or not this country will maintain any manufacturing capability at all. If we lose 10 million jobs the loss of commerce will cost us 10 million more jobs and affect foreign companies and the ability of people to eat in 3rd world countries.

The unemployment costs to the taxpayers, should they fail to provide our automakers loans, will exceed $200 billion per year. Aside from all of the other issues that these armchair automakers are trying to cloud the issue with, it definitely is a no-brainer so, even these people should not be having this much trouble making a decision.

http://ewebsmith.com/gov/autobailout.html

JM

Chrysler is going under because they can't make a decent car to save their lives. literally. their cars in 2008 are what Kia and Hyundai vehicles were six years ago. in order for Chrystler to save itself, it needs to do a bunch of things
1. improve the interior quality of its vehicles from top to bottom. the Journey and the 09 Ram are examples of efforts, but its still not that great. Plus, all of their vehicles are so noisy on the inside, such as the Liberty.
2. improve the efficency of its drivetrains. they have one vehicle that gets 30mpg highway: the Avenger. The 3.7L V6 that is used in many SUV's should be scrapped, or at least updated. 3.7L should be making at least 270 hp, ask Mazda. the 3.5L V6 used in sedans should be making at least 265 hp, like in the Accord. the 2.4L inline-4 makes pretty good power for its displacement, but is just plainly unrefined. Furthermore, they need to totally rid 4-speed automatics and their awful CVT's from their lineup. put a bnch of 6 speeds in there.
3. the driving dynamics of all of their vehicles (save the viper) needs to be improved. the Nitro and Liberty are probably the best examples for this; their suspensions allow for excessive body roll, and there is NO steering feel.

GM is next because the good majority of their cars are underperforming, inefficient, outdated, have unrefined interiors, and have lousy reliability.
1. GM needs to get rid of ALL 4 speeds and replace them with 6 speeds.
2. it needs to make its four cylinder engines more efficient, especially in the Cobalt and Aveo. the 6 cylinder and 8 cylinder engines could also use an efficency bump. this is very evident with the 5.3L V8, which puts out 30 less hp than VW's 4.2L V8, despite the fact that it uses more than one liter more. the 300 hp V6 is a great engine; it should be dropped into many more vehicles, especially the Lambama vehicles, and possibly even the large GM sedans like the Impala, DTS, and especially the Lucerne.
3. improve interior quality. it s good in newer models like the CTS, but in others like the Tahoe its just average.
4. improve driving dynamics considerably.
5. some concepts are great; the HHR, the Vibe, the Solstice/Sky, the Vue (and subsquent versions introduced later on). the HHR, Vibe, and Sky are acctually fairly fuel efficient. All three are pretty stylish (per say...). Fit and finish and gearing are detractors in all three. The Vibe and HHR could save GM at this point in time because gas prices are so unpredictable. Noise and interior quality are just plain lousy, and the engines are lackluster. GM should adapt its 6-speed unit, improve interior quality, and improve driving dynamics to both. as a result, it would see a huge jump in prospective buyers.

Ford is making pretty good steps, but interior quality in all of its vehicles is really lousy. Ford is employing six-speed automatics though, which is good. its drivetrains are still pretty inefficient, like the 5.4L V8 in the Expedition, and the 4.6L V8 and 4.0L V6 in the Explorer and Mustang. the 2.0T engine in the new A4 makes one more hp and more torque than the V6...Also, it needs to acctually redesign its models, instead of just refreshing them. the only model to get an acctual redesign will be the 2010 Taurus that comes out later next year. the 09 F150 is just a refreshening. the 08 focus and escape, refreshes. Mazda will save Ford.

All three domestic makes need to drop rear drum brakes and replace them with discs. this is 2008, not 1998.

Dont think for a second that the domestics are the only ones that have faults.

Subaru needs to drop the four speed auto from all of its vehicles and improve the efficiency and HP of its H4 engine. or just make its vehicles lighter.

Toyota needs to drop the 4 speeds, make rear discs standard on its Yaris and Corolla (critical vehicles nowadays) and improve interior quality. blatantly speaking, interior fit and finish of Toyota models has gone down considerably in recent years. the Highlander and Land Cruiser are the only recently redesigned models to have decent interiors. the Camry, Rav4, Corolla, Matrix, Sequoia, Tundra and the new models Fj Cruiser and Yaris all have cheap interios Steering feel is nonexistant in all Toyota models, and none are in the least bit agile, even the Yaris. Even Lexus models lag behind in interior opulence when compared to competitors from Germany.

Honda has similar faults, but mainly interior fit and finish with plastics and the excessive road noise. the five speed autos that it uses are OK, but will be outdated soon. efficiency has gone down, and so had braking capabilities.

Nissan is doing ok, but it needs to make stability control easy to access on all of its models. interior quality of its newer models is great, but other models is pretty mediocre.

mitsubishi needs to pick up on its volume cars like the Lancer, Outlander, Gallant, and Endeavor. it needs to make all more efficient and have better driving dynamics. plus, it needs to drop the old 4 speeds in the Galant and Endevor and adapt the 6 speed found in the Outlander. also, the CVT is garbage. interior qualit of the models is also garbage. sure, everything fits niceley together, but itall just looks cheap. the eclipse is a joke.

VW has two major faults; the five cylinder isnt very efficient, and the price of VW vehicles is inflated compated to competitors. Driving dynamics and interoir quality are great, and every VW model uses a six speed auto. to add to this, VW is considering bringing over its new seven speed unit. plus, some believe that VW's reliability is spotty, but it is improving according to Consumer Reports and the dramatic imrovement of Audi's reliability.

BMW also has efficiency problems, since it has no four cylinder models but may be bringing over the 118i and 318i soon.

Merdeces needs to bring over more efficient models and imrpove reliability.

Kia and Hyundai are improving very nicely, but they really need to be putting six speed autos in all of their vehicles, as well as making ABS and ESC standard. interior quality has been great in recent models, but efficiency has been just average.

GR

I think they should be forced to file bankruptcy and reorganize their financial structure rather than be given money to patch their financial wounds.

How about they give consumers with driver's licenses the money and tell them they can buy any GM, Ford, or Chrysler they wish with the money? If we get the cars no charge, we can afford to repair them. The auto manufacturers win, the consumers win, and the mechanics win too!

Of course I'm joking, it will never happen. The CEOs should be held accountable for their participation in this fiasco. The consumers who pay taxes should not.

Amuro Ray

Web Smith, the biggest flaw of the bailout vs unemployment insurance is that - only BIG CORP AMERICA IS GETTING THE SPECIAL TREATMENT. Mom & pop stores aren't! That's unfair. However, say we've 10 million jobs lost - WHICH I DON'T BELIEVE - then all those people can either apply for the job bank via the UAW, look for unemployment insurance, or BETTER YET - GET ANOTHER JOB!

Now all people in US have to go thru' that route. If I lost my job. I can also pick one of those 3. My tax money thus goes back to me when I need it. Same thing for others too. Everyone has the same chance. Everyone has the same treatment. Now that's fair. Is that good to our economy? Probably not. Is that good to the society on the values we uphold? Definitely?

What's wrong with this country and those who support the BO is again, taking the easy way out rather than really restructure and learn the lesson!

Amuro Ray

1 correction - I can't apply for the job bank, but at least I can apply for U.I. or get a new job.

Troy S.

I'm certain local food banks, children's homes and homeless programs would benefit with this "bailout" money.

Did anyone read that Chrylser is currently doling out 30 million in Exec bonuses right now all the while asking for bail out money?

I say NO to the Big 3 bailout. If other countries around the world are worried about work for thier people then I say have them bail out the Big 3. They've been undercutting hard working Americans in labor costs for decades. Why not give a little back?

If I am forced to use my hard earned tax dollars to bail these poorly managed companies out, I expect one of thier vehicles to be placed in my driveway for my effort. What have they done for me lately?

No bail out!

Red

The bailout should go to car buyers - not manufacturers. Tax Credits to those who buy American vehicles; allowing Americans to withdraw cash from their 401Ks with no taxes or penalties to buy a new American vehicle; and make interest on car loans deductible. Sales taxes on new cars would also be deductible. It's time to shift the financial advantage from buying slightly used to buying new.

J

hm...
In treating a forstbite, do we try to fix it or just cut that off?

Years of mismanagement, years of product that only make them NOT the customers happy, and the overpowered UAW is gonna cost my hard earn money at taxation? WTH is that?
The big 3 should own up some of their responsibility.
Capitalism shouldn't work like this at all!

Just a side note, the UAW exists because the workers feel instability due to the fact that most managers works in American companies that has no union can just fire anyone that they don't like any minute. That is the major difference why they need UAW, while the foreign brands do not have it here.

The new reality, cars - any cars, are a luxury. The new "real economy" will be enforcing people to riding trains .. It won't even be a question of whether or not to buy a car for many people. Suprised that nobody is talking much about Rapid Transit systems as this should be the focus now ..

Amalio Escobar

Why don’t we use the bail out money to help the automakers make the public transportation we need instead of promoting adding more automobiles to the congested roads we have? By the way this also would help to balance the huge trade deficit, improve the air we breathe and give us more time to be with our families instead of being stuck in traffic.

DodgeFan

It is interesting cause in Indiana our unemployement insurance is broke. The pols didn't think it would run out so early so they will be asking the gov for a loan. All workers comp. Insurance will be going up for alot of companies next year.

Little sad GM sold their stake in Suzuki. I been watching Suzuki cars and they quietly keep improving. They are still a niche but quietly working towards midstream.

Noticed someone was commenting about Mitsu and Subara. I personally wonder if the niche players can keep going. This goes for Suzuki too. Mitsu already redone most their line up, they have no money to redo Galiant (Based on old Chysler tech).

DodgeFan

The suzuki link goes to the forbe story on Opel

AJ

Those sympathetic to the current state of the auto manufacturing industries should Netflix "who killed the electric car." No sympathy here guys...

angel smith

Actualy that is not the problem.Everyone including the government is focusing on the little problems.It is sad I being very young have to figure out the actual solution.Get.Rid.Of.Money.Base things on a scale of 1-10.For people who are hard working and have good charchte get10.They get a nice home with food and clothes whithout buing them.I have yet to perfect my plan but once i grow up and become president(wich i have no doubt i can easly do)I will perfect it.

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