Automakers: Bailout Arguments, Pro and Con

For those of you who have been following this blog, you know where I stand on the proposed aid package for US automakers (see Preventing Moral Hazard in the Auto Industry for background). I am not opposed to aid for General Motors (GM) and Ford (F), provided that aid comes with strict terms:

1. A moratorium on acquisitions (whether with Chrysler, or otherwise)
2. A rationalization of operations - a reduction in the number of brands/models coupled with plant closures
3. A renegotiation of employment terms with the UAW to make the US automakers more competitive with global competitors
4. Strong incentives to build more fuel-efficient automobiles

Although I support some form of aid for GM and Ford, I have been staunchly opposed to providing any aid to Chrysler given its current ownership structure (see A Benevolent Cerberus or Is the End Nigh for Chrysler).

Rather than re-hash my ideas, for this post I thought I’d put forth some recent arguments that have been made on either side of the debate and let you decide.

ARGUMENTS FOR THE BAILOUT:

A short, GM-produced video being distributed by Weber Shandwick, GM’s PR firm (it arrived in my inbox from them on Sunday).

Popout

ARGUMENTS AGAINST THE BAILOUT:

Mike Shedlock (Mish) details his opposition to the bailout in a letter penned to his representatives, and published on his blog (see Second Push to Stop Auto Bailout). Although his comments were specific to GM, you can apply similar reasoning to Chrysler and Ford. Mish writes:

GM CEO Wagoner and other auto executives are now pleading for more cash.

Wagoner stated “We’ve moved aggressively in recent years to position GM for long-term success, and we were well on the road to turning our North American business around before the economic crisis.”

The reality is that Wagoner is in fantasy land.

• GM continued to build massive numbers of SUVs and trucks long after consumers turned their backs on them.
• GM continued to pay a dividend long after it was prudent to do so.
• GM had a golden opportunity to sell all of GMAC and failed to do so.
• GM got involved in subprime mortgages with Ditech at the worst possible time.
• On April 2, 2008 GM sales analyst Mike DiGiovanni, speaking to reporters and analysts on a conference call, said he saw “early signs” that the U.S. market was steadying. That shows you just how far in fantasy land GM is.
• GM is a company that makes mistake after mistake after mistake.

GM cannot build cars that people want at a price people can afford. That is the bottom line.

From GM’s latest 10-Q

Short-term borrowings and current portion of long-term debt.
September 2008: $7.21 Billion
September 2007: $5.26 Billion

In one year’s time, short term borrowing and interest on long term debt has gone up by $2 billion per quarter, $8 billion per year!

If Congress loans GM money, interest on its debt will rise yet again.

GM has $36 billion in long term debt and has a negative net worth of $60 billion.

Is $25 Billion The Beginning Or The End?

One look at the above numbers answers the question “Is a $25 billion bailout the end, or just the beginning?”

Stop The Madness!

Consumers are tapped out. They are not going to buy autos no matter how much money Congress throws at the sector.

World Will Not End If GM Goes Bankrupt

The very best thing that can happen to GM and Ford is they go bankrupt. The sooner the better. Congress will then see that the world will not end. Both companies will reorganize. Both companies will keep making cars.

Bankruptcy is the best option for the Auto industry. If the union disagrees, let it pledge its pension money as collateral, and let Wagoner pledge his personal wealth as collateral for a loan.

SOME MIDDLE GROUND:

Finally, I suggest reading an interesting, and thought-provoking, alternative proposed by Andrew Ross Sorkin of the New York Times (see US Should Guide GM in a Chapter 11). Andrew writes:

“The fact is we’re looking at a short-term liquidity crisis that needs a bridge loan,” Mr. Cervone [spokesman for GM] said this weekend to The Detroit Free Press.

To him, G.M. is merely in a temporary bind. If the government — that is, taxpayers — were just willing to spot G.M. some cash to get it over this little rough patch, everything would be just fine.

Mr. Cervone’s comment reflects what’s wrong with the mind-set in Detroit.

G.M is using money so quickly that a $10 billion infusion made today would disappear by February. That is why taxpayers shouldn’t fork over a cent, at least until shareholders are wiped out, management is tossed out and the industry is completely reorganized.

But there is a fix. Call it a government-sponsored bankruptcy, a G.S.B., if you will. It might sound a bit like an oxymoron, but it is an idea that has been quietly making the rounds in Washington. It makes a lot of sense. ...

I agree with many of those who oppose a bailout on the type of restructuring that needs to take place to right the ships of GM, Ford, and Chrysler. However, for me, the debate hinges on whether Chapter 11 is a viable path for the automakers to restructure. I am inclined to believe that it is not a viable path because it would be difficult to raise DIP financing (critical for any reorganization) from private sources in the current credit environment. Therefore, the government would be forced to become the DIP financier of last resort to avoid Chapter 7 liquidation.

Andrew Ross Sorkin suggests that the government do just that. And maybe he’s onto something.

Given all sides of the argument, I have sided with those who advocate for some kind of government aid - whether it come before or after bankruptcy. But either way, in order to work, that aid MUST come with strict provisions, and at a cost to shareholders, debtholders, and management.

What say ye?

Disclosure: No positions

Comments

[AmericanVOR:]

MYTH:

"GM cannot build cars that people want at a price people can afford. That is the bottom line."

FACTS:

GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of about 560,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.

Although total U.S. vehicle sales are down almost 15% so far this year (through October), a number of GM cars and crossovers have enjoyed significant sales increases:

Chevy Malibu +39%
Pontiac Vibe +36%
Pontiac G6 + 4%
Cadillac CTS +15%
Saturn Aura +7%
GMC Acadia +2%
Buick Enclave +88%

2008 Nov 20 12:19 AM

[Perception:]

FACT

"GM cannot build cars that people want at a price people can afford. That is the bottom line."

hehehe, GM makes unattractive cars with abysmal quality relative to japanese automakers. go do a pepsi challenge on the warranties, they tell the stroy. for GM to make cars of comparable quality to those of, for example, honda, the prices of comparable GM models will likey increase substantially.

merely invoking an increase in sales of certain models is specious reasoning at best, and frnakly, i'd like you to cite the source for those numbers...

look around next time you're driving. how many 1990-1995 honda accords or toyota camrys do you see on the road? lots. how many chevy luminas do you see? (caveat: without duct tape holding them together) yeah. hmmm, makes you think.

2008 Nov 20 12:52 AM

[Charto:]

I see where you are going with this but on a percentage basis GM has 9 brands and 60+ models TM has Toyota, Scion, and Lexus GM has 15,000 dealerships TM has 16.8% of that. GM is too big and that shows when there lousy CEO and destroyer of wealth doesnt even know how many models that have off hand is unfamilar with any of the numbers and is unwilling to do what it takes to ensure GM's survival in terms of giving up his pay. Obviously GM is expected to outsell but bailing out a company that is very iffy on making it would slain the gov't further for wasting tax payer money on an uncertain going entity. The question is what is a feasible solution??

2008 Nov 20 12:53 AM

[Charto:]

I see where you are going with this but on a percentage basis GM has 9 brands and 60+ models TM has Toyota, Scion, and Lexus GM has 15,000 dealerships TM has 16.8% of that. GM is too big and that shows when there lousy CEO and destroyer of wealth doesnt even know how many models that have off hand is unfamilar with any of the numbers and is unwilling to do what it takes to ensure GM's survival in terms of giving up his pay. Obviously GM is expected to outsell but bailing out a company that is very iffy on making it would slain the gov't further for wasting tax payer money on an uncertain going entity. The question is what is a feasible solution??

2008 Nov 20 12:58 AM

[Byallmeans:]

The government is culpable in this.
CAFE which the public clamors for and which our government has readily legislated and Safety Regs which is another government agency are not mutually exclusive.

All automakers both domestic and foreign alike have made great strides in the last few years with regards to engine effeciency only to be placated by the fact that every year the government legislates added vehicle mass due to increased safety regs.

Did you know that since the year 2000 that safety regs have added anywhere from 1000 to 2000 LBS of mass to our vehicles (add it up, 2 front air bags, seat or curtain bags, a multitude of structural crash beams, roof structure increases, bigger brakes and suspension parts to compensate for the weight.) All of this has produced an almost zero sum game on vehicle effeciencies made out of the latest engine technology. Take the mass out of a 2008 full size truck that was added by increased safety regs just since 2000 and the fuel mileage will increase 25%.

The government wants to regulate CAFE, "So be it" However it is not possible to build a long term strategy when you have a moving target. The only thing increases in cafe without fuel cost management will do is to force companies to produce expensive fuel effecient cars that they will have to sell at a loss because people won't buy them if fuel is 2 dollars. Hence a significant contribution to them going broke. Until the government increases the price of fuel to 4.00 and acts as a clearing house to the fuel stations. (ie the government buys the fuel for the market rate from the refiners and distributes it at a fixed cost to stations. The overage going directly to the states that purchased the fuel, to support infrastructure rebuilding. Can you say europe) These businesses cannot and will not be able to create a profitable business structure long term.

The government has also failed miserably at the rollout of alternative fuels. GM began producing E85 engine vehicles in earnest around the 2000 time frame as the government looked the other way. That development cost a pretty penny at the time. Only after Hurricane K did our government get an E85 Hard on so to speak and all the sudden subsidized corn farmers to produce ethanol. Once again the manufacturers especially the domestics ramped up E85 vehicles on the governments promise. The government once again failed miserably and never mandated that E85 be forced into the fuel stations (ie no infrastructure) to drive competiton and cost reduction as bio ethanol begins to come on line. The auto industry is sick and tired of the government passing legislation either in a vaccume or not following through. from CAFE to Safety to Bio Fuels.

While the auto makers have made mistakes and contributed to their demise our own Government through its bickering and backroom payoffs has had a significant in the domestic auto maker calamity.

The import companies are just as miffed. So why are they doing better? Their not trying to float 740 thousand retirees pension and healthcare. Which by default in any type of Chapter 11 defaults to the US government to the tune of a minimum of 97 million a month for the rest of their lives.( say 20 years at least, figure is based on the average retiree making 2500 per month and the PBGF paying out 50%, and those numbers are conservative and do not include 740 thousand flopping over to medicade instead of the company funded healthcare plan.) Thats just one little aspect.

When GM alone stopps paying the 5 to 7 billion a year tab in medical insurance how do you figure the insurance companies are going to pick that back up. And believe me they will, you guessed it their going to pass on higher premiums to you and me.

Now if a Chapter 11 makes everyone feel good and the fallout that will come with it by all means lets get it on.

2008 Nov 20 01:03 AM

[UH2L:]

A car company can't survive while bankrupt! Very few people will buy a car from a bankrupt company when they can't be sure that parts and service will be available for 4+ years. It's way different than an airline ticket which is consumed and done within a few months if not days.

UH2L
www.thingsivenoticed.c...

2008 Nov 20 01:18 AM

[Byallmeans:]

This is the real deal folks so you better batten down the hatches. If the 3 domestics stop buying alumunium from alcoa, steel from the major steel producers, glass and rubber from companies like goodyear the prices on commodities will skyrocket. They have to. The major 97 suppliers provide parts not just to the auto industry (but the auto industry is the major buyer) but to Boeing, All the Import transplants, The commercial food industry, etc etc. They will all topple into C11 also and the industry will not restart in any earnest fashion for several years if ever.
Be carefull what you wish for. So lets get it on.

2008 Nov 20 01:20 AM

[Byallmeans:]

That means finished goods, not raw commodities in my previous post

2008 Nov 20 01:21 AM

[Byallmeans:]

Robert you'll be so busy picking up the dead carcases you won't have time to utter the words Moral Hazard.

2008 Nov 20 01:24 AM

[jp23:]

bail them out but get rid of the current managment and it's time to build new green cars

2008 Nov 20 01:36 AM

[Byallmeans:]

JP
won't happen until the government gets its head out of its behind and fixes fuel prices at a minimum 3.50 to 4.00 That is the threshold where the public really gets behind buying a green or a smaller car. Without this its pointless as people wont buy. Lets get real here. The Toyota prius sold like crazy in the run up to 4.00 fuel. then it stalled or flatlined in sales voulume in july/august. And the total impact of the Prius nationwide was only 2% of the market. They had volume issues at first but they adjusted for it by early summer. The bottom line is that americans talk a good line about wanting hybrids but the reality is less than 2% of the cars sold in the USA last year were Prius hybrids. And thats at 4 dollars.

So wheres the disconnect? Are the green huggers screaming louder than everyone else on the web making it look like everyone just has to have one now. Or is everyone just chanting a good line but wouldn't be caught dead in one even at 4.00 fuel. Maybe it takes 5 or 6 or 7 or 9 like most of the EU for people stop talking a good line and get real about it. When the public's ready to get real the automakers will get real.

2008 Nov 20 01:45 AM

[Byallmeans:]

Also if you say GM does not build cars people like just look right here.
All of GM's brands are above averagew while many touted foreign brands are well below. This is a new survey as of this month.

www.jdpower.com/corpor...

2008 Nov 20 01:55 AM

[PeteK:]

The thing is, when customers got burnt once, it will take a long time before they will even walk near the same spot again.
When workers had no loyalty to their employer, there's no way that business will survive. To keep the same workers is like to repeat history all over again. Take a good look at Boeing, workers treated "Strike" as having fun. How can it not fail in time ? Chapter 11 is the best and only way out for GM. It will come back stronger and give GM time to regroup and correct its past mistakes. GM should also plan to move to the Southern States where everything is more friendly for business. Build new plants and update equipments that are essential to compete with foreign cars. That's how Toyota succeeded. Good to learn from it.

2008 Nov 20 03:35 AM

[Mary Anne:]

Allears just hit the proverbial nail on the head!

On Nov 20 01:45 AM By all Means wrote:

> JP
> won't happen until the government gets its head out of its behind
> and fixes fuel prices at a minimum 3.50 to 4.00 That is the threshold
> where the public really gets behind buying a green or a smaller car.
> Without this its pointless as people wont buy. Lets get real here.
> The Toyota prius sold like crazy in the run up to 4.00 fuel. then
> it stalled or flatlined in sales voulume in july/august. And the
> total impact of the Prius nationwide was only 2% of the market. They
> had volume issues at first but they adjusted for it by early summer.
> The bottom line is that americans talk a good line about wanting
> hybrids but the reality is less than 2% of the cars sold in the USA
> last year were Prius hybrids. And thats at 4 dollars.
>
> So wheres the disconnect? Are the green huggers screaming louder
> than everyone else on the web making it look like everyone just has
> to have one now. Or is everyone just chanting a good line but wouldn't
> be caught dead in one even at 4.00 fuel. Maybe it takes 5 or 6 or
> 7 or 9 like most of the EU for people stop talking a good line and
> get real about it. When the public's ready to get real the automakers
> will get real.

2008 Nov 20 04:51 AM

[James Cullen:]

Ok, correction: GM cannot build cars that people want, at a price people can afford, and which is high enough not to result in them filing bankruptcy.


On Nov 20 12:19 AM AmericanVOR wrote:

> MYTH:
>
> "GM cannot build cars that people want at a price people can afford.
> That is the bottom line."
>
> FACTS:
>
> GM outsold Toyota by about 1.2 million vehicles in the United States
> last year and holds a U.S. lead over Toyota of about 560,000 so far
> this year. Globally, GM in 2007 remained the world's largest automaker,
> selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.
>
>
> Although total U.S. vehicle sales are down almost 15% so far this
> year (through October), a number of GM cars and crossovers have enjoyed
> significant sales increases:
>
> Chevy Malibu +39%
> Pontiac Vibe +36%
> Pontiac G6 + 4%
> Cadillac CTS +15%
> Saturn Aura +7%
> GMC Acadia +2%
> Buick Enclave +88%
>
>

2008 Nov 20 09:51 AM

[Killjoy:]

I keep hearing all this talk about GM compared to Toyota....What about Honda?!? They had a record year, and i can buy a brand new fully loaded car for under $20,000. I'll take that over a hybrid that weighs 1k lbs more and that has maintenance twice as expensive as non-hybrid more fuel efficient car.

2008 Nov 20 10:37 AM

[Repper:]

Yes most discussion is GM vs Toyota because they are the biggest players involved, and the comparisons are most direct. Most of the same things could be said of Ford vs Honda etc.


On Nov 20 10:37 AM Killjoy wrote:

> I keep hearing all this talk about GM compared to Toyota....What
> about Honda?!? They had a record year, and i can buy a brand new
> fully loaded car for under $20,000. I'll take that over a hybrid
> that weighs 1k lbs more and that has maintenance twice as expensive
> as non-hybrid more fuel efficient car.

2008 Nov 20 10:45 AM

[Repper:]

I agree that Chapter 11 would be the best way for these companies to reorganize and develop a more competitve cost structure, BUT everyone arguing for chapter 11 fail to realize one major point: They couldn't survive a bankrptcy filing. Finiky consumers with other options will NOT buy cars from them.

2008 Nov 20 10:57 AM

[Gandalf:]

The depth of the problems faced by the 3 American auto makers requires that all three should go into bankruptcy under a common bankruptcy judge with the objective of rationalizing the research, development, product portfolio, manufacturing, marketing, service/warranty and financing into one competitive and profitable company.

Even if we still had a healthy investment banking community and a strong economy, this would be a daunting challenge for private capitalism.

Now, it needs to be led by the best experts in Congress, Judiciary, and Administration who have our entire national interest at stake, including return on our investment in this industry.

I am not a big fan of Mitt Romney as a political figure but he may have the best set of skills and relationships to accomplish this enormous task. His father was the head of an American car company and he has led a successful investment company.

If the Obama folks and congress want to reach out to get problems solved, he may be a good choice to lead this critical effort for the future of our country.

2008 Nov 20 11:40 AM

[Neene:]

Our government has provided billions of bailout dollars to the greedy incompetent Wall Street corporations and banks. Now there is a run on the US Treasury to bail out the automakers and in the meantime a line is forming for other companies, along with states looking for bailouts. What is interesting is that nobody in Washington DC is interested in bailing out all the stockholders who lost millions in GM and Ford stock, the people who lost money in 401Ks, homeowners who pay their mortgages on time and now their house is worth 25% less, homeowners in Louisiana and Mississippi who lost their homes due to hurricanes Gustav and Ike, homeowners in California who lost their homes due to wildfires, homeowners in the Midwest who lost their homes to floods, the hard working people who are losing their jobs through no fault of their own but through the incompetent managers in charge of corporations throughout the country. The American people who play by the rules get screwed and the incompetent greedy fat cats get bailed out. This is not right and the bailouts should end now. The auto dealers are creating fear and hysteria that the country will collapse unless they receive bailout money. Lets take a look at Chrysler: Robert Nardelli, Chairman and Chief Executive Officer who was hired in 2007 by Cerberus Capital Management, a private equity company that bought Chrysler, who was the former CEO and Chief Executive Officer of Home Depot from December 2000 to January 2007. He was fired due to his incompetent management of Home Depot and for his failure he received a severance package of $210 million. This incompetent manager along with the private equity firm, Cerberus Capital Management, who thought they were so smart that they could make millions by turning Chrysler around, failed by not being so smart, are asking the taxpayers to bail them out. It is a travesty that a bailout is even being considered but the heart of the matter is that the bailout is a disguise, it is a payoff to the unions for their money and support in the election The best solution is to let all three automakers file for bankruptcy, renegotiate all union contracts along with all other contracts and obligations, then file a new business plan with goals and target dates. Hopefully Toyota will acquire GM and Nissan will acquire Ford and the majority of autoworkers will keep their jobs, at reduced pay and benefits and the American car industry will be on the road to recovery and a bright future. Chrysler acquired by Cerberus Capital Management, a private equity venture capitalist company will be allowed to fail, and go the way of Lehman Brothers. They made a bad investment and should pay the ultimate price. The American taxpayer should not in any manner, way, shape or form bailout a vulture company that has no regard for the workers and the impact on their families when they acquire companies, saddle them with debt to repay themselves and then put the downsized company back on the market within a three to four year period to further enrich themselves. Its time for the blubber to hit the road.

2008 Nov 20 11:44 AM

[aarc:]

The current global economic crises is expected to get worse or even worst than the last Great Depression of the 1930s.

World War II was a product of the Great Depression. Every country in the world is now bracing for something "bad" that might happen out of the current global crises. We dont know what "evil" can come out of this but the G7 and the G20 are already in a frantic mode to solve the current crises before "things" got out of hand.

Likewise, in an environment such as this, it will be in the best military/defence interest for the government of any country to maintain it's manufacturing base that can build armaments, bombs, tanks, airplanes, and other war fighting machines in case of catastropic events lead to war among nations.

WW-I was supposed to be the war that ended all wars; yet WW-II happened unpredictably.

Dismantling or doing something such as bankcrupcy to GM can result in massive dislocation of skilled manpower and to other industries downstream that will be needed in a hurry when things go from bad to worse.

Why take the risk?

It is a lot cheaper and safer for the govt to maintain current status quo in the interest of national security.

Let them fail if and when global economic and political situations have stabilized.

War is not measured in dollars and cents. It is measured in who has the better chance of survival.

It is still too early to discuss the subject of war.

It is not too early to prepare for something bad getting into something worse or even worst.

2008 Nov 20 12:55 PM

[jazzme:]

After 37 years of retailing both imported and domestics cars here's the perspective put simply.

If the domestics build say a really crummy ugly color that won't sell...they keep it for a year and tell the retailers (dealers and salespeople) that they don't try hard enough.
If the Japanese do the same...a running production change usually is made to either drop the color or change it within 6 months. They listen to the people on the retali fromt lines and learn from them.
Who deserves to survive? Who is less liklly to repeat the same mistakes?

2008 Nov 20 01:31 PM

[mojo12374:]

Obama owes the UAW for their considerable support in getting him elected. Waxman's wife is on GM Board of Directors, and Waxman (D- CA) just got elected as Chairman of Energy comittee. Here's an Idea, instead of giving the UAW and auto companies 25B or more, why not give money to people who buy the cars? It's tax payer money, at least people should get something for their monet, instead of just buying a vote.


On Nov 20 12:19 AM AmericanVOR wrote:

> MYTH:
>
> "GM cannot build cars that people want at a price people can afford.
> That is the bottom line."
>
> FACTS:
>
> GM outsold Toyota by about 1.2 million vehicles in the United States
> last year and holds a U.S. lead over Toyota of about 560,000 so far
> this year. Globally, GM in 2007 remained the world's largest automaker,
> selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.
>
>
> Although total U.S. vehicle sales are down almost 15% so far this
> year (through October), a number of GM cars and crossovers have enjoyed
> significant sales increases:
>
> Chevy Malibu +39%
> Pontiac Vibe +36%
> Pontiac G6 + 4%
> Cadillac CTS +15%
> Saturn Aura +7%
> GMC Acadia +2%
> Buick Enclave +88%
>
>

2008 Nov 20 02:18 PM

[mojo12374:]

Obama and Waxman owe GM and the UAW, They won't let them fail!!!

2008 Nov 20 02:20 PM

[mojo12374:]

Obama owes the UAW for their considerable support in getting him elected. Waxman's wife is on GM Board of Directors, and Waxman (D- CA) just got elected as Chairman of Energy comittee. Here's an Idea, instead of giving the UAW and auto companies 25B or more, why not give money to people who buy the cars? It's tax payer money, at least people should get something for their monet, instead of just buying a vote.



On Nov 20 12:19 AM AmericanVOR wrote:

> MYTH:
>
> "GM cannot build cars that people want at a price people can afford.
> That is the bottom line."
>
> FACTS:
>
> GM outsold Toyota by about 1.2 million vehicles in the United States
> last year and holds a U.S. lead over Toyota of about 560,000 so far
> this year. Globally, GM in 2007 remained the world's largest automaker,
> selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota.
>
>
> Although total U.S. vehicle sales are down almost 15% so far this
> year (through October), a number of GM cars and crossovers have enjoyed
> significant sales increases:
>
> Chevy Malibu +39%
> Pontiac Vibe +36%
> Pontiac G6 + 4%
> Cadillac CTS +15%
> Saturn Aura +7%
> GMC Acadia +2%
> Buick Enclave +88%
>
>

2008 Nov 20 02:23 PM

[Jason Rines...:]

Great idea on $4.00 gas. It caused the second wave of the market crash. Besides, GM already has the Chevy Volt and serious mass production plans. Bankrupt it, say goodbye to management and the union and then let's talk.




On Nov 20 01:45 AM By all Means wrote:

> JP
> won't happen until the government gets its head out of its behind
> and fixes fuel prices at a minimum 3.50 to 4.00 That is the threshold
> where the public really gets behind buying a green or a smaller car.
> Without this its pointless as people wont buy. Lets get real here.
> The Toyota prius sold like crazy in the run up to 4.00 fuel. then
> it stalled or flatlined in sales voulume in july/august. And the
> total impact of the Prius nationwide was only 2% of the market. They
> had volume issues at first but they adjusted for it by early summer.
> The bottom line is that americans talk a good line about wanting
> hybrids but the reality is less than 2% of the cars sold in the USA
> last year were Prius hybrids. And thats at 4 dollars.
>
> So wheres the disconnect? Are the green huggers screaming louder
> than everyone else on the web making it look like everyone just has
> to have one now. Or is everyone just chanting a good line but wouldn't
> be caught dead in one even at 4.00 fuel. Maybe it takes 5 or 6 or
> 7 or 9 like most of the EU for people stop talking a good line and
> get real about it. When the public's ready to get real the automakers
> will get real.

2008 Nov 20 06:59 PM