car_guy

Cash-For-Clunkers Reveals Weakness Among Detroit Brands

You conveniently avoided mentioning California, which was awarded the lions share of the funding, $322,677,500 or 11.3% (almost twice runner up Texas). Over 72% of their purchases with the program were for Asian OEMs. They also had the highest percentage of Toyota sales in the nation with 28% of total purchases being Toyota's. They also had the 2nd highest percentage of Honda sales, after Hawaii, with 19%.

Gee, California buys Asian OEM vehicles, and the mid-west buys US OEM vehicles. What amazing insight. This is hardly a useful picture of the US car market.

Who Might Benefit From Detroit's Failings

Rick,

Another article highlighting a thoughtful approach combined with a lack of industry knowledge.

1. If GM goes down the entire industry in North America is going down for up to 1 year. There is an excellent research paper at cargroup.org that details this scenario. The problem is that every auto plant in North America buys something from the NA supplier base. Suppliers have spent the last 15 years creating a diverse customer base for themselves to reduce their exposure to reductions at a single OEM. However, the big suppliers will still have 15-30%+ of their business w/GM and if GM goes into chapter 11 expect at least 5-15 major suppliers to follow some for financial reasons and some to protect themselves from GM's bankruptcy judge. With credit this tight, production will stop for some period of time, which will hurt everyone.

Chrysler would not be as bad, but in this market it would still cause a shock because the banks will shut off credit to suppliers with Chrysler business and the OEMs do not have the cash to fill the void.

If Ford were to survive, & this is the scenario they want the $9B backstop for, they would benefit from GM or Chrysler customers moving to Ford.

I think Toyota would be a big loser because as the new #1 automaker in the world, and in the US, they will have the big target on their back that GM used to wear. They will be blamed by many people for the failure of the US OEMs (this would not be fair, but neither is the bulk of the criticism of GM), they will have to spend billions of dollars cleaning up their supply chain issues, and any big surge in sales from displaced GM customers would force them to make decisions they are not comfortable making, like significantly expanding their dealer base. They will be under huge pressure from the states & feds to make up for the 4-6K dealers that would go under with GM & Chrysler. They have been unwilling to do this in the past, I don't see why this would drastically change.

The southeastern US states are living a fantasy if they think the remaining automakers will just simply build a bunch of new plants. Honda & Toyota built small car plants in the US in '80s because they were worried about getting locked out of the market by the feds. In the last 10+ years all of the new factories built by foreign automakers have been for vehicles that Americans buy a bunch of but their home markets do not (that would trucks & SUVs). The only reason Toyota is building the Prius in Mississippi is because they won't be able to sell the trucks they planned to build there. I would not expect to see a single new plant built after what happened in 2008. If the US moves to smaller cars like the rest of the world, they will be built with Europe's and Asia's small cars either in the OEM's home country or in China. Especially if Americans refuse to pay a premium for small cars like Europeans & Japanese do (the cheapest comparable Yaris in the UK is $1,300 more expensive than the US). With the lack of a US energy policy, which causes gas prices, and consumer demand, to fluctuate wildly, the soaring cost of healthcare premiums (doubled since 2000), the fact that the US market will not grow significantly (getting back to norm is not growth) in the next 10-15 years, and if Americans start buying what the rest of the world buys, the foreign automakers will stand pat and using their existing capacity to meet demand and importing the rest. It worked well so far, why change? If a company wants to make cars here there would be a number of fairly new GM or Chrysler plants that they could buy super cheap and they would have their pick from a pool of highly experienced autoworkers in the Great Lakes region. Honda has been working in Ohio, which has almost as many UAW jobs as Michigan, for 30 years without problems. It wouldn't make any sense to build from scratch and train a new workforce.

Lastly, consumers are in for a real shock in a couple of years, sooner if Chrysler & GM go down. All of the automakers are re-sizing their business for a 12-13 million vehicle market and they will use any increase in the market to drive up prices to pay for all of the new CAFE mandates, healthcare increases, etc. The overcapacity will be gone either way, but if GM and/or Chrysler go down it will be eliminated almost overnight. Buy a car or truck right now if you can because they will never be this cheap again.

Who Might Benefit From Detroit's Failings

Everybody has a different experience. I have owned numerous US products, primarily Chrysler products, and have had very few problems with them. My 2002 Mercedes Benz on the other hand was the most unreliable vehicle I have owned in 20+ years. I had a wide variety of parts on the car replaced under warranty and some problems they never did get fixed.

That is why it is better to use Consumers Reports or JD Powers to determine the quality of a vehicle model.

What your story does show is problem the US 3 have with their dealers who, in many cases, will tell their customers anything to deflect the blame from themselves. The service manager has no information on how Ford is dealing with the supplier. Honda/Toyota/Lexus/Sat... dealers don't do this and instead help their customers resolve their issues.

All of the OEMs, and I have worked with them all as a supplier, work very hard to reduce cost and none of them is willing to pay extra for quality and all of them monitor it closely and expect it from all suppliers.


On Dec 04 01:41 PM scammy wrote:

> I never owned a foreign car UNTIL ford and gm wore me out.. 2003
> Malibu, sold at 44k, just out of warranty, problems like 1000's of
> others on the internet, brought back (3) times before 35k for front
> brakes that GRINDED bad, never really fixed, ac compressor would
> go on & off at will whether you had temp all the way up or not,
> intake manifold started leaking all over front of engine, that was
> to be a $1500 repair, but traded it in first, then, would NOT START
> until you sat for 10 minutes with the key OFF then ON, then it would..
> Gassing up at a filling station you had to WAIT 10 MINUTES to start
> the sucker.. Rear window defroster STOPPED WORKING.. Need I SAY MORE..
> EVERY FORD I owned NEW since 1993 had the sending units FAIL in the
> fuel tank, thats (4) DIFFERENT vehicles and types.. Kept bringing
> them back, one (5) times. They have to drop the fuel tank, drain
> the gas, replace the sending unit, reverse, a 3 hour job.. A service
> manager told me that Ford takes the lowest cost bid and that the
> subcontractor that makes the sending units was taking them to the
> cleaners and that Ford DIDN'T CARE.. How many OTHER items have similar
> ends..LOL..!! Had two of these fords blow head gaskets BEFORE 50k,
> and I DON'T dog my vehicles..WTF..
>
> FINALLY bought a 2005 V6 Honda Accord made in Marysville, Ohio..
> With 50k on it, ITS THE BEST CAR I'VE EVER OWNED, PERIOD..!!!!!!!!!!!!!!...
> I can see putting 200k on it with no problem, just change the timing
> belt at 110k like the book says and water pump and drive on with
> oil changes, brakes, etc.. WTF.. Why gm, ford, and chrysler can't
> do it is THEY DON'T CARE ENOUGH at the higher levels in the company..
> They can save .45 on a sending unit, so they buy them and KEEP BUYING
> THEM even if 1000's fail, THEY DON'T CARE..!!!! WHY SHOULD I CARE
> THEN.. I took a BUTT KICKING ON THAT MALIBU with the trade-in, NOBODY
> WANTED IT.. IT WAS TRASH.. THAT whole model was trash, THEY MAKE
> TRASH.. SORRY..!!!
>
>
> On Dec 03 06:09 PM closed book wrote:

Who Might Benefit From Detroit's Failings

Who is actually going to pay for this? Most analysts don't believe that Toyota has actually made back their 10 year Prius investment and is actually making a profit selling them at $21K and you want GM to sell a similar vehicle at $12K out of the gate? This is easily the most ridiculous ideas I have ever heard. If anyone should be selling $12K hybrids it should be Toyota since they have at least paid for all of their tooling.

If you are working at one of the Auto plants in the south, Michigan has nothing to worry about.


On Dec 05 06:26 AM countrycuz wrote:

> So GM has the audacity to beg for a handout so that they can produce
> more cars that are not needed or wanted by smart shoppers.
> Tell me this.
> at a price of thirty thousand dollars, who in the hell is going to
> benefit from the Volt electric car? they need to rethink just who
> needs such a car how it would benefit The USA.
> Drop the price to 12 thousand dollars so that low income people can
> afford them by the thousands. then build them by the thousands in
> a war against OPEC. use every plant at their disposal . put it on
> a war footing. every Volt produced would be a virtual tank to fight
> against the demand for foreign oil.

Who Might Benefit From Detroit's Failings

Consumers Reports latest article on automotive quality stated that Ford was as consistently good as the good Asians (Honda & Toyota) and that GM had many vehicles that were just as good. In GM's case, they also had some models that were not as good, so CR penalized them for that. Chrysler was the only US OEM they said had consistent issues.

CR also rates a number of US 3 vehicles above the Camry V6 for quality. Car & Driver has hardly been easy on the US 3 for the last 20-30 years, but has grudgingly given them credit when they produce good vehicles. On their latest Top 10 List GM had 2 vehicles, Ford had 1 and Toyota had none. That is not a simple quality assessment, but an assessment of the best vehicle period. It was not unusual 10-15 years ago to not have a single US car on this list.

Lastly, North American Car of the Year simply means you can buy the car in North America. "Car of the Year" wouldn't be very helpful for consumers it was a European only car like the new Ford Fiesta, which will likely earn a few European Car of the Year awards but cannot be purchased in the US until 2010.

Try using a few facts next time.


On Dec 05 12:52 PM iapproveu wrote:

> Just make sure you buy an extended service contract to cover it..!!

>
>
> After we bail out the Big 3, lets bail out the 8 track player companies,
> Beta max manufacturers, casset tape manufaturers too. Lets bail out
> EVERY company that makes old fashion technology that does not sell
> in todays market.
>
> I LOVE HEARING FROM THE REDNECK BUBBA POSTERS ON HERE SAYING I HAVE
> A CHEVY/FORD PICKUP THATS 20 YEARS OLD WITH 250,000 MILES, NEVER
> SPENT A DIME ON IT, BEST QUALITY TRUCK ETC....so anotherwords you
> have not spent anything to help out detroit either.....right? LOL

>
>
> Also, if you want to see what that stunning piece of american engineering
> made by the proud UAW will be like in a year....just go rent a few
> cars from Avis/Hertz etc. Rent both, the big 3 and the compitition.
> You will see all the Big 3 plastic crap, with gaps that are DRASTIC
> in the quater panels/hood(no attention to detail at all). Then drive
> it over a normal road and liten to the squeeks and rattles at 22,000
> miles. Ever notice that a rental company NEVER has one of these cars
> passed the factory warr..??? yea, neither would I..! YES, quality
> has come a long way.....but its not like the others. Here is a point.
> Go to any site on the net that sells extended service contracts.....put
> in some hypothetical cars. 2006 Camry, 2006 Altima, 2006 Accord,
> 2006 Malibu, all with the same milage, say 60,000....and you'll see
> for yourself which is the better made car. The malibu warranty is
> $1013 more. Why? Because the quality is so good? please! THESE ARE
> THE PEOPLE THAT PAY TO FIX THEM....THEY KNOW THE FACTS AND ACTUARAY
> REPORTS! Quit reading motor trend and car and driver and wake up.

>
> Ever wonder why the magazines had to come up with "North American
> Car of the year"..? Because a "Big 3" cant win the over all "Car
> of the year"...so they had to eliminate the compitition.
> VOTE with your feet and your dollars when you make a purchase. you
> work hard for your money, spend it wisely. Yes, its a personal choice,
> but demand that quality go up......or.....force the other companies
> to make a lesser quality car so the Big 3 can compete on a level
> playing field.
>
> Im done.
>
> On Dec 05 09:48 AM okbtan wrote:

Who Might Benefit From Detroit's Failings

Yeah, 1 bailout every 100+ years vs an industry wide bailout for the banking industry, located New England and the South, about every 10-15 years. This doesn't count the trillions of $ they have access to from the government every year.

The auto industry had a solid plan and was even making money before the banking industry drove the economy into the ground selling liar loans. The southern banks, like Bank of America, were the first to the trough.

I don't know what you have against Michigan but you obviously don't know that Toyota has their US design center here and Honda's design center is a few hours away in central Ohio.


On Dec 06 04:24 AM TenQ wrote:

> Bailing out the Big 3 is like filling a black hole.
> It will never end. It's like giving intensive care for the next
>
> 10 years or more. Just impossible to do that. Plus, the same

>
> old same old will never change. With the bailout money, America

>
> can start a brand new Car company some where in the the Southern

>
> States. Forget about Michigan.

Who Might Benefit From Detroit's Failings

Zenith is actually a Korean company, division of LG, and has been for almost 10 years.


On Dec 04 12:34 PM jamewhiteperson wrote:

> Maybe the us american should start making better product, invest
> more in R&D and that would create more jobs? I have Zenith lcd
> I brought last black friday.. the screen is all in mess up in one
> color now.

Chrysler: Trying to Stake Its Claim in Electric Cars

Paulk8756
What 'raid on the federal treasury' are you referring to? The $25B in LOANS was part of the original energy bill that raised the CAFE standards and is forcing the auto industry to spend $35B in tooling & research trying to meet these standards. If the government is going to force the companies to make cars consumers may or may not buy the least they can do is help them pay for it.

Also, the Japanese government has been investing heavily in the development of batteries for the Auto industry which is why most of the companies supplying hybrid batteries are Japanese. Since the US has been investing nothing, we have nothing. If we do not start investing now, we will be importing batteries forever.

Chrysler: Trying to Stake Its Claim in Electric Cars

Not only is the serial hybrid approach simpler, but it is more efficient since the gas engine can operate at constant RPM charging the batteries. This is like driving on the highway at a constant speed 100% of the time, even a full size SUV uses only 40 hp to cruise at a constant highway speed. They key to making this work is batteries with enough power density to get the 40 miles on electric w/o charging and to reduce the vehicle's weight as much as possible to compensate for the heavy batteries.

Paulk8756 - Chrysler is using suppliers for the technology and 3 of the 4 vehicles (EV, Jeep, & Minivan) are modifications of existing designs. They face a bigger challenge to reduce the weight of the existing vehicles to compensate for the batteries, but all of this investment can be distributed across the non-electric vehicles which will benefit from being lighter.

Chrysler's Rebadging Plan: Strategic Blunder for Nissan?

Leave it to Seeking Alpha to publish incorrect, old, news and then build an entire thesis off of it. The article in WSJ has been formally rejected by Chrysler and their partner strategy has been outlined in an article in today's WSJ. From the article: "Mr. LaSorda pledged that every joint venture will either produce an entirely new vehicle not already in Chrysler's lineup or it will be limited to a slightly modified car or truck made or designed by the partner but that doesn't compete with an existing Chrysler model in the same market."

This is consistent with the announced deals with Nissan and Chery. Both deals provide Chrysler with slightly modified vehicles (rebadged) that do not compete with existing models. Nissan would provide B class vehicles based on the Versa , for Latin America and Chery would provide A or B class vehicles for North America. Chrysler has nothing this small and rebadging a partners vehicle is much faster than building your own from scratch. Designing a new vehicle off of an existing platform is quicker and more reliable than designing everything from scratch (which is why every Auto OEM in world takes this approach). Chrysler will ultimately develop a B class vehicle for sale in growing foreign markets and will replace the rebadged vehicles at that time.

Chrysler is already designing the replacement vehicles for the mid-sized C/D segment. This is the highest priority project at the company. However, as the chart above shows, they missed horribly with the latest version of the Sebring/Avenger. The previous versions were more competitive and the new management is focused on doing their homework and hitting the market correctly, like GM did with the Chevy Malibu.

Which is exactly what everyone claims they should do....

Guess they are damned if they do, damned if they don't.