Toddms

Cash for Clunkers May Cost Up to $45,354 Per Vehicle

The purpose of the program is not only to increase sales, which it does as he points out, at the expense of future sales, but to remove permanently the lower mileage vehicles from the road. I believe this is one of the primary purposes of the program. Normally the trade ins are resold thus still out there burning fuel at the higher rate. Now they are off the road completely, furthering the stated goal of increasing the US fleet avg MPG. Now whether this is a worthy goal is another debate...

Can GM Really Abandon Trucks and SUVs?

From Miken : "It's very difficult for a car company to profitably build these small cars in the U.S., so the logical thing for the multi national companies to do is build them elsewhere and bring them in. That not only applies to the UAW companies, but the Toyota Yaris, Prius and Honda Fit are built outside this country and imported.

So, as often happens, the government is working at odds with itself. They are driving auto manufacturing away, while pretending to help preserve jobs."

Probably one of the most poignant comments I've seen, and a point missed almost entirely in the media and by the govt. This is truly the heart of the matter.

Lindmark has another good point - GMC buyers pay a premium over Chevrolet buyers for the presige and quality (percveived or real). Same reason Honda sells an Accord for more by calling it an Acura TL. Same for Nissan/Infiniti and Toyota/Lexus and Ford/Mercury/Lincoln. GM's unique problem is that instead of 2 tiers which is reasonable, GM had originally 5 tiers from Chevy to Pontiac to Olds to Buick to Cadillac. This is the "excess brand" problem - there just isn't enought room for that much differentiation within one company using the same platforms and powertrains. But getting rid of GMC on the same principle would be a giant error - it is already a proven success (moneymaker).

Another comment - with as much public outcry as we seem to hear about needing higher mileage cars, it has been a fact ever since CAFE kicked in around 1977, that trucks have been the most profitable vehicles assuming reasonable fuel prices. The public (and govt) seem to vote one way with their mouths and another with their pocketbooks, and then bad mouth the auto companies for obeying market forces. If GM, Ford, Chrysler had been really savvy, they would have stopped making the unprofitable small cars in the US completely as Miken suggests, and gone to importing them from low wage countries ala the Chevy Aveo. How would that have gone over in the press, or with the UAW for that matter? GM could have just paid the CAFE fines like BMW and Mercedes do, as a cost of doing business. This would have made way more sense than building 300,000 Cavaliers a year at a loss of $2000 each (just 1 of many examples) just to avoid a few million $ in CAFE fines. Instead GM kept the jobs in the US and met CAFE standards, even if the prime motivator was to appease the UAW, it is what everyone wanted at the time. But as they say, no good deed goes unpunished...

We are the only country that has anything like CAFE - everyone else manipulates auto purchase behavior (ultimately fuel consumption) via fuel taxes. But we seem wedded to the bass ackwards CAFE approach which does nothing but confuse and inflame the public and cause our manufacturers to make ridiculous business decisions, while doing nothing except encouraging people to drive more, while not conserving fuel.

The People's Republic of America: See What Congress Is Doing?

Yes the whole thing is political posturing. BTW 150 million is 0.1% of the bailout 150 billion. Where's the outrage over the other 99.9%??

When Will GM Hit Zero?

"no credible analyst can testify to the financial prudence of manufacturing green cars, at least not yet"

Read it, learn it, live it. Of all the problems they have, the automakers should NOT be taking beatings from the Senate clowns and Nancy Pelosi for making cars that will sell at a profit. That much is hard enough while our industry is being plundered by Japan, Korea, and China, Inc. No more whining about Hummers and SUV's!!! The car business is not "build it and they will buy buy" like making a baseball diamond in a cornfield. $6 gas will certainly create customer demand (with wallets, not hot air) for better mileage, and a natural response by the automakers in making high mileage cars - works like clockwork in Europe, GM and Ford included. So yell for a gas tax, and the rest will take care of itself - profitably.

Detroit's Big Three and the Democrats' Economic Illiteracy

There are plenty of mature US companies - IBM, 3M, Boeing to name just a few - with big legacy costs due to health care and pensions. In the past this was called being a good corporate citizen. When did it become mismangement? Apparently when the US govt, starting with Reagan, adopted a "free trade" mantra. The table was of course tilted toward low cost foreign producers who have the advantages of low wages, lax environmental standards, import barriers, and nationalized health care in many cases. In the auto business, Korea and Japan have essentially closed home markets and plenty of cooperation between govt and their auto companies. The US transplant factories were basicaly them throwing us a bone to not inflame public opinion, and yes even there they have a great cost advantage. Of course our companies suffered and many have failed - steel, textiles, electronics, etc - they have been bled dry for 25+ years by our own idiotic trade practices and a lack of coherent industrial and energy policy. This picture is a lot bigger than the automotive business. The auto companies are just the latest in a long string of companies to hit the wall.

Let the Detroit Automakers Fail

One of the things you will get with a reorganized GM/Ford is a lot fewer US assembly plants and therefore US automotive jobs. Consider this - Korea, Mexico, and soon China are the choice global locations for manufacturing low margin products of all types. Until we get some "fair trade" instead of "free trade" policies in place, this will continue in all industries. Low margin (read small and cheap) vehicles are no exception. It is why the Big 3 were reduced to this vulnerable position in the first place and why they cling to HIGH margin (read - big and/or expensive) vehicles and why they fight CAFE. They cannot make a profit on low margin vehicles made in the US, and never will. But if they had tried to move Cobalt/G6/Malibu production to Mexico for example, the UAW would have gone out on strike. GM realistically hasn't had the resources to try and break the UAW for over 10 years. They blinked at the last attempt in the strike of 1998, caving in at the end. At that time II don't think they ever conceived a serious threat of going bankrupt, so caving to the UAW seemed the lesser evil at the time vs. having a really bad fiscal year. Now with their backs against the financial wall, there are no resources left to try breaking the UAW. Bankruptcy is the only answer short of some huge cash infusion. So go ahead and hope they go bankrupt, but realize with the "free market" still the dominant force in play, Democrats and Obama notwithstanding, and cheap wages/less regulation just across the border, these jobs will leave the U.S. for good once the UAW millstone is removed from around their necks. The Toyota, Honda, etc plants in the US will be next. They were only put here to appease anti-protectionist opinion in the US, There is no good reason they wouldn't freeze new plant construction in the US and put all new investments in Mexico once the reorganized Big 2 or 3 start doing it, undercutting even the Honda and Toyota US wage costs. The problem is a lot bigger than the car companies and involves US trade policy since Reagan. I predict we will get a lot worse off before public opinion shakes off the "free trade" brainwashing that has been foisted upon us these 25+ years.