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After a Big 3 bailout, what then?

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IDemo Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 10:51 AM
Original message
After a Big 3 bailout, what then?
Let's assume that Detroit, with hat in hand and tin cup held out, receives its $34B bailout or loan; it doesn't matter which for the purposes of this discussion. It looks like a done deal this morning. Hell, let's give them an even $100 billion and throw in leather seats and satellite radio for everyone.

What happens then?

Even if the big three get their acts together and miraculously engineer, build, and market 50 mile-per-gallon hybrid vehicles within the next three years, where are they planning on selling them? The bottom has dropped out of car sales along with virtually every other retail sector. Even the makes and models people normally can't get enough of are stacking up at the loading docks.

As well, consumers who might otherwise be in a position to buy are facing much tougher conditions to secure car loans.

The price of gas might appear to be one bright spot on the map, but don't imagine for a second that $147/barrel oil and higher won't be seen again. Despite whatever else happened in the oil futures market to result in $4 gas, world oil exports are going to begin declining at an alarming rate, and not in fifty years from now, but the next few.




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Idealism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 10:58 AM
Response to Original message
1. That picture is actually of imports, not from the Big Three
What does that tell you?

Automakers from around the world are in trouble, asking for bailouts left and right.

So that means we should be the only country to let their automakers fail, thereby helping foreign makers grab larger market shares? China would just LOVE to be able to buy the remnants of say GM for the cheap, considering the only thing holding back their car industry is a 50% higher defect rate. So lets just slide ever farther into a trade defecit, and let China become more self-sufficient so they no longer need our consumerism. Once they no longer need our purchasing to run push their economy, guess what -- They won't lend us any more money. Game over, time to print paper like its goin' out of style.
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AndyTiedye Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 11:03 AM
Response to Reply #1
2. The Chinese Must Build Cars The Way They Make Baby Formula
50% higher defect rate.


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IDemo Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 11:09 AM
Response to Reply #1
4. I didn't say those were domestics
I would think the phrase 'loading docks' would make it self evident they are imports. Of course the auto market sucks right now for all manufacturers, foreign or domestic. But where exactly do you believe a continued production run of current models is going to sell? Are they going to simply pile up by the thousand until a miraculous economic turn-around occurs? I don't see that happening anytime soon, Next year? Zero chance. The following? Maybe. And, as oil supplies contract, the picture is going to get murkier.
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Idealism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 11:30 AM
Response to Reply #4
5. Last time I checked:
GM was the most sold brand of automobiles on the planet in 2007.
General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of nearly 700,000 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.

Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.

Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.


I think its clear that the photo has been/is being used deceptively by the media as a visual reinforcement that "nobody buys these cars."

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IDemo Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 11:47 AM
Response to Reply #5
6. No one is arguing which manufacturer is larger
The fact is, all manufacturers planetwide are experiencing severe downturns. GM, -41%, Ford, -31%, Toyota, -34%. The point of the OP is that there exists no reason to believe this trend is going to reverse itself anytime in the near future. And I see no reason to believe the Big Three will be any different than AIG when it comes to bailout money: more will be asked for, and sooner than later. You can take that to the bank, if you can find one that is still solvent.
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Idealism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 12:05 PM
Response to Reply #6
7. Ford is still solvent, but thats besides the point
This is a governmental failing just as much, if not more, than the Automakers. Japan automakers (Toyota, Nissa, Honda) have been receiving government subsidies ever since their inception for simply building cars. On top of that money, they get more money for each "clean car" they build, yet Toyota (one of the first to produce fuel-cell technology en mass) STILL builds and sells Prius' at a loss. A couple thousand dollar loss, I might add per car. The technology is still relatively new, and while the Big Three are getting to the party late, it is not really at a disadvantage relatively speaking. Toyota spent billions of R&D that Detroit won't have to as the technology becomes more mainstream. The government last year authorized a $25 billion fund for the Automakers to help them develop greener cars, yet they haven't received a penny of this yet due to Congress being slower than molasses. The point is Ford was restructuring two years ago and was looking good until this economic downturn, and they are still better off solvency wise than either of the other domestic automakers. Chrysler was in the middle of cutting cuts, which Nardelli did (to the tune of a $2 billion per year less) while having the most efficient workers of any automaker who has factories in the United States (foreign included). GM should've cut a few brands earlier than they were planning, but people didn't foresee this crisis happening, and until it did GM, Ford, and Chrysler's sales were humming along better than their foreign competitors. The trend won't last forever, but the good thing is restructuring during a downturn means you can always hire new people when things get better. And crisis helps corporations change their business models, which will happen at all of these companies much faster now, thanks to their brush with certain death.
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ben_meyers Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 11:05 AM
Response to Original message
3. What then? Harley Davidson and Fleetwood RV's
are both having problems too. Newspaper publishers and other Media outlets are bleeding red ink. Hell, Donald Trump missed a 53 million dollar interest payment last week, what happens to all of his employees if he goes under?
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