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Automotive News & Views Do You Favor A Government Loan To The Detroit 3?
3958 messages, Last post on Oct 02, 2009 at 4:52 PM
You are in the Automotive News & Views Forum. Your Hosts are steve_ & claires
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Replying to: gagrice (Nov 26, 2008 5:31 am) I think you got it! I think the Big 3 would love to get out of their commitments in the U.S.A. They could make money if they were only producing and selling overseas. Of course, if they stick around and can collect another $25 billion, then why not! One other thought, why doesn't Mexico and Brazil come up with some of the $25 billion?
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Replying to: lemko (Nov 26, 2008 6:40 am) It is perception of worth. The Disney board thought that Michael Ovitz was going to make them lots of money. He turned out to be a bumbling idiot with a good lawyer writing his contract. It cost Disney $140,000,000 to get rid of him. Franklin Raines as CEO, took $100s of millions in bonuses from Fannie Mae. Rather than have a scandal in that pseudo corporation they forced him to retire. He got to keep at least $110,000,000 of his ill got gains. Both examples are what our executives in this country have evolved into. I believe any company that receives tax dollars to survive should have automatic caps on salaries, bonuses and stock options. I liked McCain's idea that those executives would be limited to pay equal to the highest public offices.
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Replying to: driver100 (Nov 26, 2008 7:21 am) I imagine they did give some kind of incentives to build there. Are they making money in those locations would be the question to ask? I know GM has asked Germany to bolster their Opel division. Canada has a lot to lose also with GM and Ford closing up shop. |
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Replying to: tired_old_dave (Nov 25, 2008 11:43 am) This has been occurring since the early 1970s. It didn't start in 2000. tired_old_dave: While the fear is now deflation, how does keeping the printing presses working overtime not produce a debased currency and hyper-inflation or just ... Inflation occurs when too much money is chasing the same number of goods. So much wealth has evaporated over the past year that these injections of cash won't replace it. Recent actions of the federal government show that someone has learned from history - more specifically, the history of this country from 1929 to 1933. The stock market crash didn't cause the Great Depression. It was a necessary correction to rampant speculation in the stock market, which began around 1927. Several factors turned what should have been a short, sharp recession into the Great Depression. The first was the Hawley Smoot Tariff passed in 1930, which was designed to "protect" American industries, but ended up choking international trade. The market for American goods dried up, and the economic downturn spread to Europe. There was a thriving export market for American cars at this time (particularly for luxury marques like Packard and Cadillac), but foreign countries slammed that door shut in retaliation for the American passage of Hawley Smoot. The American manufacturers thus faced the loss of export markets at the same time that domestic demand was slackening. The second was a goverment concerned about inflation, when the real problem was deflation. The Federal Reserve choked off the money supply at a crucial time. It was akin to treating someone for a fever after he had frozen to death. This is why the government has been injecting cash into the economy. Another factor was a rising tax burden between 1929 and 1932. Note that even Obama has backed off on his plan to immediately repeal the Bush tax cuts (now his plan is to let them expire as scheduled), because he has advisers smart enough to realize that government should not raise taxes during an economic downturn. As for bailing out financial firms and not automakers - the simple fact is that financial firms are more important to the economy than, say, General Motors. Again, our government has learned from history. The collapse of several financial institutions during the early 1930s was a significant factor in worsening the economic downturn. That is not to say that more oversight shouldn't accompany the government aid. At this point, the best option for General Motors is some sort of pre-packaged, government-approved bankruptcy plan that allows the company to use the tools available in a bankruptcy filing to cut costs and slim down without an actual filing, which would scare away customers.
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Replying to: gagrice (Nov 26, 2008 7:29 am)
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Replying to: kdhspyder (Nov 25, 2008 4:09 pm) One, GM should keep its full-size SUVs. There is still a market for those vehicles, and GM's are the best of the bunch. GM's mistake wasn't in making those vehicles, it was in betting the farm on them Two, Lincoln is still viable, especially as Ford works to combine its dealer network. Around here, several Lincoln Mercury dealers have closed down, and one Ford dealer has taken on the franchise. If Ford and Lincoln are combined at the dealer level (as they were, ironically, prior to World War II), then dealers will have Fords to appeal to the mass market, and Lincolns to appeal to more traditional, upscale buyers. |
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Replying to: grbeck (Nov 26, 2008 7:57 am) I agree, the Suburban has been around for decades. It has survived all the ups and downs. As long as someone has a family and needs to tow something, they will have a market. Sure this can be served by a crew cab pickup, but the pick up still can't haul over 5-6 people (bed doesn't count). |
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Replying to: grbeck (Nov 26, 2008 7:57 am) That makes a lot of sense to me. I was at the Honda dealer this week and the Acura dealer is across the street. I would have liked to have peeked into an Acura, but I wasn't going to walk over there. I bet Ford could manage quite a few upsales by having Lincolns in the showroom. Of course there will be guys like me who go in to look at a MKZ and decide that the Focus is pretty darn nice for half the price.  "Rumors howling in Detroit's November winds point to brand-burning as one of the primary ways the companies plan to demonstrate to Congress they will be able to sustain their operations in a U.S. auto market that is expected to be decidedly unkind for all of 2009 and possibly well into 2010." For Bailout Blueprint, GM, Ford Might Finally Burn Rubber on Underperforming Brands (AutoObserver) |
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Replying to: lemko (Nov 26, 2008 7:51 am) I agree and good point. Driver100 Plan is to limit Presidents pay to 15X top paying salary in the company. Example: If top class worker makes $60,000, Pres gets $900,000 Max. Other execs top out at 10 X = $600,000 Could have bonus plans like extra percentage based on increase in sales of same percentage. I don't believe too many execs actually have a value of $100 million dollars a year...no human being is that good. |
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Replying to: steve_ (Nov 26, 2008 8:37 am) At this point, for Ford, a sale is a sale... As for the article on GM and Ford eliminating brands - I would disagree with some points. At Ford, the Mercury unit has been a black hole for decades and simply must go by any rational assessment. Mercury doesn't bring anything new to the customer, but the vehicles are basically Fords with different grilles, headlights and taillights. The investment to create a Mercury from a Ford is next-to-nothing, and the vehicles receive virtually no national advertising support anymore, so the division isn't really costing Ford much money. From a financial standpoint, it's not a black hole. The company has stressed it has faith in the Lincoln luxury division - and it would be hard to suggest Ford forge ahead with no premium-market presence - but in coldly clinical terms (the kind that might be necessary to mollify a Congress running on high-horsepower skepticism of Big Three management acumen), Lincoln doesn't work and hasn't since the 1960s. Lincoln was quite successful during the 1970s, when it set sales records with the "standard" Continentals and Marks, and again during the mid-1980s and early 1990s, when the Town Car was selling very well. I'd ditch the MKZ, develop the MKS and upcoming MKT, keep the Navigator and figure out how to build a rear-wheel-drive Lincoln off of the next Mustang platform. And either kill the Town Car or update it with new styling, a better chassis and a MUCH more luxurious interior.
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