Should the big 3 be bailed out?

[APXD 30]

cjbcpa wrote:

Off topic but relevant, did anyone see the latest Pano. Porsche only sold something like 185 Boxers & Caymans nationwide in September. That can't even be one per dealership. Makes me wonder how the Porsche dealer network will survive.

Answer:





















+ Cayennes were strong. Don't forget that Obama's campaign promise, a Cayman in every garage

[emayer]

+1  Good point.   The Cayenne was the financial saviour for Porsche, and the Panamera will certainly help.  Diversification is key!

BTW-  The 2010 Cayman/Boxster revision is set for intro at the LA Auto show next week.  I get the sense the timeline on this was moved up a bit....

[Brian Minkin]

cjbcpa wrote:

CB

Off topic but relevant, did anyone see the latest Pano. Porsche only sold something like 185 Boxers & Caymans nationwide in September. That can't even be one per dealership. Makes me wonder how the Porsche dealer network will survive.

It is tough for all dealers right now regardless of brand. Of course that is only the picture for new car sales and Porsche dealers sell used as well and make money on service and parts sales. I am sure their business is slow but unlike most car dealers their business plans are not based on moving a high volume of cars to keep the doors open.

Of the dealers that I service that say they are doing "OK" despite the economy are stores for Lexus, Infinity and Acura. Expensive luxury sport sedans are still selling at a decent pace. I think Porsche is correct in moving into this market and will fair well with the new Panamera. I have met many first time Porsche owners who's first Porsche was the Cayenne and I am sure the Panamera will attract first time Porsche buyers as well.

[Brian Minkin]

Some facts to stir further discussion on the original topic.

The UAW contract that they say is full of concessions is not exactly so.  In this contract new union members will work at wages competitive with non union plants such as Toyota.  These people will make about $35 an hour including all benifits.  Current union members however are paid $76 and hour including benefits and are not taking a cut to save the industry.  Yes they have given back a little in the cost of health care and other benefits, but the biggest piece of the pie which is the hourly pay of current members certainly does not help the big 3 sell competitive products and make a healthly profit margin.

[emayer]

Brian Minkin wrote:

Some facts to stir further discussion on the original topic.

The UAW contract that they say is full of concessions is not exactly so. In this contract new union members will work at wages competitive with non union plants such as Toyota. These people will make about $35 an hour including all benifits. Current union members however are paid $76 and hour including benefits and are not taking a cut to save the industry. Yes they have given back a little in the cost of health care and other benefits, but the biggest piece of the pie which is the hourly pay of current members certainly does not help the big 3 sell competitive products and make a healthly profit margin.

Agreed.

I'm not sure of the US structure, but in Germany a Union representative sits on the board of the automakers. Not that their structure is perfect, and one could certainly argue a possible conflict of interest, but having inside knowledge of the health of a company likely promotes more reasonable dialogue and a sense of ownership. What strikes me about all of this is that we've seen this situation evolving over quite some time. The desire for a quick dollar on both sides of the table has now crippled long term survival....

As an aside though relevant to this topic, what do you make of the proposal to end secret ballots for dertermining unionization? I'm not well briefed on this, but it seems rather undemocratic and a way for unions to pressure employees to sign on....

[ccm911]

You know what the real question is here?  The Americans have built crap for the past fifty or so years.  Are we now to believe that an American can actually build a quality car?  What changed?  How about nothing!

A bailout will only prolong the suffering.  Time to pull the plug and get on with life.

Americans have already "voted" on the future of the big three by refusing to buy their shoddy wares. 

[APXD 30]

ccm911 wrote:

You know what the real question is here? The Americans have built crap for the past fifty or so years. Are we now to believe that an American can actually build a quality car? What changed? How about nothing!

A bailout will only prolong the suffering. Time to pull the plug and get on with life.

Americans have already "voted" on the future of the big three by refusing to buy their shoddy wares.

OMG, I agree with Chris. It's nice that after all the politics associated with the the election we can find some common ground. (Although my official position is that his is all Obama's fault ).

[ccm911]

Welcome to the new America!  Time to get on with business.  We all need to "cross the aisle" every now and then.  No more "Party Politics".  Just because I vote for one party, I hardly agree with all of their rhetoric.  Just choose the lesser of two evils.

No more fighting, a lot of work ahead.  We need to get back to really getting the whole Term Limit issue solved.

[Brian Minkin]

ccm911 wrote:

You know what the real question is here? The Americans have built crap for the past fifty or so years. Are we now to believe that an American can actually build a quality car? What changed? How about nothing!

A bailout will only prolong the suffering. Time to pull the plug and get on with life.

Americans have already "voted" on the future of the big three by refusing to buy their shoddy wares.

American built cars from the big 3 have improved in quality and as someone who works on their product every day I believe as far as quality they are world class. (I am not commenting on design and style here) Actually the quality of imports is dropping as they try to save weight and money on their vehicles. Also the amount of electronics on all vehicles regardless of brand makes a lot of unsatisfied customers as electronic failures are prevalent problems on most vehicles today. Unfortunately the American public has such a bad taste in their mouth from the years of the big 3 building junk that it is hard to get many consumers to look at their product today.

A big part of the problem the big 3 faces is a market with more competitors then ever before. Global trade and the Free Trade Act have made the USA an open market with no import tariffs so foreign manufactures can compete here easily. It appears that in 2009 we will start to see Chinese product being marketed here adding another division to the slice of the pie.

With the pie being sliced more ways then ever before, even as the economy emerges from recession it will be very difficult for the big 3 to maintain market share. So it seems that bailing out the big 3 without them seriously restructuring their business and downsizing makes little sense. For the big 3 to get bailout money from congress I think they need to present a plan for the future rather then grapple for money as they are now doing. They are able to compete in markets outside of the USA with product that sells well and they have a sizable market share. So it would seem that some where inside these dinosaurs are people that know how to build product and market it that would give them the same results as they get else where in the world. They can not however expect greater market share then they have in other parts of the world here with the global market the world now lives in.

They say that if they go bankrupt no one will want to buy their product because they will not be sure they will be there to service it. But going bankrupt and reorganizing seems to be the only way possible for them to restructure and downsize as the union has a strangle hold on them now and to be successful they need to get out from under this. I think they can emerge successfully from bankruptcy as smaller more efficient companies. If congress does bail them out and they do not change their way of doing business it will only lead to more begging as they fall deeper in the hole they are in.

Obama will bail them out in 2009 which will save them from going into bankruptcy. So this drama will continue far into the future.

[emayer]

Just had another thought (sorry!)......

There was no bailout for the German and Japanese auto manufacturers after having been reduced to rubble during WW II.  How did they survive?  Restructuring, rebuilding, and branching (initially) into other needed industries.

The point that America has made their choice is well stated.  Instead, we should be forward thinking and consider opportunities for these firms following their collapse.