The big American auto makers fear bankruptcy

[LaFille]

...And now would rely on govt help to survive. (Click for article summing up the situation.)

The idea of Ford and GM disappearing was very impressive to me; even if they lost a lot of ground to the Japanese in the past decades, they remain a huge symbol of the American power (and how much about historical importance). Car factories closing here and in Ontario was making the news regularly since that time (along with other companies moving bases to find cheaper labor), but the whole company's future altogether being threatened that much...

[Glance A'Lot]

It is indeed peculiar that the American Cars, which once were everybody's dream, nowadays so completely lack something salient in car buying decision - image.

I claim that no car is bought on purely factual criteria - as much as buyers try to rationalize their decision...

Germany's Ford and GM daughters both build competitive cars, that are constantly beaten (in sales share) below their factual value and technical merit by their Volkswagen/Audi counterparts.

Audi showed what brand building can achieve when they started their campaign in the eighties - it took them over 10 years, but by constant development of the brand, they made it from an insignificant Volkswagen tributary to a premium brand.

America's car industry has a looong way to go - a journey they should have started on 20 years ago, at least.
I'm not sure wether the big, multi-brand corporation basically competing against itself in its market share is the best route.

An automotive industry in the USA will survive - but in its present, concentrated form? Maybe not, and may be, that is for the better.
Maybe not for the shareholder, at least in the short run, but for the customer.

[Hildor]

Wow, impressive news indeed. I wonder how these things will turn out. Can't really imagine an America without those large auto makers....(by that I don't mean that I think cars will dissapear from America ofcourse, it's about those large auto makers)

[LaFille]

I think they underestimated a lot the gas question and the trend in environmental awareness... Again a year or 2 ago, while all the others were going with low-consumption and smaller machine, they were releasing a bunch of muscle cars like the GT and the Charger... And we really didn't come across many of those big thirsty critters on the road.

Last week for the first time I saw an ad from one of those (not sure which, GM or Chrystler) about a completely electric car model that they said would be released in 2010, however. It was a flagrant lobby thing, but it's the first big company that I see announcing such thing with a clear planned released date. The model was called Volt.

[The Sonar Chicken]

While the gas question and trend in environmental awareness were probably significant factors, isn't it usually poor management that has got more to do with a company's collapse?

Edit: Also, if the auto industry were so important, why didn't the gov or anyone take action faster? I guess they were all too busy with the ride, eh?

[Glance A'Lot]

While the gas question and trend in environmental awareness were probably significant factors, isn't it usually poor management that has got more to do with a company's collapse?

In Europe we're paying up to $2/litre (That's $8 to the gallon!) - so it is as much a 'wallet awareness' as an environmental one - maybe even more so...

As to poor management, I just read an article on 'Marketing myopia', which to some extent seems to fit here:

"The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railraods are in trouble today not because that need was filled by others (cars, trucks, airplanes) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed they were in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad-oriented, not transportation-oriented; they were product-oriented instead of customer oriented."
Theodore Levitt, Harvard Business Review (1960!)

Hollywood and Television are another example; they're in the entertainment industry, not the movie industry.

I see parallels there in the automotive industry (and not just the American one!). Focused on building cars, for a clientele that is mainly in their marketing imagination - not on a way to ensure individual transport within a finite environment that grows denser and denser on a global scale.

[Terrordar]

If anything I think we need more rail, to be honest.

But back on topic:

The Americans will bail out the car and truck industry, especially since Gm has actually made their battery car.

[ss]

Nov 21, 2008 22:50:32 GMT Terrordar said:

If anything I think we need more rail, to be honest.

But back on topic:

The Americans will bail out the car and truck industry, especially since Gm has actually made their battery car.

I agree, we need more rail, and they are building a "Light Rail" right near my house. It will be for people only but the set up will be great to and from the "downtown" area to the residences. Will be running in 2009/10.

I hope the let the "big 3" go into bankruptcy and restructure. It will be painful, but it is not the governments job to say who will succeed and who will fail. Compitition will rectify that problem.

I agree with Glance, they have the wrong mental state concerning reality.

[LaFille]

Mind that underestimating the customers' wants/needs can be counted as management flaws.

Public transportation is great and I agree we need more, but I doubt people will stop buying a lot of cars for that (unless they're hardcore citizens who never need/want to go elsewhere). It's way too convenient to be able to go from A to B directly and without having to take rigid schedules into account, without talking about all the psychological/emotional/cultural aspect of driving.

I don't know the implications and what would be best in this particular situation... But I'm not a fan of neoliberal economics.

[Elliot Kane]

I'm pretty sure the US govt will bail out their car industry. Too much national pride involved for them NOT to - and that's without the immense hit their economy has already taken. The car industry is a major employer and there's a ton of other industries that would be damaged, too, if the big guys went bust.

Europe can sulk and complain about fair trade all they want on this one - they're on a hide into nothing (And hypocritical besides).

[Elliot Kane]

Mitt Romney on the US car maker's crisis

[The Sonar Chicken]

Actually, in theory that'd sound really good: letting them pay for their own mistakes. In reality? Not so good unless you force them to dissolve their companies and create new ones out of them. Isn't a lot of America's population employed by the automobile industry?

But still, they'd have to weigh out the "cost" of letting the companies fall and the "cost" of the amount of bailouts the companies will get: financially, economically and so forth.

But still, Obama is right to not give out "quick answers" right now on this issue, despite annoying lots of Democrats. Fast and flashy promises won't help anyone. I think that only after tons of planning, strategies and discussions, research, etc. will the pple-in-charge arrive at a proper solution.

[The Sonar Chicken]

Carmakers' bailout pleas hit Senate skepticism

www.chron.com/disp/story.mpl/ap/business/6147928.html

[Elliot Kane]

It's finding the right balance. No govt can bail out everything, but they do need to make sure the economy doesn't take any more serious damage. I know I don't envy anyone trying to walk that line...