Why do you think GM and Ford sales are dropping?

Why do you think GM and Ford sales are dropping?

IMO I think GM's quality and exterior designs are just as good and/or no worse then Toyota's and Honda's so I think there are other factors that are far more significant that are causing the downturn.

Everyone has the mindset that foreign cars are far superior and are all much more reliable. Working for Enterprise, those Honda and Toyota people are extremely loyal.

I declined to vote, because amazingly, the most obvious reason (to me anyway) was not listed. Onerous agreements with the UAW have left GM/Ford with a horrible cost structure and unfair cost dis-advantage in the marketplace.

I declined to vote, because amazingly, the most obvious reason (to me anyway) was not listed. Onerous agreements with the UAW have left GM/Ford with a horrible cost structure and unfair cost dis-advantage in the marketplace.


UAW contracts might have hurt GM profit margins and forced GM to offer huge incentives to be competitive, but I don't think that alone would explain why sales are dropping on the retail level.

I do agree that UAW and white-collar/management misteps explain why GM's profits have been so bad during the last 4 years of economic expansion.

Everyone has the mindset that foreign cars are far superior and are all much more reliable. Working for Enterprise, those Honda and Toyota people are extremely loyal.
Yep Toyota and Honda have built a very strong reputation from the cars from the 80s and early 90s. Domestics during that period were different types of cars. More value oriented than doing what it took to make the cars the best. The people in charge of the domestic cars wanted profitable cars not the best ones on the market. As a result they used cheaper interiors, didn't update models enough, and generally had harder times with small problems, sensors and such, making the cars seem less reliable. So the perception that was created during the 80s and early 90s is what the domestics have to deal with and as a result sales drop. The only way to turn perceptions around is to out-do the competition in every way with every model, something we are begining to see at GM with its GMT900s and other models new interiors, at Chrysler with the LX cars, and at Ford with its F150. But while they are all on the right track when it comes to certain models or options or features we don't see the kind of commitment that is needed to overcome this perception problem.
Ford seems to have said "Ok being the highest volume line in the US doesn't matter anymore, we are just going to get smaller and more profitable." Which is their perogative.

GM seems to be headed on the right track but they have to do some things 100% or the perceptions will just continue. The W-body needs to die, the Epsilon Malibu needs to step up and beat EVERYONE in its class. The Cobalt while nice is not going to pull the attention that the new Civic does. It needs to step up the game, which I hope the MCE does. The GMT355 trucks need to be overhauled and get GMT900 level interiors, an optional V8, and the 3.6 DOHC V6 NOW! Heck throw in the extra 5 speed autos from the CTS since the new CTS will get 6 speeds across the board. A decision needs to be made with Buick and Pontiac. Saturn is clearly defined, along with Cadddy, Hummer, and Chevy. Pontiac and Buick are poorly defined and are in DIRE NEED of direction. Without the direction and new models the brands are going to stay as low volume/low profit brands until GM axes them.

Chrylser seems to have a split personality when it comes to its model lines. While the LX cars are the hit that Chrysler wanted them to be I don't see the new Cloud cars doing the same to their segment. The Sebring looks odd because it was designed as a 5 door, you can tell by looking at the short trunk and weird C-pillar. The Ram is doing well, though it needs better gas mileage, but the Dakota is in a weird place. It looks a little odd, is only available as extended and crew cab, though I doubt the Regular cab sales would have set any records it should have been offered. The interior is VERY cheap and poor looking. The Caliber looks to be a hit but the Jeep Compass should have never made it pass the drawing board. The Dakota is I think doing OK but nothing like the GMT900s are doing. The Chrysler Aspen will likely fare even worse. It seems like Chrysler will commit 100% to some programs but only 50% to others.

GM marred its reputation badly enough and pissed off enough of their customers badly enough with their KNOWINGLY poor quality vehicles that I imagine they aren't going to see a drastic improvement in their public perception for at least several more years.

Putting out cars with competetive perceived quality may help the issue but it's kind of a 'trust' issue. Like cheating on your wife for a couple of decades and then expecting her to just take you back because you brought her roses the last few weeks and apologized.:p

Aside from that, the fact that they are too large for their economic position hurts them a lot with all the downtime their factories are forced to incur (or be forced to overproduce and thus cause new vehicle sales prices to plumet along with resale value.

GM marred its reputation badly enough and pissed off enough of their customers badly enough with their KNOWINGLY poor quality vehicles that I imagine they aren't going to see a drastic improvement in their public perception for at least several more years.

Putting out cars with competetive perceived quality may help the issue but it's kind of a 'trust' issue. Like cheating on your wife for a couple of decades and then expecting her to just take you back because you brought her roses the last few weeks and apologized.:p

Aside from that, the fact that they are too large for their economic position hurts them a lot with all the downtime their factories are forced to incur (or be forced to overproduce and thus cause new vehicle sales prices to plumet along with resale value.
After the UAW negotiations we will see a HUGE drop in overproduction and downtimes, IMO.

Should I......even bother? WTF. The MEDIA HAS BRAINWASHED THE PUBLIC! :p Yes we had some bad product for a spell. Yes the UAW deals haven't helped things. Yes the media are a bunch of anti-capitalist liberals, who would love nothing more than to bring down the big 2, and will take full credit once its been achieved.

IMO I think that the 0%-financing buying spree that many warned was going to steal future sales is now coming to fruition. New cars are now more reliable then ever before and people will most likely either have to keep them longer since resale values on truck/suvs are only getting worse, or they will take a huge loss and buy a lower priced car with whats left. Out here in SoCal alone there is a huge spike (bigger then normal) within the last year of people buying used Toyota Corollas and Civics to save on gas.

Over the last 4 years people bought new cars with 0% interest and either bought new homes or refinanced and remodeled their existing ones and now their budgets are maxed out.

Perception that Toyonda make high quality, hi-tech, fuel efficient and value priced cars. Perception is everything.

Perception that Toyonda make high quality, hi-tech, fuel efficient and value priced cars. Perception is everything.

Voted the SUV option. It's pretty obvious that GM & Ford gave away the sedan market because they were putting most of their focus on trucks.

I still think a lot of it has to do with many of the cars that they make not being so great.

Sure, they've made a bunch of steps in styling and quality, as well as interior quality, but it still seems like they don't really focus on the details.

For example, I drive manual transmission cars almost exclusively. I know I'm in the minority, but I wish they'd offer some here an there and when they do, actually put forth the effort to have it shift smoothly and effortlessly like a Honda or BMW or VW, etc. It's such a buzzkill when you try to drive a new domestic car and the shifter sucks. Every magazine complains about this.

They also need to work on the steering feel and handling precision, as well as putting OHC engines in models with sporting pretensions. The next car I buy will have to have an overhead cam engine (unless it's a V8) because they're smoother. I don't care if a pushrod V6 is technically faster. It isn't as fun to drive agressively.

All these things mean it's highly unlikely that I'll buy a domestic car next time I buy a new car. I want GM and Ford to succeed, but the details are a deal killer for me. I'm not buying a new car anytime soon though, so they've got time to fix the details. :)

I think theres several reasons for GM's declining market share.
1) Fresh in my mind is the brand loyalty they created within their own divisions and customers. So many people love chevy..hate pontiac, olds, or any other love/hate combinations...and dont care if their all GM or not. So when a brand stops offering a car they like, they refuse to switch to 1 of the others. Instead, many customers go the import route.

2) I think GM has forgotten about the youth market in the 80's and 90's. Many kids grew up wanting civics, nissans, eclipses and other rice and GM wasnt marketing a car for the age group that could compete.

3) The all out switch to fwd models after killing the G-body. I think they still needed to keep several rwd cars from the 80's - 90's to retain their buyers and didnt.

4) killing off several platforms and Oldsmobile over the last 10 years with no real replacements...
B-body.(caprice, fleetwood, wagons) h-body(lesabre, bonneville, 88, 98, Park Ave) f-body(firebird, camaro)

5.) letting great cars go stale through minor refreshes and poor quality. Creating the Why would I buy a new one when mine looks almost the same exact same as it. (lesabre, bonneville, cavalier, grand prix, regal...etc)


6.) 3yr/36k warranty is worthless. Based on the huge leap into the market by hyundai with the better warranty. They sell cars almost on the warranty alone. I think that kind of warranty would be huge for saturn. No one ever has anything great to say about hyundai except for ..."I would think about getting 1 because of the warranty"

UAW agreements have nothing to do with sales.
(I wanted to get that out of the way 1st :) )

MustangKiller's on the right track. Plenty of cars were killed off because the profit wasn't huge. Instead of finding a cheaper way to make a product, there was the expectation that the public would simply move to other similar cars or the automaker would make far more money adding the avalible space for another SUV or truck line.

Consider these examples:

1. GM's B-bodies were discontinued to make space for additional large truck production. These cars weren't replaced. the mid sized cars were marketed to take their place.

2. The MN12 Ford Thunderbird & Cougar were good for 100,000 cars per year. Thunderbird actually outsold Monte Carlo by a thin margin the last couple of years. Yet Ford yanked them with no replacement. According to Ford, they weren't "cost efficient".

3. Pontiac killed it's Bonneville & Sunfire. Sure, Bonne wasn't that great of a car, and Sunfire was just a Cavalier, but Bonne equalled 30-40,000 cars per year and Sunfire at least that much. Both killed. Not replaced.

4. Camaro killed. A Chevy manager actually suggested that potential Camaro buyers would move to Monte Carlo and Cavalier. They didn't.

5. The last T-Bird (2 passenger vehicle) sold around 20,000 annually. Killed without a replacement. More sales lost.

This goes on and on.

Although some of these cars didn't sell in massive numbers making massive profit, they did sell and they still contributed to the bottom line.

How many sales would be added to GM if Bonneville, the B bodies, and the Sunfire were replaced? If GM still made another 50-70K F-bodies? I'd wager half million per year with these cars and Oldsmobile. Same story with Ford if they replaced cars they killed.


It isn't the UAW, or bad quality that has killed GM & Ford's volume. It's all the vehicles they killed without replacing them in the quest for more trucks, SUVs, and higher profits at the expense of keeping a broad base of vehicles so that when tastes and buyer priorities changed, they would have their tails covered.


....exactly what people were warning here when I 1st joined 6 years ago. :(

I feel there is no silver bullet, but I feel that product is a big part of it.

UAW agreements have nothing to do with sales.
(I wanted to get that out of the way 1st :) )

Actually indirectly they do. The agreements that make it (short term - which is what stock holders care about) cost beneficial to keep factories running and producing cars causes the market to be flooded with cars, this causes prices to drop and incentives to inflate. Guess what this does? Increases short term sales at the expense of killing resale value. Guess what one of the #1 factors that... at least any SMART consumer will consider when buying a car that they don't intend to keep almost forever? Resale value. It's a very real and sometimes THE most significant true cost of owning a new vehicle.

Short term sales go up, long term sales go down because people are afraid of bad resale on their new car, plus a bunch of the people who were going to buy a year later, just bought now and thus won't buy next year (which makes the effective sales totals for next year (which is now this year) drop). Oh and to top it all off people get addicted to the rebates, so when production is actually doing a good job of meeting demand and not much more, then people don't want to buy because they figure it's only a matter of time before the rebates come back.

Call it addicted to rebates, or cutting off your nose to spite your face, or stupid stockholders only concerned with a quick buck because it is ALL of those things... but a lot of the reason GM has to play its cards that way is because of those agreements that make it even more expensive to not run a facility than it normally would be.

For example, I drive manual transmission cars almost exclusively. I know I'm in the minority, but I wish they'd offer some here an there and when they do, actually put forth the effort to have it shift smoothly and effortlessly like a Honda or BMW or VW, etc. It's such a buzzkill when you try to drive a new domestic car and the shifter sucks. Every magazine complains about this.
Sorry to break the news. But manuals matter less and less each year...

Only 15% of new car buyers in the US say they'll consider buying a car with manual transmission, and by 2012, only 6% of cars will be offered with a stick.

(from the MetaFilter weblog)

So I hardly think that's a major factor in declining domestic sales. Maybe it matters in Europe, where manuals are still 'relevant'... hey maybe you should move to France? You'd fit right in:

All these things mean it's highly unlikely that I'll buy a domestic car next time I buy a new car.

Call it addicted to rebates, or cutting off your nose to spite your face, or stupid stockholders only concerned with a quick buck because it is ALL of those things... but a lot of the reason GM has to play its cards that way is because of those agreements that make it even more expensive to not run a facility than it normally would be.
100% Agree.

A Chevy manager actually suggested that potential Camaro buyers would move to Monte Carlo and Cavalier. They didn't.
Got data to back up this vacuous claim? Hmm. Didn't think so. How in the world do you know they didn't move over to those other cars, at least in some fraction?

I've been bloging about this lately and heres my 2 cents.

GM and ford obviously need to work out their union contracts in order to be profitable however, it dosn't matter if they can't sell cars, obviously.

American cars have a image problem, poorly built cars in the 90's cause Americans to not trust american companys. Most people are stupid when it comes to this and have "brand loyalty" which is nothing more then an attempt to make sence of an unknown (relateing to car overall build quality and longetivity)

Their is a general distrust and hatred towards america by americans, americans. I'm not a democrat or republican but the fact is most americans are democrats and when they as the voteing majority are in such a minority as far as laws and wars go, they don't like it. The leaders of this movement give the oil man physiq* (wonder why). So people commonly associate american companys with republicans which stand against their general believes. Conciously or not I think this greatly effects american buying decisions. Thats my theory anyway

Americans don't build the right cars! Its a fact, there is a large amount of people who like and need smaller cheaper and sporty cars. **(Importent) Ford and GM focus on the truck market because it gives them the biggest profit margin and their image in that sector is very good. Of course this makes sence, however, they ignore the long term effects of this. Younger people buy cheaper cars, when you buy a car you develop brand loyalty, when these young people get older and more established, they buy bigger more expensive vehicals which in turn - turn a better profit margin for GM and Ford. ***

0% Financing is NOT the way to go, it will produce a very short term gain. The problem isn't at all that american cars are to expensive, its that they have again a image problem and no matter how cheap they can get no one is going to invests 1000's into a car with questionable precieved quality

So heres my solution.
GM, Ford fill the airways with your environmentalist bs about development of alternative fuels and "helping to make a difference"

Have one of top guys come out. Do a commercial, talk about american history (ford especially) tell the public how confident you are in the products you sell that your willing to add an extra 20,000 miles of warranty to ANY competeing vehical because you believe you "build the highest quality vehicals in the world". Add a warranty over 100,000, wouldn't that be shocking?? Warrantied untill 120k! Advertise like hell and you fix the problem

90% of people don't care what, car and driver, consumer reports and JD power and associates have to say about the most "Reliable car of the year". They car about what they hear from their friends and neighbors. Bad remarks from others build a natural biased against american cars even when those people do research. They just need to FIX there image problem, get people to feel their car is reliable and they'll buy it then they become american brand loyalists.

Perception and the media.
2 biggest problems right there.

Sorry to break the news. But manuals matter less and less each year...



(from the MetaFilter weblog)

So I hardly think that's a major factor in declining domestic sales. Maybe it matters in Europe, where manuals are still 'relevant'... hey maybe you should move to France? You'd fit right in:

Well perhaps. But they still matter. But my point is that they still don't focus on the details. Other companies focus on them, that's why they win magazine tests, which domestic cars rarely do. If you read the articles it's almost always details or lack of refinement that does them in. Oh, and since most magazines are run by enthusiasts who prefer to run manuals in the tests whenever possible, a clunky manual all but guarantees a non-winning finish. Never winning a comparison test is more than enough fodder for most domestic car haters to survive on.

Most cars these days are pretty good. The details matter now more than ever - even on low volume products. The number of high volume vehicle lines and models declines every year. The attitude of your approach ("it's low volume so who cares") all but guarantees further market share declines.

Wages are down, living expenses are up. This is the first time since my early 20's that I've been having to live from paycheck to paycheck, dipping in and out of debt.

If the worst happened and my one running car went down, I'd be forced to scramble to fix it or buy a really old, used motorcycle. There are no other options.

Meh Ill give you there are perception issues. However, considering the whole lineup, a lot of the outgoing cars felt as old as they were. The new models are totally competitive with imports, but there are still a lot of butts in seats that say otherwise.

Additionally, I agree with Guy, there are a lot of vehicles they simply dont make, so people buy them from elsewhere, often at a higher price point. For all the years no one took Lexus seriously, Cadillac was putting out FWD rebadges, and no people rightfully see no reason to cross shop.

Got data to back up this vacuous claim? Hmm. Didn't think so. How in the world do you know they didn't move over to those other cars, at least in some fraction?


Don't need data.

Monte Carlo stayed static (and actually decreased over the years). Cavalier's buyer profile went unchanged.

Sure there's some small fraction of buyers that moved to something else, but if 5,000 potential Camaro V6 buyers moved to Cobalt, or Ford managed to get 1/10 of the last model Thunderbird buyers into Mustang Cobra convertibles, or GM managed to move 10, 20, or even 50% of Grand Prix buyers into sedan versions (all these numbers are extremely optimistic by the way), there is still a loss of sales. All these add up. In fact, almost all of Pontiac's sales decrease over the past 4 or so years can be traced to reduced product lines. Ditto Buick.

To throw something else into the mix, check MC's sales after Regal and Grand Prix coupes were discontinued. No Monte Carlo sales spike that made up the difference there either. Small increase, yes. Enough to make up even half or even 2/3 the difference? Nope.

Just pull up related sales records. You can do that at GM's media and Ford's websites. Both keep archives dating back several years.

The UAW is the favorite whipping boy for everything wrong with the industry. It's easy, coinvienent, and simple. Ditto blaming Japanese automakers. But then it seems there's collective amnesia where the complants of just 5 or 6 years ago were concerned. GM (and to a lesser extent, Ford) were killing off cars to send money and resources to trucks, SUVs (and in Ford's case, diversification) that at the time had a far greater return on investment.

Meanwhile, Toyota was adding models to their lineup, and expanding their influence (and volume) here and in Europe.

GM and Ford reduced their car lineup. Toyota expanded their car lineup.
Toyot's market share increased as people turned back to cars. GM and Ford's decreased. Not exactly rocket science.

Not everything I (or anyone) post requires charts and an entire detailed indepth report if you disagree. :lol:


BTW:
Regarding that issue of a Chevrolet manager claiming Camaro could be covered by Monte Carlo & Cavalier, here's the thread and the story:
http://web.camaross.com/forums/showthread.php?t=322519&highlight=camaro+monte+carlo+cobalt

30thZ286speed was also on the right course when he started this thread:
http://web.camaross.com/forums/showthread.php?t=416494&highlight=camaro+monte+carlo+cobalt

Don't need data.

Sure there's some small fraction of buyers that moved to something else, but if 5,000 potential Camaro V6 buyers moved to Cobalt, or Ford managed to get 1/10 of the last model Thunderbird buyers into Mustang Cobra convertibles, or GM managed to move 10, 20, or even 50% of Grand Prix buyers into sedan versions (all these numbers are extremely optimistic by the way), there is still a loss of sales. All these add up. In fact, almost all of Pontiac's sales decrease over the past 4 or so years can be traced to reduced product lines. Ditto Buick.

guionM -- I completely agree with your greater point, but I believe the data would show something very different than you are describing. A large number of those Camaro/Thunderbird/GP "sporty car" drivers probably did purchase trucks or SUVs instead of cars. Killing these cars in favor of trucks made sense at the time ... it's just that they never planned for what would happen afterwards.

I believe older model concepts (eg: the "personal luxury coupe") were in structural decline and it's not likely that sales would have rebounded even if there had been a model refresh. The problem is that GM/Ford never replaced these old 60s/70s concepts with new concepts that were appealing to the modern buyer (except SUVs).

This might be contentious, but I believe an "evolutionary" 5th gen F-Body would have been a failure 5 years ago. GM needed to hit the reset button, which they eventually did. Same argument applies to the Thunderbird. When people stopped buying SUVs, there's been no boom in Monte Carlos or Crown Vics -- people are buying new concepts like crossovers and Priuses.

As the resident car dealer on this board, my .02...

1) Most domestic car buyers don't need a new car yet.
GM pulled ahead soooo many buyers with 0% for 60 in late 2001, so think about it. Those people haven't even paid their cars off yet, on average have 60-75k miles on their cars, and aren't even needing a car yet. We've had almost FIVE YEARS of non-stop incentives from the Big 3!!!

2) We don't make any super-mileage cars
We don't make hybrids...which while they do not account for a ton of sales (aside from the Prius), they add an aura to their respective brand that filters down to the other models. But even then, a Civic 5 speed gets 40 MPG highway...a Corolla gets 38. When people are window shopping and see a Cobalt gets 34? There's a definite perceived difference these days. People come on my lot and are shocked that a Compass only gets 26 with an AT, even though it ALSO has 4x4!!! The automatic answer is "well, Hondas get over 40 MPG!"

Even though the closest Honda to it (a CRV) comes nowhere near 40 MPG...

3) Chrysler products blow transmissions, GM cars blow head gaskets, and Ford products are unsafe
Despite the fact that Chrysler revamped their horrific 4 speed AT back in 2000, the Quad 4 hasn't been produced since 1995, and the Explorer tire debacle is 5 years old now, perceptions die very, very hard...if I had a nickel for the amount of times I heard each of those comments...

4) Domestic car resale value sucks
This one needs no explaining...

5) I'm waiting for the big sale
Domestics have TRAINED people to wait. During Employee Pricing the past 2 months, I sold so many cars over 180 days old, it was unreal...overall though, EP was a huge yawn for Chrysler...


Chrysler is plodding along ok with the help of Mother Germany keeping product spending up, GM has some real bright spots and, IMO, will have the best overall lineup of the Big 3 very shortly...

Ford? Dead in 5 years if they keep this sh!t up...

Your number one is a big part.

The big 3 completely saturated the market... In the long run, I think this may be a good thing, as it probably got a lot of people out of 92' Cavaliers and into 02' Cobalts. Thats the best thing you can do for perception right there.

Its just a matter of "in the mean time" can you keep making quality gains and can you wean people off huge discounts.

Sure, they've made a bunch of steps in styling and quality, as well as interior quality, but it still seems like they don't really focus on the details.

For example, I drive manual transmission cars almost exclusively. I know I'm in the minority, but I wish they'd offer some here an there and when they do, actually put forth the effort to have it shift smoothly and effortlessly like a Honda or BMW or VW, etc. It's such a buzzkill when you try to drive a new domestic car and the shifter sucks. Every magazine complains about this.

I agree completely with you here. My GM is an good overall car with no major flaws, but all the minor ones like the unwilling shifter, the surging engine, and the clunky suspension translate into total buzzkill. e.g. Every time I go up or down my driveway, the suspension makes a loud annoying clunk. I have to hear this several times a day - that type of thing doesn't exactly build customer loyalty. GF's new tC, for $10K less, exhibits none of these traits and is generally more pleasant to drive.

GM marred its reputation badly enough and pissed off enough of their customers badly enough with their KNOWINGLY poor quality vehicles that I imagine they aren't going to see a drastic improvement in their public perception for at least several more years.

Putting out cars with competetive perceived quality may help the issue but it's kind of a 'trust' issue. Like cheating on your wife for a couple of decades and then expecting her to just take you back because you brought her roses the last few weeks and apologized.:p



This is good.

Call me picky, but that's just me, but just from what I've seen with my parents C1500s, one a 97 and the other a 98....I am not eager to try the newer stuff.

Those taillight circuit boards...garbage. The CFI spiders....joke. How long did GM use those smae parts with no "cure"? Pretty much forever.

Let's not get into the Camaro well-known sore spots with just the interior. I was cleaning out the Camaro and doing the initial prep for the LT1 swap....wiped off all the vinyl pieces inside....then grabbed off the many pieces of what was that dash pad and threw them into a pile on the storage floor behind the car. Seriously, if that flimsy POS is $150 and GM couldn't fine better ways to waste our time, why am I about to try out ANY newer vehicle of theirs.

Mind you, I have little confidence in the cheapyness of what the Japanese bring to lots of their products now, either.

My Ranger isn't much better in some regards, but for what I paid for either ride, I'll deal with it. Imagine what someone who bought either vehicle new would have thought....which is why I won't buy new, anyway.

Not my loss.

As the resident car dealer on this board, my .02...

1) Most domestic car buyers don't need a new car yet.
GM pulled ahead soooo many buyers with 0% for 60 in late 2001, so think about it. Those people haven't even paid their cars off yet, on average have 60-75k miles on their cars, and aren't even needing a car yet. We've had almost FIVE YEARS of non-stop incentives from the Big 3!!!



So true.

Just as the clothing industry uses 'fashion' (and social status) as a way to get people to replace their current clothes long before they are worn out, the same 'trend' currently goes for many car owners. Honestly most people don't replace their cars/trucks because the are totally worn out, rather they are replaced because they 'desire' something new and shiny (they didn't bother to polish/wax their current car) or they 'want' to get a vehicle that will make them feel more important and/or unique by placing them higher up on their social totem pole.

Sure some people need a new car because of life changes such as getting their first 'career' out of college, having kids, and having the kids grow-up and move out, but many don't buy a new car out of necessity. I personally don't think there is anything wrong with buying a new car 'just for fun' as long as you can afford to do it without sacrificing something that's far more important.

Most all of us here are car nuts and would most likely put driving and car ownership higher up on the 'need' level than most.:)

Note: I need to qualify my statement in regards to automotive buying trends pertaining to the US, Japan, and Europe and not to 3rd world countries and etc.

Honestly most people don't replace their cars/trucks because the are totally worn out, rather they are replaced because they 'desire' something new and shiny (they didn't bother to polish/wax their current car) or they 'want' to get a vehicle that will make them feel more important and/or unique by placing them higher up on their social totem pole.

I don't know about you but the reason I buy a new car is the same reason I buy a new TV. The new ones are better than the old ones.

That doesent negate his point. You're not buying it because the old one is no longer useful, you buy it because you want it.

I don't know about you but the reason I buy a new car is the same reason I buy a new TV. The new ones are better than the old ones.

That's the 'obvious' reason why we all buy new items, but historically people use to wait until their old one wore out first. ;)

Wages are down, living expenses are up. This is the first time since my early 20's that I've been having to live from paycheck to paycheck, dipping in and out of debt.

IMO I think wage deflation and/or wage stagnation has more to do with global outsourcing and ironically is the 'flip-side' of the promised technology/dot-com revolution of the late 1990's that made outsourcing far easier and cheaper because of the internet. So it should come as no surprise that the last time there was significant increase in wages on a national level was right-before-and-during the dot-com bubble of the late 1990's (before the internet became truly global, easy, affordable, and fast).

The quote below reinforces what you mentioned since living expenses have gone up far more than the 12.8% that wages have gone up for men since 1973. Real wage increases within a married dual income household had more to do with the wage increases and financial opportunities of the college educated wife which are up 26% since 1973.

http://money.cnn.com/2006/09/01/news/economy/state_working/index.htm

Between 1995 and 2005, productivity -- a measure of the quantity and quality of what workers produce per hour -- grew 33.4 percent. But hourly wages rose only 11 percent, with almost all of that increase coming during the late 1990s, according to EPI.

From 1973 to 2005, the median wage for women with a high school degree rose 7.4 percent. By contrast, the median wage for men with a high school degree fell nearly 14 percent.

For men with college degrees, they're now earning 12.8 percent more than they did in 1973 while women with college degrees are taking home 26 percent more pay.

Since 2001, however, the median wage for both genders with college educations remained essentially flat.

guionM -- I completely agree with your greater point, but I believe the data would show something very different than you are describing. A large number of those Camaro/Thunderbird/GP "sporty car" drivers probably did purchase trucks or SUVs instead of cars. Killing these cars in favor of trucks made sense at the time ... it's just that they never planned for what would happen afterwards.

I believe older model concepts (eg: the "personal luxury coupe") were in structural decline and it's not likely that sales would have rebounded even if there had been a model refresh. The problem is that GM/Ford never replaced these old 60s/70s concepts with new concepts that were appealing to the modern buyer (except SUVs).

This might be contentious, but I believe an "evolutionary" 5th gen F-Body would have been a failure 5 years ago. GM needed to hit the reset button, which they eventually did. Same argument applies to the Thunderbird. When people stopped buying SUVs, there's been no boom in Monte Carlos or Crown Vics -- people are buying new concepts like crossovers and Priuses.

Good points all, but you also reinforced my point. Maybe some did move to trucks-SUVs. But when fuel prices climbed & those buyers moods changed, Toyota (not Ford or GM) was in a better position to gain. And they did. While GM & Ford (which killed off one car line after another then kept their remaining cars around unimproved compared to the competition), lost share when they no longer could depend of trucks & suvs.

You're also right that the coupe market declined quite a bit. But it's a streach of the imagination to think that the year the Thunderbird & Cougar went out of production without Monte Carlo experiencing a serious sales jump, or ditto the Mustang when the Firebird-Camaro died, that 100,000 and 60-70,000 in sales simply evaporated into thin air overnight. While I might be convinced that a Thunderbird buyer might move to an Explorer, I don't think you'd convince me that F-body buyers decided to buy a trailblazer instead. :)


I think Jason hit something as well. At what point is the market so saturated with buyers making car payments that the market no longer expands? I think Jason's point doesn't answer why Toyota's market share is increasing while GM & Ford's are dropping. I would imagine that it would depress the entire new car market.

its a couple things thing that are killing the big 3

1. boring/non existant line-ups have you looked at the new cars lately?

2. really bad dealership experiences. If you ever take your car to some dealers,some are the worst. for example, the company car I drive is a p/t cruiser. It went in for a recall on a power steering hose. I get a call that there was something wrong with the brakes (master cylinder), it was under warranty so I said fix it. Well, Get the car back I hop in the car and the brake pedal went to the floor. I nearly took out a couple cars on the lot:confused: The service writer had the balls to tell me this was normal and the pedal would eventualy get better. I tossed him the key and told him to drive it, he told me he had better things to do. I get the manager and makes the service writer drive it, well...... the guy puts it in drive right into a new 300C.
When he got out of the car I asked him if that was the brake improvement he was talking about that would get better. :lol: After that, the car had to go back 5 more times for braking problems. Needless to say the car has not been right since. Now times that by 1000's to other people. Would you go back?

3.Not listening to your customer base. This one needs no explanation.

I don't think you'd convince me that F-body buyers decided to buy a trailblazer instead. :)

Well, probably not the same people. But the demographic certainly did. In 1979, the iconic "macho" image car was a Trans Am, but in 1999 it was a pickup or a sporty SUV (Pathfinder, etc).

But it's a streach of the imagination to think that the year the Thunderbird & Cougar went out of production without Monte Carlo experiencing a serious sales jump, or ditto the Mustang when the Firebird-Camaro died, that 100,000 and 60-70,000 in sales simply evaporated into thin air overnight.

Yes if you look at at a particular point in time. But the trendlines were going towards zero. GM/Ford chose to lose those sales the cheap way (killing the cars) rather than the expensive way (investing in a failing model).

Of course, the business plan for the Camaro is based on the idea that 100,000 muscle coupe buyers will simply materialize out of thin air (plus whatever it can steal from the Mustang etc). Funny how that works -- I don't claim to understand it, but I do think the average car buyer doesn't have a very firm idea about what they want and can be convinced with marketing.

As for the Big 3 emptying the market through incentives, I agree that's having a short term effect, but the long term "structural" demand for domestic cars is falling (for whatever reason), and that decreased demand is the main reason the UAW agreements have become so onerous.

As for the Big 3 emptying the market through incentives, I agree that's having a short term effect, but the long term "structural" demand for domestic cars is falling (for whatever reason), and that decreased demand is the main reason the UAW agreements have become so onerous.

So true.

While GM and Ford are indeed facing cyclical (external) problems like being addicted to incentives and flooding the market with 0% financed car/trucks to the point that the people who were already loyal to either GM or Ford aren't ready to replace their cars/trucks yet. The people who already hated domestic brands like GM and Ford didn't buy their cars/trucks during the 0% marketing bonanza and are now replacing their Honda and Toyota at a more normal cyclical pace.

More significantly however, is the (internal) structural problems within both GM and Ford that are now coming to fruition. Unfortunately none of those severe problems will have an easy solution.

Another reason to add.
The market is oversaturated with brands and models, much like it was in the 40's.
Your not going to sell the huge numbers of everybrand you did like in the 80-90's. Get over it!
However it seems instead of understanding this point they whine and complain and kill every model that doesn't meet their 150,000 unit goal.
Then they replace it with nothing, because in their mind nothing is somehow greater then 40,000, and in their ignorance they assume all 40,000 old customers will somehow still buy 40,000 of their brand of another vehicle, thats more profitable for them.
Then a few years down the road they realize they screwed up, for some reason their customers jumped ship. They try to bring that car back, only to realize oh **** its going to take even more years to get it back in to production.
Then about the time they rush it to production and get it right people are pissed cause they wanted it 4 years ago and now they are on to wanting something new.

Sound familiar? How many times do you think we can play this stupid game?
Some condensing is fine, but someone needs to realize at this time in history overall volume is going to be lower, suck it up and keep making a car through good times and bad. During the bad, figure out what the problem is, redesign it, come out with a new model. Don't however just give up and go oh well lets kill it.
Things go in cycles. Since these bureacracies move slower then the government in getting stuff done, they are always following the cycle and always behind the curve.

If one considers there has been very little wage appreciation on the national level for the last 5 years as mentioned in a previous post. The only real pay bump a lot of Americans got in the last 5 years is when interest rates dropped significantly and they were able to cut their interest payments on their credit cards, new car loan, and home loans significantly and the money that was saved felt like a pay increase.

The problem is that rates have either gone back up or people already spent that extra 'bonus' money that originated from historical low interest rates. Either way people are starting to feel like they are making less money and their budgets are getting tighter even though unemployment is really low @ 4.7%.

Other then one's house, a car is the single most expensive item a person buys and there is no doubt that people now have a different set of priorities then they did back 2002. If taxes go back up people will unfortunately have even less money to spend on a new car then they do today.

Import cars are still "better" than most of GM's cars, that's the problem. GM needs to make a small car that is actually better than a civic or corolla! GM needs to make a mid-size car better than a camry or accord! (I know they are coming out with a new malibu, but I doubt it will be better).

They also need to get the VE's over here asap!

GM’s Daewoo sold 97,423 units last month, 87,271 outside of Korea and 10,152 within Korea, up 6.1 percent from a year ago.

Hyundai reported a significant 24.6 percent increase in sales to post 224,547 units in August which could also be an indicator of new auto buying habits.

http://times.hankooki.com/lpage/biz/200609/kt2006090418085911890.htm

While this thread is most likely not the best sample of the collective feelings of the entire US auto buying consumer (we’re GM fans), but oddly GM decided to increase their warranty on 2007 vehicles when most of us here think that warranty/quality is the least of their problems.

http://money.cnn.com/2006/09/06/autos/gm_warranties/index.htm

GM's new warranty, which will be offered on all GM passenger vehicles, will cover all powertrain components, meaning the engine and transmission, for five years or 100,000 miles. The warranty will apply to all 2007 model year GM vehicles from all of the companies brands.

Good points all, but you also reinforced my point. Maybe some did move to trucks-SUVs. But when fuel prices climbed & those buyers moods changed, Toyota (not Ford or GM) was in a better position to gain. And they did. While GM & Ford (which killed off one car line after another then kept their remaining cars around unimproved compared to the competition), lost share when they no longer could depend of trucks & suvs.

You're also right that the coupe market declined quite a bit. But it's a streach of the imagination to think that the year the Thunderbird & Cougar went out of production without Monte Carlo experiencing a serious sales jump, or ditto the Mustang when the Firebird-Camaro died, that 100,000 and 60-70,000 in sales simply evaporated into thin air overnight. While I might be convinced that a Thunderbird buyer might move to an Explorer, I don't think you'd convince me that F-body buyers decided to buy a trailblazer instead. :)


I think Jason hit something as well. At what point is the market so saturated with buyers making car payments that the market no longer expands? I think Jason's point doesn't answer why Toyota's market share is increasing while GM & Ford's are dropping. I would imagine that it would depress the entire new car market.

So far everything you have been saying makes sence, but just some food for thought comments/questions

I do believe the Oldsmobile elimination killed a lot of the sales. I think olds owners were more die hard Olds fans than GM fans, and they opted to go elsewhere besides GM for their next purchase.

with the elimination of the B-body how did they affect Crown Vic sales in 1997??? my guess is not much. SO either they actually did have a replacement in SUV's, or at the time, there was not a market for large RWD cars.

Car prices have increased more than Family income. I remember when there were a good handful of cars solidly under $10,000 for first time buyers 10-15 years ago. durring that time span, gas prices have trippled, houses have increased dramaticly, yet minimum wage has increased little to not at all durring that time frame. Add to that the addition a weak resale value, increase number of people leasing, and the increase of "certified used" cars, I believe more people are buying used cars vs. new cars.

I'd also bet that a lot of Thunderbird/Camaro/B-body potental buyers bought their car used since there was no "replacement" for them.

If one considers there has been very little wage appreciation on the national level for the last 5 years as mentioned in a previous post. The only real pay bump a lot of Americans got in the last 5 years is when interest rates dropped significantly and they were able to cut their interest payments on their credit cards, new car loan, and home loans significantly and the money that was saved felt like a pay increase.

The problem is that rates have either gone back up or people already spent that extra 'bonus' money that originated from historical low interest rates. Either way people are starting to feel like they are making less money and their budgets are getting tighter even though unemployment is really low @ 4.7%.

Other then one's house, a car is the single most expensive item a person buys and there is no doubt that people now have a different set of priorities then they did back 2002. If taxes go back up people will unfortunately have even less money to spend on a new car then they do today.

Good point. But also consider that new car prices have been stagnant for 5 years as well. Save highly successful models that's had price increases, the price you paid for a car September 2006 is roughly the same as you paid in September 2001.

So far everything you have been saying makes sence, but just some food for thought comments/questions

I do believe the Oldsmobile elimination killed a lot of the sales. I think olds owners were more die hard Olds fans than GM fans, and they opted to go elsewhere besides GM for their next purchase.

with the elimination of the B-body how did they affect Crown Vic sales in 1997??? my guess is not much. SO either they actually did have a replacement in SUV's, or at the time, there was not a market for large RWD cars.

Car prices have increased more than Family income. I remember when there were a good handful of cars solidly under $10,000 for first time buyers 10-15 years ago. durring that time span, gas prices have trippled, houses have increased dramaticly, yet minimum wage has increased little to not at all durring that time frame. Add to that the addition a weak resale value, increase number of people leasing, and the increase of "certified used" cars, I believe more people are buying used cars vs. new cars.

I'd also bet that a lot of Thunderbird/Camaro/B-body potental buyers bought their car used since there was no "replacement" for them.

First issue, I'm sure that killing Olds sent buyers out of GM. Olds buyers were very loyal (if dwindling). They were typically old as well. I can see the logic in killing Olds (big disproportionate investments didn't increase overall sales), but those sales had to go somewhere. It doesn't seem like it went to Buick, yet import luxury brands sales increased. :think:

Second, no big bump in Crown Vic sales (though it did increase a couple years later with the redesign). However, buyers didn't seem to migrate to the new FWD Impala either. However, Lincoln's Town Car seemed to benefit somewhat from Buick & Cadillac's B-body demise.

Finally, there's still a good number of $10K cars for 1st time buyers. However, going back to 1990/1995 and comparing prices without factoring in inflation is going to skew your numbers.

But...If you factor in inflation over the past 5 years or so, the stagnant prices of today's bread & butter cars actually makes new cars cheaper today than they were in 2001. Mustangs still start around 18K, Impalas are still typically stikered around 22-25K. The past 5 years should have car prices up at least 3-5K on a car that cost $20K in 2001. Yet.... it's still about the same price! :eek:

Finally, there's still a good number of $10K cars for 1st time buyers. However, going back to 1990/1995 and comparing prices without factoring in inflation is going to skew your numbers.

When adjusted for inflation $10,000 in 1990 is equal to $15,000 in 2005. I would argue that todays $15,000 2006 Civic is a better car then a (new in 1990) $10,000 1990 Accord was. So in otherwords today's Civic has become what the 1990 Accord was at it's time and a new 2006 Accord has become what the Acura Legend was in 1990. Now that all the Honda's have moved up the ladder it's should be no surprise that Honda has now brought out the new 2006 Fit to replace the Civic as it's entry-level car.

The past 5 years should have car prices up at least 3-5K on a car that cost $20K in 2001. Yet.... it's still about the same price!

The benefits of wages stagnating on the national level since 2001 in some sort of odd way.

Car companies can't charge significantly more for cars since 2001 because many people can't afford to spend more so the car manufactures have to cut costs by outsourcing more parts, engineering, and software design off-shore which unfortunately puts even more deflationary pressure on wages.

Yeah alot of people here are saying: "but GM has good quality now and they have changed..."

The thing is that it takes time to change people's image, consumers don't forgive that easily.

Hell my mom bought a 2001 z28 camaro, its about 4 years old, and I have to admit...its a piece of crap. Not the ride and performance, but the quality and the build.

Have gotten used to rattles, interior pieces that don't fit together well...some even falling off. A convertible roof with a crappy weak motor that needs replacing...cheap everything parts. An engine needing to be replaced cause of a broken pushrod (my mom rides the car like a granny too).

Honestly just because of the extra money my mom has paid in repairs of her poor quality car, I don't trust GM quality. Its like you buy a car, then you have to pay even more for it in repairs down the road. Why should a company get away with that? I don't care if they changed now, but for the way they were, screw em.

meh thats my 2 cents

I just can't help wondering if Kirk Kerkorian and all his hedge funds buddies had other intentions when he came to GM's rescue. I'm not saying they were bad, only that he and his friends could have a lot more at stake then their (minimal by their collective standards) investment into GM to keep the stock from imploding.

The quote below reinforces the significance of GM and Ford not just on economy but as well as its influence on the speculative Hedge Fund industry and the overall health of the stockmarket.

http://www.msnbc.msn.com/id/14640270/site/newsweek/page/3/

The scenario that worries experts most involves a U.S. recession leading to mass corporate bond downgrades, which could leave hedge funds short of cash, triggering a global bond-market meltdown. Though such a disaster is not clearly imminent, last year's downgrades of Ford and GM did drive a number of hedge funds under. That shows just how entangled these household names, and the households that own their stock, are with a very risky business.

http://money.cnn.com/2006/09/08/news/economy/recession.reut/index.htm?postversion=2006090811

In somewhat related economic news.

HSBC: Risk of U.S. recession growing

Income of most Americans are falling and housing slowdown threatens economy despite companies doing well.

September 8 2006: 11:16 AM EDT

NEW YORK (Reuters) -- Investment bank HSBC has revised downward its forecast for 2007 economic growth and cautioned that the risk of an outright recession is growing as a retreat in housing threatens household balance sheets.

The company argues that while corporate profits have remained sky-high, the incomes of most Americans have effectively fallen over the last 18 months.
That, say economists Stephen King and Ian Morris, could be a recipe for hard times in an economy that relies on consumers for over two-thirds of its strength.
"Never before have households been so hard hit at a time companies are doing so well," the two economists said in a research note to clients. "So it's likely that the U.S. could slow down quite a long way."

They now see gross domestic product expanding just 1.9 percent next year, down from an earlier forecast of 2.6 percent and from an expected rate of growth around 3.5 percent for 2006.

Making things worse, the bank says, a mammoth budget deficit means the U.S. government has "less room to maneuver" if the economy does skid off track.
In the last recession, a massive round of tax cuts and a super-loose monetary policy helped the economy get a second wind. Americans will have no such luck this time around, King and Morris warn.

No doubt whatsoever that we're headed into a recession.

Personally, I think it's going to be a very serious one.

Just dropping in on this one, haven't read the whole thing, but I would most likely say that Ford and GM sales are dropping because of lack of interesting cars. Outside of the vette and Mustang is there really anybody that is excited about fusions and G6's. Everything else in the line-up of both companies are utilities. The focus sucks now there is no SVT version, cobalt ss are still sitting on lots as 05 models, the trucks have gone from being trendy back to neccessity type vehicles, and everything else pretty much blows. There is no excitement in either manufacturer's line-up.

A significant automotive downsizing trend that is occuring in California is ironically rooted in the great home expansion in significantly cheaper areas over the last 6 years. Incredible amount of new homes have been built in the last 6 years in areas where people bought much larger new homes significantly cheaper than more established and expensive places like Orange County and Los Angeles.

These same people who live far away from the major cities in these desert-like areas are also the ones who unfortunately have a 1-2 hour one way commute back-and-forth work, and you could just imagine how much they were spending a month when gas hit $3.50 a gallon out here fueling their Tahoe or Suburban which they bought with 0% interest way back in 2002 .When these people get ready to replace these trucks/suvs Im willing to bet they wont be buying a truck-based SUV again. Even if gas prices fall, they will have that fear in the back of their mind that gas prices could spike up again.

Another factor which will drive thousands and thousands of these same people into smaller cars next year is that many of them who bought these new homes 3-5 years did not get fixed-rate loans and their adjustable loans (and interest-only loans) will begin to reset to a higher rate next year. If these same thousands-and-thousands of people see their monthly mortgage payments jump 25%-50% they will have to find a way cut cost somewhere.

Considering all of this I wouldnt be surprised if Hyundai has a record breaking 2007 out here in California.

Lack of industry-leading products, poor/marginal styling, poor resale values, poor quality reputation, miserable dealer service, dependence on SUV's and pickups for most profits, do I need to continue?

There are some folks who need large pickups/SUV's, but many folks who owned a Tahoe or a TrailBlazer are looking at Camrys and Accords to replace them. GM and Ford don't really have products which are superior to these vehicles (comparable, yes, superior, no), hence the loss of sales (and $$$).

Lack of industry-leading products, poor/marginal styling, poor resale values, poor quality reputation, miserable dealer service, dependence on SUV's and pickups for most profits, do I need to continue?

There are some folks who need large pickups/SUV's, but many folks who owned a Tahoe or a TrailBlazer are looking at Camrys and Accords to replace them. GM and Ford don't really have products which are superior to these vehicles (comparable, yes, superior, no), hence the loss of sales (and $$$).

In 2004, good reply.

I dont feel that way any more though.

I dont think the sales are really just dying either. Truck sales were down big time last month compared to '05 but remember the big sales last year. My Dad bought a new truck for $15,000! (GMC Sierra)

Cars, however, are the same level as last year. Will this recent tumble in fuel prices bring trucks back? What about the new trucks coming? The trucks have been tired for a while. So tired that even a front end refresh couldnt plant any last leg life into the Silverado. But thats ok, new ones are months away!

If there was any doubt the Ford was losing market share since 2000 this graph should put one's mind at (un)ease.

Notice how market share really drops off at the very end of each year shown.

http://msnbcmedia.msn.com/i/msnbc/Components/Art/BUSINESS/060911/AP_FORD.gif

No doubt whatsoever that we're headed into a recession.

Personally, I think it's going to be a very serious one.


I agree with you on that, something needs to be done. Number one Bush's tax cuts need to be revised. Put more money back into the middle, and lower classes pockets. Give the wealthy a little MORE of the tax burden, then you'll see more consumer spending. Also the War On Terror isn't helping things, this is a very expensive war, the sooner we get out the better off we'll be. Another solution would be getting a grip on Energy Prices. Yes the price of gas is going down, but winter is coming up, and that heating bill is going to hurt people just as much. Oh and what about doing something about outsourcing American jobs to Mexico, China, India, and any other country for that matter. Just b/c Bush's economic policies have made it easier to do so. This is an area that I feel needs alot of attention. Punish companies who outsource jobs, by taking their tax benefits away. Create jobs and the economy will be healthier, instead of allowing them to be outsourced which only hurts us in the long run.

I tried to be as non-political as I could, and I even controlled my Bush Bashing. I'll be honest, I didn't vote for him, and I can't wait until he leaves office.

94,

I agree that 'something' has to be done, but I don't think that raising taxes or raising the 'white flag' of surrender will solve the problem. Reversing the so called 'tax cuts for the rich' and redristributing it to the middle class sounds good, but in reality the government will waste most of that money and very little of it will get into the hands of the people who really need it. The government (both parties) monopoly has proven itself time-and-time-again to be a very poor and inefficient manager of the peoples money. I'm not saying the status quo is perfect because it's not, but raising taxes will most likely send even more companies off-shore and even more people will lose jobs in the manufacturing and service sectors.

IMHO I think there is a much more significant factor involving a complete restructuring and decentralization of the global economy that's happening as we speak. Technologies like the internet, cell phones, and etc are leveling the playing field and making countries with cheap labor easily accessible by updating both their information and product distribution capabilities at an alarming rate. No single country has a monopoly on hard work and intelligence and these poor countries are putting significant deflationary pressure on both US wages and US-made merchandise.

While the war on terror is expensive, it's the result of the forces of globalization connecting different cultures to each other regardless if they want to or not and that problem won't magically disapear anytime soon. The problem is the populace of some mid-east tribal-like civilizations who sit on a goldmine of oil (that the global economy needs) don't want anything to do with the world (as we currently know it) unless it converts to Islam.

While Im not saying the (US and/or world) economy is predetermined to fall into a depression-like situation, but we all should be aware of the 4 major factors that made the Great Depression so severe:

1.)The over-stimulated and unsustainable economy of the 1920s. (1998-2000 dot.com bubble which was temporarily saved by 2001-2005 housing bubble. IMO the housing bubble would have peaked at the end of 2003, but the the easy access to interest-only and negative amortization loans kept it going for another 2+ years.)

2.) Federal Reserve Bank over-tightening the money supply from 1930-1933. (Fed raises rates and tightens the money supply between 2004-2006)

3.)The sudden rise of global protectionism leading to the collapse of world trade with the Smoot-Hawley Tariff Act of June 17, 1930 that raised tariffs by 50% (A deep US recession in 2007/2008 could lead to a rise in protectionist sentimentist in which those running for political office will promise to defend US Jobs by increasing tariffs and corporate taxes. Terrorists didn't target the WORLD TRADE TOWERS on 9/11 on accident, they were trying to stop globalization (world trade) and kill thousands Americans while they were at it.)

4.)The dramatic rise of income taxes in 1932. (A new president in 2008 could significantly raise taxes and tariffs as promised. There is a very good possibility that a more left-leaning politician will also want to tax all internet transactions and this could be accomplished by adding a national sales tax over and above our existing local sales tax.)

Well, right now the "global war on terror" is being run off the books -- there's no budgeting or plan for how to pay for it. That's going to have to change, so sooner-or-later, tax policy is going to have to be adjusted for what is basically a permenent obligation. No way around it.

And tax rates were very high in the boom years of the 50s and 60s, so it's not quite that simple.

And tax rates were very high in the boom years of the 50s and 60s, so it's not quite that simple.

True.

The countries demographics were much different in the 50's-60's as well as the availability of easy credit and the very high level of individual debt that is seen today. So in other words, today's consumer has monthly expenses that are significantly more than those in the 1950's and 1960's. A tax increase would significantly impact consumer retail spending which now makes up 2/3rds of the US economy. Since a huge portion of the US economy has some sort of outsourcing to cheaper foreign countries, any new tariffs would cause price inflation in those products/services which would make those things even more expensive for the retail consumer (the price increase would act just like a tax hike on the middle class).

The problem is the economy has become dependent to many things like lower tax rates and cheaper foreign-made goods and etc. While there are hidden costs to everything like financing an expensive war for the stable supply of cheap gas, paying for expensive healthcare and over crowded schools for low-priced illegal workers and their kids, but any significant change in the infrastructure and cost ratios of products, services, and tax rates will take many years work themselves out and the process could be very painful for many.

Domestic manufacturing only makes up 10% of the current US economy so increased tariffs/taxes on foreign-made goods would have a much larger and significant impact on the US economy then they did back in 1930's.

Fed Chief Bernanke Says Terror and Protectionism Threaten Global Integration - http://www.bloomberg.com/apps/news?pid=20601087&sid=avDsyXp_q69M&refer=home

Well, my instinct is that the Bush tax policy has done very little to directly help General Motors, a company with a predominately blue collar/lower-middle class customer base.

But my point about the 'war on terror' is that eventually Congress is going to have to put it the budget and figure out how to pay for it. Just like Germany, Korea, Philippines, etc.

Well, my instinct is that the Bush tax policy has done very little to directly help General Motors, a company with a predominately blue collar/lower-middle class customer base.

While I agree, that we haven't seen the 'trickle down' affect of the tax cuts to the degree I would have previously thought or prefered, but it has helped nevertheless. After the dot-com/stockmarket meltdown and the terror attacks of 9/11 the country was in very bad shape. Tax cuts along a significant drop in interest rates made the recession of 2001-2002 the shortest in recent history by pouring capital into the market which allowed businesses and consumers to reconsolidate their debt. Consumers also saw a huge appreciaton in the value of their homes that was directly driven by interests rates dropping to historical lows and those things directly saved the automakers and the overall economy from a much deeper and more painful economic downturn.

But my point about the 'war on terror' is that eventually Congress is going to have to put it the budget and figure out how to pay for it. Just like Germany, Korea, Philippines, etc.


They'll get around to it in 2008, when we have an administration change. The War On Terror, along with Hurricane Katrina relief, have put our country in a financial bind. You know there was one other time in U.S. History that a President's Policies weren't agreed with and congress actually did something about it. 1865 was the year, President Lincoln had just been murdered, and Andrew Johnson took over. To make a long story short, every measure congress passed, Johnson vetoed. Congress then passed the bills into law by a 2/3 Majority Vote. I know i'm leaving alot out, but I really don't feel like being a History Teacher right now. Unfourtinately we have a Republican Party who has members that are so attached to the party line, that will ignore everything that is wrong with this administration. The destruction of civil liberties, a unilateral foreign policy, the unchecked deficit spending, and the blatent abuse of power by the executive branch. So unless the Democratic Party gains an overwhelming majority in the house and senate. I don't see anything like Congressional Reconstruction happening again. And the United States will continue down this "March Towards a Recession". I as a citizen, taxpayer, and a consumer hope something is done about this. Otherwise, my generation, will bear the cost for years to come.

I always tend to believe that what happens in the Australian market will eventually be reflected in the US market. Slowly over the years we've seen Toyota rise to number one in the Oz market... and have occasionally been outsold by Holden (when fuel was cheap). Which brings me to the next point...

People here in Oz have taken to the Toyota Corolla in huge numbers over recent months as fuel prices have soured. The funny thing is that the current Corolla has been on the market for years and hasn't changed much. It seems when people want a small, reliable and economical car, they automatically think Toyota. Similar story with Honda and Accord (and Acura) sales but Honda is an importer to Oz and a much smaller player in our market.

Is Toyota's reputation unshakeable, that's the question? We've seen them overtake Ford in the US recently (which was once unthinkable). Like I said, the US market seems to be following the trend in Australia.

I found this interesting quote regarding many economists (lack of) ability to predict recessions and economic downturns that could have severe consquences for domestic auto makers in 2007

Economists have a poor track record for predicting recessions. According to The Economist, 95% of economists in March, 2001, thought a recession would not occur that year, though one actually began the same month. "Professional forecasters…are always way overoptimistic and systematically miss the turn downward of the business cycle," notes New York University economist Nouriel Roubini, who pegs the odds of a recession in 2006 at 70%.

http://businessweek.com/print/investor/content/sep2006/pi20060918_635433.htm