99SilverSS

Well the Japanese govt. never claimed to be socialistic like China but they have gone down that road from time to time. For many of the companies they helped didn't do so well and have kept their economy from reaching its full potential. On the other hand their help for the automakers has proved to be pivotal in their success.

You may feel like its not our problem but it is when Domestic automakers struggle to compete and threaten to take the whole economy down with them the problem comes home. When world trade is concerned it's never fair for everyone. The deficit has caught up with the Domestic brands.

IMO if the US Govt. just decided to help the Detroit 3 with their pension and healthcare obligations for retirees I think they would survive long enough to pay back the loan. The hope would be for them to eventually bring their legacy costs under control so that they can gain a more equal footing with foreign competition.

Robert_Nashville

Is your point that if foreign governments step in and help their domestic auto industries; that makes it appropriate; perhaps even necessary for the U.S. Federal government to step in and help it's (original) domestic auto industry even if such help violates the Constitution as well as the free market system the country was founded on?

If that is your point, then I would assume that in your child labor example, it would be appropriate for the U.S. to go back to allowing child labor in it's domestic T-shirt industry because that's what the governments of other countries allow?

Robert_Nashville

It's not really a matter of what a government claims; it's a matter of what they do (also note, China is a communist government which is the ultimate expression of socialism).

Funding their ongoing pension and health care obligations from promises made years ago is really what this bailout is all about...if Detroit didn't have those obligations I'd bet they wouldn't need to be at the government trough right now. Of course they can't come right out and say that or if they mention it at all it just get's referred to as "legacy costs".

Of course whether you call them what they are or just call them "legacy costs", the bigger question is why I (or any other taxpayer) should be obligated to pay for Detroit's pension and health care obligations?

Certainly, if the Detroit 3 has the financial ability to meet those obligations then they absolutely should do so but just because they don't doesn't mean I need to be obligated...if they aren't making enough profit to keep their promises then they can't keep their promises.

The heart of this whole issue as I see it is decades of the Big 3 being held hostage to the UAW...it's great if, going forward, they've finally decided to join reality and work with Detroit to keep their future costs in line with the rest of the market but that can't erase the many years of excess.

Their decades of excess and unrealistic expectations should not have to become my or any other taxpayer's responsibility.

Geoff Chadwick

The 4 year mark is pretty hysterical to me - I've owned every one of my cars but 2 over 4 years and all of them have been over 10 years old. I bought none of them new.

Eaton has a transmission on the market for commercial trucks (one of the Ultrashift variations) that lists the first fluid change at 500,000 miles!

With cars lasting longer and longer (and a lack of cheap credit having people hold onto them longer) I'm still wondering if the car market will become more cyclical like trucking - where a used truck can still fetch a pretty penny in resale value.

99SilverSS

I don't know if I'd go that far. Japan and now the US govt. have practiced some forms of socialism but we are still very different than China's communist ownership of many businesses.


I see the Domestic brands asking for the bailout at this time and this urgently not for legacy costs but operating money. If this was just their desire to get govt. help for their legacy costs they would have done better to do it after the new Democratic Congress is in session. Of course we can split hairs about where the money would go and if the legacy costs were not so high would they be in the position to need a bailout.

I see the legacy costs as the heart of their problem. It takes money away from the UAW and development and production of vehicles. The competition is tight so a few thousand dollar disadvantage will eat away at quality and production over time. That will eat away at sales and once those are gone they need to pull more money from each vehicle sold and each employee working to make up the difference because unlike profits legacy costs go up every year.

The unfortunate bottom line is we the US taxpayers are going to pay for their legacy costs if we decide to bail them out now or allow them to fail and pick up the bill after. So now the debate changes to what is a better deal for the taxpayers.

Robert_Nashville

I wasn't really equating China with any of the rest of them...most other countries in the world practice a form of social democracy (except for those few dictators and the occasional monarchy)...the U.S. has most certainly been doing "socialistic" type intervention too but nothing like the $700B bailout passed a few weeks ago or the involvement likely with the auto industry if the Feds give them money...there are a lot of people in this country who want us to look like France or Germany or Sweden...I find that both sad and disturbing.


Detroit has been saying for some time now that they are "making cars just a good as the imports" and many have been saying that the UAW is not the problem "now"...if both of those things are true (and I'm not saying they aren't), there there should be no reason why GM can't make as much profit off its vehicles as a Toyota, Honda, BMW or MB or any other "foreign" nameplate.

So...that really only leaves the ongoing costs of meeting pension payments/health care benefits. I know the UAW is "taking over" the health care benefits but that's with a huge infusion of cash which GM has just said within the last couple of days that it doesn't have.

I suspect, however, that if GM starts asking for money for benefits for its former employees, the American public will not bee too keen on fronting money for that.

As to which is the better deal for the taxpayers, I truly don't know and despite what some are saying about it, I don't think they truly know either...I'd like to see someone with no ax to grind either way do a real analysis of that question!

91_z28_4me

I don't I just corrected the common misconception that the Big3 are asking for a cash bailout. They are asking for no or low interest loans. They aren't just asking for cash in the coffers. And they are asking for it specifically because they think the market will get better and these funds would allow them to cover the time between then and now.

Eric Bryant

One of the numbers I heard during the start of the "credit crunch" was that roughly 1 in 3 buyers of new pickup trucks are upside-down on their trade-in!

Time is money, of course - if the rig is in the shop, it's not earning its keep. For the heavy-truck guys, it's a delicate balance between minimizing downtime due to maintenance, and minimizing downtime due to repairs.

In the pass-car industry, it's all about keeping the car out of the shop during the emissions warranty period. What happens after that is still considered, but "weighted" much less heavily.

I think we'll see some of that soon. Even during the last downturn in the economy (2000-2003), we were able to keep moving steel due to cheap loans. That ain't gonna happen this time around!

What we've recently concluded is a decade or so of marketplace distortion.

WERM

Hey, I'm not making this up. Think about it like this... how many other products come to the east coast from Asia by boat? LOTS. And these are mostly items smaller and easier to ship by rail/truck than cars.

I'm sure Nissan has to be bringing in some cars to the East coast by boat.

99SilverSS

Well it is disturbing and I didn't like the bailout for companies like my former employer AIG. They were not worth it. If I had to pick I'd have given the money to the Detroit 3 rather than AIG. Odly enough they are not even asking for as much as AIG got the first time.


To me I think the American public and Senators would be more sympathetic to the Domestic brands if they came out and said we need help because of legacy costs. The thought of helping retired older Americans stay off Welfare and other social programs could be spun easier than just handing money to GM to build another Hummer as many think will be the case. At least then they would have an answer to where the money will go and they could also say it would help them become more competitive, which would be the truth.

It's not like the Senators haven't heard this before from the airlines when while in bankruptcy they practically dumped their legacy costs on the govt.

As for a group with no axe to grind either way; wasn’t that supposed to be the Senate Committee? Although I think we both know the answer to that.

Robert_Nashville

Senators don't just have an ax, they have an arsenal of things they can use to cut you up into little pieces.

Dan Daly

A lack of moisture, steady temps, etc. Basically the same reason why classic cars from California tend to be in better shape than those that were in a barn in eastern Virginia.

shock6906

Now I haven't lived in California since I was about four years old, but wouldn't a port city in California be humid just like one on the east coast?

Northwest94Z

Absolutely not. The southwest coast by comparison to the east coast is very dry and arid. Just what cars like for longevity. There is also no salt being dumped on the roads on the west cost (south).

Jason E

Regarding the whole theory of cars lasting longer, and people trading more to make a fashion statement than needing a car....

This phenomenon is something I've been thinking about more and more lately. People, up until recently, generally had 2 schools of thought...at least from what I saw. Buy a new car, trade it in before the warranty expires. Or, buy a used car, and run the wheels off of it. The used car market is still doing ok...I'm taking in junks all day long on nice 2-3 year old Grand Cherokees, Libertys, 300s etc.

The problem for the Big 3 business model is that the other school of thought is stuck like a deer in headlights. People finally realize they don't NEED brand new cars if they just bought one 2-3 years ago. They want one, and many will again within the next year, if/when things stabilize. But then again, more and more won't. Americans are finally waking up. And that's really, really bad for the Big 3, and the imports too. If Toyotas are so f-ing brilliant, there is no need to replace a 3 year old one with another one.

I look at the manner in which I got both my wife's and my "normal" cars, and laugh at the waste made by the previous owners. My wife's car (the '04 Comp G) was purchased by us when it was 2 years old, with a whopping 13k miles on it. I bought it wholesale from my old dealership, and my former sales manager was kind enough to let me talk to the lady when she was signing the paperwork on her new G5 she replaced it with (don't ask me, because I don't get it...). I asked her why she was getting rid of such a low mileage car, and she said "well, my husband and I change every 2 years. I don't really know why. We just do." Ok....now here I am, 2 years later, the car has 20k more on it, it runs like a swiss watch, and we're planning to keep it for at LEAST another 6-7 years...3-4 years after its paid off.

Now my truck. This one baffles me. My truck was traded in to me at the height of Gas Price F-over, back in July. Truck had 31k on it, with a 3 year old Fisher plow that was about $5k new. He bought the truck during EP pricing in '05, and paid $28k real money for it. Paid $5k or so for the plow. $33k total investment. Truck is barely broken in, for crying out loud. My highest offer from a wholesaler on it was $10k, as we didn't want to keep any more trucks at that point (remember, this was the height of gas price freakout), so I bought it from the company for $11k. A $22k real money drop, for 31k miles worth of use. And I already know he'll be back in 3 years, just before the warranty expires, for his next one.

The problem is, these people might not wake up...but many others, like me, are. Indeed, we thought about buying a brand new Malibu for my wife, but we both love her car. I could've bought a brand new truck, but for the 3-4k miles a year it'll go, why spend that much?

More and more, I really think the obsession to trade in perfectly good cars is going to be a waning practice....