One of the things that has been overlooked...is with a government bail out..will the Big 3 be forced to finally raise prices. We all know that GM's sticker prices for instance are on par with imports...but domestic vehicles can then be discounted 10-20% from that. In most cased GM makes a few hundred a vehicle. Some of that comes from excess inventory..however some of it also is related to the fact that domestic cars are percieved to need to sell for less than imports.

With the loans paying to trim capacity, and someone overseeing the company do you think we will see wholesale price increases? I am also guessing that there are gonna be some rediculous fuel ecomomy demands made by the Czar that require expensive technology.

What about Toyota and so forth. It almost seems like GM will be working to build cars the government wants..while the competition can still build whatever.

 

Not all the Big 3. If you read the Ford plan presented to Congress, they were very clear that their intent was to keep production in-line with demand in order to improve resale values and brand reputation. Which is a refreshing philosophy out of Detriot.

GM's business plan seems perpetually based on the idea that they just need more marketshare -- no matter how they get it. To that end they've run all their brands through the muck, which in the long-term killed their ability to move huge volumes.

Part of this was just a poor business decision that emphasized price over perception. When you are a high-cost producer, don't sell a low cost product. Duh. However it was motivated by the UAW and Pension Fund agreements. If the UAW can agree to be "flexible", GM will cut production drastically, cut the red tag employee sales, and perhaps improve their marketing.

(standard disclaimer that GM might be out of business by next month.)

 

That could DEFINITELY be a problem.

Hopefully, "Big Brother's" involvement will consist of helping the American automakers perform the necessary "restructuring", and not really be involved in the products. That might be a pipe dream, but if this isn't the case and Uncle Sam micromanages the actual product lineup, I'm thinking the American automakers will wish they took the bankruptcy option.

 

There is and always will be a fear of "Big Government", whether logical or desreved or not, or whether thought beyond impulsive fears or not.

The oversight that's forming is heavily weighted towards both ensuring the taxpayer gets their money back as well as the viability of the auto industry. There's going to be wildeyed crazies in the congress just like there are in the general population. However, the adults have a tendancy of coming through the muck when dealing with important issues like this. Also, if "Czars" are put in charge of making sure the Feds money (taxpayer money) is being used to improve the business will tend to realize the law of cost versus return very quickly.

 

One provision of the deal currently on the table: the automakers must drop their fight against California's regulation of CO2 emissions. I think we're gonna see alot of this kind of thing; Dodd & Co. eyes are getting wide at the prospects of the power they will wield over the auto industry under these agreements.

 

i say no to price increases. It's unlikely the big three will see a sufficient demand to justify that move.

Unfortunately for them the consumer is gonna need huge incentive to make an investment in a barely functional company. This was there prime arguement for not doign the traditional bankuptcy route.

 

I think we will see a weaker dollar later in 2009 and this should help domestic manufacturing.

 

Higher prices and lower volumes have to be part of any sustainable future for the Big 3. This whole game of losing a lot on each unit but making it up in volume clearly is a pathetic excuse for a business "strategy".

I don't doubt that consumers will be hurt by this, but it'll be part of making new-car purchases back into a "need" rather than a "want'.

China and Korea are already devaluing their currencies in anticipation of this. Looks like a good ol'-fashioned trade skirmish is going to break out soon.