TOYOTAL RECALL: Toyotas Quality Issues Show GM/Chrysler Bailout Justified
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TOYOTAL RECALL: Toyotas Quality Issues Show GM/Chrysler Bailout Justified
Say what you will:
http://www.thegmsource.com/index.php...articleid=1327
TheGMSource - The company once thought to be the pinnacle of automotive quality and engineering has started a new decade much like it left the last one: plagued by recalls for millions of its top selling vehicles. In October of last year Toyota announced a major recall of 4.5 Million cars because of what it said was a floormat problem that lead to random acceleration of vehicles. Just yesterda the company added 1.1 Million more vehicles to that recall, in addition to a newly announced recall of 1.2 Million vehicles for faulty gas pedals.
To listen to Toyota tell its story the two recalls are different, yet much one in the same. With that said, this time last year GM was in the middle of receiving billions in dollars in bailout funds by then President Bush. Whether you like him or not, the President made the right call to step in and save GM when Congress wouldn't.
It was then placed in the lap of incoming President Obama. Obama initially loaned GM and Chrysler billions of U.S. taxpayer money in an attempt to keep the companies from bankruptcy. In the middle of last year GM and Chrysler were both forced to file for bankruptcy, in a prepackaged version of it that lead to massive restructuring by both companies.
A Game Of "What If's"
Lets sit back for a minute here and say play a game of "what if." What if President Bush never gave billions to both companies? What if President Obama hadn't stepped in with billions more to force these companies into a prepackaged bankruptcy.
What if GM and Chrysler were left to "die on the vine" and received no Government assistant. It was clear that Chrysler would have been the first company to file bankruptcy which would have lead to the liquidation of the 3 of Detroits Big 3 automakers. Maybe lawmakers would have stepped in to save GM once they saw Chryslers misfortunes lead to hundreds of thousands of workers out of a job. Maybe not.
GM would have traveled the same road as Chrysler. Liquidation of the former worlds #1 automaker. With that, hundreds of thousands of more jobs lost, pensions slashed as much as 75% (if the Pension Group could afford anything) and most of all, towns, citites and states destroyed. The U.S. Economy would have tanked bringing the entire world with it.
Why The Bailout Is Important Now
We know how the bailout has paid off in the short term. No major job losses, increased investment in the U.S. to produce GM and Chrysler products which will lead to increased jobs in the coming years. Dealerships have stayed open (some will reopen thanks to the courts) but most of all the bailout has helped with this Toyota recall situation.
GM says they have received "thousands" of calls from Toyota customers "looking for help." GM is offering incentives to woo Toyota buyers away from their defective vehicles into a brand new GM product.
Why is that significant? Imagine the alternative yet again. Imagine if Toyota buyers who are "looking for help" couldn't turn to GM, the automaker they grew up with but ultimately left. A sense of comfort in uncertain times for them. Imagine the damage that would be done to the U.S. economy because the largest automaker in the world can't sell 60% of its fleet in the U.S. for what may be several weeks. There would be a literal stand still in new car purchases which is a major factor of our economy.
Sure there's always Ford to turn to. No doubt some buyers have turned to Ford for assistance as well. Could you imagine the thousands seeking help from GM not having that outlet and nobody to turn to? Ford would be inundated with customers that they surely couldn't service.
The Ultimate Stimulus Package Is A Toyota Recall
With all of that said...it comes down to American safety, especially if the rumors are true that the U.S. Government had to step in and stop Toyota from selling these defective products. It keeps factories humming along in U.S. plants and it increases traffic to dealerships to those other then with the Big T on their roofs. The ultimate stimulus package is a Toyota recall.
So I ask you readers.....in the face of everything we've seen from the bailouts, is this the biggest issue why the bailouts are worth it? More choice to American customers and their safety or are the bailouts still a bad idea?
To listen to Toyota tell its story the two recalls are different, yet much one in the same. With that said, this time last year GM was in the middle of receiving billions in dollars in bailout funds by then President Bush. Whether you like him or not, the President made the right call to step in and save GM when Congress wouldn't.
It was then placed in the lap of incoming President Obama. Obama initially loaned GM and Chrysler billions of U.S. taxpayer money in an attempt to keep the companies from bankruptcy. In the middle of last year GM and Chrysler were both forced to file for bankruptcy, in a prepackaged version of it that lead to massive restructuring by both companies.
A Game Of "What If's"
Lets sit back for a minute here and say play a game of "what if." What if President Bush never gave billions to both companies? What if President Obama hadn't stepped in with billions more to force these companies into a prepackaged bankruptcy.
What if GM and Chrysler were left to "die on the vine" and received no Government assistant. It was clear that Chrysler would have been the first company to file bankruptcy which would have lead to the liquidation of the 3 of Detroits Big 3 automakers. Maybe lawmakers would have stepped in to save GM once they saw Chryslers misfortunes lead to hundreds of thousands of workers out of a job. Maybe not.
GM would have traveled the same road as Chrysler. Liquidation of the former worlds #1 automaker. With that, hundreds of thousands of more jobs lost, pensions slashed as much as 75% (if the Pension Group could afford anything) and most of all, towns, citites and states destroyed. The U.S. Economy would have tanked bringing the entire world with it.
Why The Bailout Is Important Now
We know how the bailout has paid off in the short term. No major job losses, increased investment in the U.S. to produce GM and Chrysler products which will lead to increased jobs in the coming years. Dealerships have stayed open (some will reopen thanks to the courts) but most of all the bailout has helped with this Toyota recall situation.
GM says they have received "thousands" of calls from Toyota customers "looking for help." GM is offering incentives to woo Toyota buyers away from their defective vehicles into a brand new GM product.
Why is that significant? Imagine the alternative yet again. Imagine if Toyota buyers who are "looking for help" couldn't turn to GM, the automaker they grew up with but ultimately left. A sense of comfort in uncertain times for them. Imagine the damage that would be done to the U.S. economy because the largest automaker in the world can't sell 60% of its fleet in the U.S. for what may be several weeks. There would be a literal stand still in new car purchases which is a major factor of our economy.
Sure there's always Ford to turn to. No doubt some buyers have turned to Ford for assistance as well. Could you imagine the thousands seeking help from GM not having that outlet and nobody to turn to? Ford would be inundated with customers that they surely couldn't service.
The Ultimate Stimulus Package Is A Toyota Recall
With all of that said...it comes down to American safety, especially if the rumors are true that the U.S. Government had to step in and stop Toyota from selling these defective products. It keeps factories humming along in U.S. plants and it increases traffic to dealerships to those other then with the Big T on their roofs. The ultimate stimulus package is a Toyota recall.
So I ask you readers.....in the face of everything we've seen from the bailouts, is this the biggest issue why the bailouts are worth it? More choice to American customers and their safety or are the bailouts still a bad idea?
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From: Ontario
The major flaw in that reasoning is the assumption that GM is number 2 on shoppers' lists after Toyota. I think that would be the extreme minority of cases. Most likely it's something like Toyota, then Honda, then Nissan, then Subaru ... and near the bottom comes GM and Ford. Sure there will be some Toyota customers go to GM (the "thousands" of calls GM received out of the millions of Toyota owners), but I don't think that many.
And given the recent shrinkage in the North American market, I suspect there's plenty of capacity for the runners up to absorb all the Toyota customers who absolutely need to purchase a new car right now and no longer want a Toyota.
And given the recent shrinkage in the North American market, I suspect there's plenty of capacity for the runners up to absorb all the Toyota customers who absolutely need to purchase a new car right now and no longer want a Toyota.
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Joined: Mar 2001
Posts: 954
From: Shelton, WA
The major flaw in that reasoning is the assumption that GM is number 2 on shoppers' lists after Toyota. I think that would be the extreme minority of cases. Most likely it's something like Toyota, then Honda, then Nissan, then Subaru ... and near the bottom comes GM and Ford. Sure there will be some Toyota customers go to GM (the "thousands" of calls GM received out of the millions of Toyota owners), but I don't think that many.
And given the recent shrinkage in the North American market, I suspect there's plenty of capacity for the runners up to absorb all the Toyota customers who absolutely need to purchase a new car right now and no longer want a Toyota.
And given the recent shrinkage in the North American market, I suspect there's plenty of capacity for the runners up to absorb all the Toyota customers who absolutely need to purchase a new car right now and no longer want a Toyota.
What they said.
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From: MI
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From: Greenville, SC
I disagree. The ONLY thing that will justify the bailouts is if GM and Chrysler both succeed, become profitable, and can grow.
Toyota having a problem is a great time to steal some sales, but is in no way a "justification" for the bailouts. You can play the "what if" game all you want, but GM and Chrysler both need to earn back the NA market with good quality products, not because of the misfortune of others. If the GM or Chrysler car the "distraught Toyota Owners" buy is crap, in a few years when this all blows over, they'll return to Toyota or another foreign brand.
Toyota having a problem is a great time to steal some sales, but is in no way a "justification" for the bailouts. You can play the "what if" game all you want, but GM and Chrysler both need to earn back the NA market with good quality products, not because of the misfortune of others. If the GM or Chrysler car the "distraught Toyota Owners" buy is crap, in a few years when this all blows over, they'll return to Toyota or another foreign brand.
Last edited by Silverado C-10; Jan 30, 2010 at 03:22 PM.
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From: Roseville, MI, USA
You do know that Honda just recalled thousands of vehicles as well right when Toyota did. They just picked the picture perfect time to do so.
Honda won't benefit........if any other then GM it will be Hyundai and only because the American car buying public for the most part is new to them.
Honda won't benefit........if any other then GM it will be Hyundai and only because the American car buying public for the most part is new to them.
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Joined: Mar 2001
Posts: 954
From: Shelton, WA
You do know that Honda just recalled thousands of vehicles as well right when Toyota did. They just picked the picture perfect time to do so.
Honda won't benefit........if any other then GM it will be Hyundai and only because the American car buying public for the most part is new to them.
Honda won't benefit........if any other then GM it will be Hyundai and only because the American car buying public for the most part is new to them.
The Honda voluntary recall isn't even close to what Toyota's is, and unlike Toyota who appears to have learned their "recall handling" skills from Ford, Honda is dealing with it light-years better.
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From: The Golden State
GM was bailed out by the Bush administration December 2008 after congress refused to use taxpayer money to help GM (and Chrysler). This was money GIVEN to GM. This was a BAILOUT.
Last summer, GM went into bankruptcy. To avoid being liquidated, before it went to court, a deal was worked out between the UAW and the Treasury Department in which the US government (along with the Canadian Government, the UAW, and a few other smaller entities combined) would BUY selected assets of the General Motors Corperation, and leave what was left for liquidation, which the Bankruptcy court approved.
This saved essentially an economic meltdown via sparing a massive amount of unemployment. That would have exploded government spending (unemployment insurence and health care coverage as well as pension liabilities) while at the same time decimating governments income. It would have spread, and that's why even George Bush backed a bailout.
In Chrysler's case, even though it wasn't quite at the door of death the way GM was, they were by their own estimates about 6 months away (later found out to be a bit longer). In this instance, they too got a government BAILOUT December 2008 the same time General Motors did.
The big difference with Chrysler is that instead of them arranging to have the government buy them in a bankruptcy, the UAW bought parts Chrysler through their pension fund and essentially hired Fiat to run it, with the Federal Government acting as broker.
Again, in both instances BUY... is not "BAILOUT".
In Bankruptcy, money was exchanged for "ownership" of the company.
In December 2008, money was "given".
The "Bailout" kept GM and Chrysler afloat until they came up with plans to fix themselves.
The Feds appointed a team to evaluate both companies, and came up with dead on, easy to read and understand reports that were linked here.
Both were forced into bankruptcy.
To avoid liquidation, they had a prepackaged version that was NOT a precident, and in fact had been done quite a few times in court before.
As far as if the bailout was justified, there is no doubt whatsoever it was.
Not because of Toyota's quality issues. But because Michigan didn't didn't implode taking most of the country with it. Paying 60 billion to own GM (with the possibility of recouping most if not all of it back) is a lot cheaper than paying out another half trillion plus dollars if everyone wound up unemployed.
As far as who benefits, Ford does by far.
Ford has the highest quality ratings of any car company in America right now, and word's starting to get out.
Toyota's going to get a serious black eye over all this, and the gap between Ford and Toyota will get alot bigger.
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From: Toronto, ON Canada
I agree on just 1 thing: the bailout was good for GM/Chrysler.
I disagree on everything else. In fact, the writer has an intellectual capacity of a gold fish with his cheap attempt to bring in emotionalism. Did he really say that Toyota owners can be "comforted" by the all-embracing, fatherly arms of GM? You've got to be kidding me.
Anyway, do you know why I agree that the bailout was a good thing? The bailout happened when the big 3 were criticized for being stuck in the middle ages, producing cars nobody wanted, with a reputation for reliability less than stellar. What this Toyota recall is showing, though, is that even the kingpin has serious issues, and perhaps people should not be so quick to discount domestic manufacturers. And the bailout kept the big 3 afloat enough for this to happen.
We'll see how this goes down in the pages of history for both domestic and Japanese automakers.
I disagree on everything else. In fact, the writer has an intellectual capacity of a gold fish with his cheap attempt to bring in emotionalism. Did he really say that Toyota owners can be "comforted" by the all-embracing, fatherly arms of GM? You've got to be kidding me.
Anyway, do you know why I agree that the bailout was a good thing? The bailout happened when the big 3 were criticized for being stuck in the middle ages, producing cars nobody wanted, with a reputation for reliability less than stellar. What this Toyota recall is showing, though, is that even the kingpin has serious issues, and perhaps people should not be so quick to discount domestic manufacturers. And the bailout kept the big 3 afloat enough for this to happen.
We'll see how this goes down in the pages of history for both domestic and Japanese automakers.
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Joined: Aug 2000
Posts: 6,165
From: Sterling Heights, MI
To say that Toyota's recent problems justify the bailouts is nonsensical. One has nothing to do with the other.
The only thing that will ultimately prove the bailouts were justifyable is if GM and Chrysler never find themselves in this position again. In short, it is far, far, FAR too early to be popping the corks - hell, GM isn't even out of gov't control yet.
The only thing that will ultimately prove the bailouts were justifyable is if GM and Chrysler never find themselves in this position again. In short, it is far, far, FAR too early to be popping the corks - hell, GM isn't even out of gov't control yet.
