Posted on 12/24/2008 7:19:49 AM PST by XR7
The collapse of the U.S. auto industry would be easier to take if the cars were junk.
That’s how it was the last time one of the Big Three (Chrysler) went belly up back in 1979. If you’re old enough to remember the Cordoba, you know what I’m talking about. It was easy to comprehend the failure of late ’70s-era Chrysler because Chrysler’s cars of that period were junk. People tend not to buy junk — end of story. Simple relationship. Cause and effect.
But today?
Never have the products of the Big Three — especially GM and Ford — been as good as they are right now. The incidence of problems, recalls, etc. is actually lower for some American-brand cars than for Toyota and Honda. By any objective measure, parity, at the very least, has been achieved. The cars are damn good. But they’re not selling.
How do you fix a problem like that?
The cruel answer is, it’s not up to GM or Ford anymore. They have done almost everything they can, on the product side. What’s coming home to roost is a deadly trifecta of lingering buyer suspicion of American-brand cars combined with soaring gas prices and an economy in free fall.
You can fault the American car companies for the first item — the unpleasant legacy of Pintos past, so to speak — but the other two are completely beyond their control.
Some fault GM, Ford and Chrysler for building too many big trucks and SUVs. But that is what the market wanted — until quite recently. The car industry does not turn on a dime. It is not like making a candy bar or a plastic bucket. Millions of dollars and several years (24-36 months is typical) are needed to design a brand-new, wheels-up new car model and bring it from design sketch to production. The surge in gas prices came upon us — and the auto industry — suddenly.
Those who fault GM, Ford and Chrysler for not anticipating the uptick forget that every single major Japanese automaker was feverishly working on gigantosaurs of their own circa 2000-2004 — from the aptly named Nissan Titan to the monstrous Toyota Tundra. But they got to the party late — and their exposure was minimal as the feces began to hit the fan. It was relatively painless to throttle back (Nissan and Toyota may actually cancel their big trucks) and re-focus on what they have historically always done best — passenger cars.
But the backdrop issue is the collapse of the consumerist economy. What’s forgotten amid all the hair-pulling and gnashing of teeth is the simple fact that people, in the main, were only able to “buy” cars — irrespective of who made them, whether Americans or Japanese or Germans — by signing up for a big fat loan on the easy monthly payment plan.
Often, few, if any, questions were asked.
Credit and loans made it possible for even average middle income people to drive home in $45,000 vehicles (SUVs and cars). Now that credit has dried up, the party’s over. No one’s buying anything — because no one can afford to buy a damn thing. Gas mileage is a bogey. The truth is most of today’s middle-large sedans don’t deliver much better fuel economy than trucks and SUVs. About 5-8 mpgs or so better. Big whoop. If the car in question has a V-8, there is virtually no difference. Minivans are obnoxious pigs — with typical city mileage in the mid-high teens, as bad or worse than a new Escalade.
No, the problem is we’re tapped out. We can’t afford gas because we can’t afford anything. That includes cars.
Which is why the cars aren’t selling. Which is why the $25 billion bailout won’t do much except temporarily preserve the jobs of those unlucky souls working directly or indirectly for the industry.
Until the broad masses are once again in a position to buy expensive consumer goods such as automobiles, no amount of bailout boodle is going to solve the problem. Trillions in hopelessly unrecoverable debt is going to have to pass through the economy’s colon first. Then, incomes — and income stability — will have to rise, so that people not only have disposable income once more but feel reasonably secure in their jobs so that they’re willing to sign up for a big hunk of debt.
Do any of you see this happening in the near-term future? Me either.
So, we’re left with the cruel irony of an industry that has never built better products that is on life support — and not likely to recover.
Because for it to recover, we’ve got to recover first.
And no one’s offering us a bailout.
Did you actually buy one?
I remember, but I wasn’t even old enough to drive at the time.
Agree or disagree?
Ditto.
He's 100% correct about that.
You know, I don’t remember the actual car, but I do kinda remember the commercials. I was actually considering buying a new American car (my very first!), until Obama got elected. I’m not willing to take on new debt in the face of the Depression I expect. And now that they’ve gotten that bailout, I’m not buying anything new from the Big Three EVER.
“Trillions in hopelessly unrecoverable debt is going to have to pass through the economy’s colon first.”
Under serious consideration for new tag line.
I am a man who knows who I am.
The Caballero is a car for the man who knows who I am.
I think it would have been in their best interest to have a broader product line.
If they had more high MPG cars during the gasoline price spikes they could’ve ramped up production on those pretty quickly and help mitigate the losses they sustained.
As it was they had a bunch of $40,000+ SUVs that got less than 18 MPG while we had $4.00/gallon gas.
They took a major hit from that swing in consumer buying.
They have to hedge against wild price swings like that.
Cars are better, but in Consumer Reports Annual Auto Issue, Honda, Toyota and Subaru have the least problems while Ford GM and Chrysler are near the bottom. Ford is mid-pack.
Why should I spend my hard earned money on a LESSER quality vehicle? That's the real issue.
Yes he is. I have a Ford Fusion that has been a great car, an Explorer that has been extremely reliable and I got rid of a Ranger no too long ago that had over 325,000 miles on it and was still going.
The quality of U.S. cars have improved much, but it’s hard to shake the ghosts of the past (Pinto, Citation, Vega, etc.) Once people get bitten on a major purchase like a car, they don’t just forgive and forget.
lol!
I remember that.
My dad owned a Chevy Vega at that time. He often said that on a cold, quiet winter night you could hear that car rust.
He also wondered if one winter morning he would walk outside and find the car completely rusted away, with the only surviving piece being that worthless aluminum engine.
Same here. 44 years old now.
I had a 1978 Camaro with a Small Block 305. I can hear Highway Star playing in my head.
Yes. And they ARE expensive. Two factors account for most of that: a) government interference vis-a-vis “safety” and excessive pollution control devices, and especially b) Union greed.
This is the first, and most honest, story about the Big Three in recent times.
The liberal press is solidly in the pocket of the foreign automakers, slavishly reporting how great they are while ignoring massive recalls and defects. At the same time, the same media exaggerates any Detroit defect into certain death for millions of motorists.
This is the same media that hates America, so hating American manufacturing goes hand-in-hand with that.
It’s easy to pick on American iron, so many people do it.
The domestic manufacturers did deliever lousy quality in the past. As conservatives, we despise the UAW and other unions by what they have done to manufacturing in this country.
However, the truth is indisputable.....American cars are every bit as good as foreign cars. The quality ranking are so close that the differences are statistically insignificant.
Of course, the media does not portray it that way and those that have had bad experiences with American cars eat it up gladly.
“Cars are better, but in Consumer Reports Annual Auto Issue, Honda, Toyota and Subaru have the least problems while Ford GM and Chrysler are near the bottom. Ford is mid-pack.”
I have to say, I think part of that is due to the impression American cars are crap. I knew people who had major problems with their new Honda, but it was “just a fluke”, as they would say. I cannot imagine them saying that if it was an American car. I think people are harder critics of American cars because any little thing that does go wrong is expected due to their past track record.
LOL...right up there with the Pacer and Pinto
I didn't think the pinto was all that bad of a car.Put a Boss 302 or a 300 horse 289 in it and you had a street beast!
Actually the 1971/72 pintos where pretty good cars. What killed the Pinto was $.35 a gallon gas. Why buy a little car when you could buy a Mustang or a LTD.
My company just got me an ‘09 Chevy Impala. This is a very nice car, much nicer than any car I have personally owned.
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