GM and Chrysler

I saw a news report (NBC) last night that claimed the government has said it will back the warranties of GM/Chrysler/Ford cars sold today should the companies themselves go out of business tomorrow.

If that’s true, it seems like a great time to buy a new car would be from GM in the last days of their firesale prior to going under completely. You’d likely get a car on the super cheap, with the one real worry (warranty service) backed by the government. Of course, warranty service from the government most likely consists of you paying to repair the car, then submitting to the feds for reimbursement. That will either end in you waiting months to be denied your claim, or finding out that the reimbursement fund ran out of money after the first 90 days due to massive amounts of fraudulent claims submitted by scammers.

For the sake of all those employed by the industry, I sincerely hope none of the big three goes under. That said, I admit to a morbid curiosity as to what it would be like if one did.

Yeah, if Honda isn’t willing to pay a competitive salary they won’t be able to attract top talent and they will never be able to compete. There’s a reason guys like Wagoner command millions of dollars, it’s because they can change the direction of a company.

I sincerely hope that’s one outcome of the current economic mess, for American shareholders and boards and I guess the populace in general to collectively realize that execs are not worth anywhere near what they get paid currently.

There is almost certainly a market failure going on in executive compensation but I have not seen any research that points the finger at exactly why it is happening.

I suppose it has something to do with:

  1. our markets being very far from PC
  2. Executive compensation being a smallish portion of the total costs of the company
  3. Very little oversight of the compensation

I guess… but I would rather just read what some dude who did a year worth of research thinks.

Well, I suspect that they would tell the public whatever they thought the public wanted to hear on this topic. It may be that GM failing would involve a sharp rather than graded decline in demand, and allow the suppliers to downsize/consolidate more smoothly. So maybe it’s best for Toyota if we throw money at GM in a way that lets them fail a little more slowly.

The bottom line in the long run is that about as many car parts will be built as are needed to make the cars to meet demand. The number of companies competing over the pie doesn’t affect this demand beyond the short term.

No question that it’s being politic, but there’s an element of truth behind it.

I think to some extent Toyota recognizes that e.g. GM and Chrysler as bad as they are, aren’t all bad. The companies have taken the lead in important ways. Chrysler, for example, has invented (at least) two entirely new classes of automobiles in the past 25 years – the minivan and the “crossover” SUV (i.e., the Pacifica) – which opened up massive mainstream markets for all manufacturers. GM builds some very fine engines and transmissions, and that R&D work pushes everyone else.

I certainly don’t say the Japanese aren’t xenophobic. But I do say they know it when they see it. They have bent over backwards for many years to avoid America-first reaction against their products.

538 has a interesting graph today.

That would be an awesome graph if Toyota or Honda was on the graph as well.

That looks like a stable business just hit by hard times. Pour on the billions!

Why didn’t we let AIG go bankrupt and then buy things on the cheap? Then we wouldn’t have to pay the high priced bonuses to rich people. Just like how the contracts GM has with normal workers is going out the door should they declare bankruptcy.

There’s been at least one thread covering some variation on that almost weekly for months and months. Do try and keep up.

I’m just not that into you.

As a theory, maybe they didn’t expect the huge runup in health care costs when they promised it all back in the 1960s? Dunno, it’d be interesting to see.

I wish the next time David Gregory says pay is all relative and the CEOs of these failing companies are taking a “hit” because of stock prices, someone would interrupt him and ask how much Toyota’s and Honda’s executives make compared to GM’s. It’s all relative. I’d prefer the relative with functional companies. Heh.

this could hit a lot of people hard:

DETROIT — Two people briefed on the plan say General Motors Corp. will close most of its U.S. factories for up to nine weeks this summer because of slumping sales and growing inventories of unsold vehicles.

The people did not know exactly when the shutdowns would occur, but both say they will include the normal two-week closure in July to change from one model year to the next. Neither person wanted to be identified because workers have not been told of the shutdowns.

GM spokesman Chris Lee would not comment other than to say the company notifies employees before making any production cuts public.

GM is living on $13.4 billion in government loans and faces a June 1 deadline to restructure or seek bankruptcy protection.

Weirdly enough, they’re advertising the new Camaro on TV here and man, if I had any money I might must buy one!

That is the thing…GM is making some really great cars! The Camaro is getting rave reviews. The V6 version puts out 300hp and gets decent mileage…that is incredible. The Vette is a worldclass sports car, period, and the ZR1 is a worldclass supercar. The Cobalt SS is a barn-burning turbo 4 on par or better than any pocket rocket (its ugly, IMO tho). The Malibu has been reviewed as the best midsize on the market (and has a hybred version). The Pontiac G8 GXP has been favorably compared to the BMW M5. Seriously.

Ford has an equally impressive, if not more so, lineup.

And Oldsmobile was making the finest cars it had ever made and some of the best in the industry (cf. the Alero) at the time they were canned. The trouble is that perception lags reality by roughly 10 years in the industry.

The new Camaro looks like an amazing vehicle. I think it has a strong potential to be a collector’s item, and I’m tempted to snag one for that reason alone – especially if GM fails this year and no more are built.

Man we had an olds 88 ESS that to this day we sigh everytime we think of why in the hell we decided to trade it in for ford explorer (which we sold 2 years later).