GM and Chysler Bankruptcies

[kandrathe]

Yep supply drops, and assuming demand stays the same, price goes up. Of course right now, demand has dropped too and I admit that supply is going to drop more than demand. I'll grant that the short term in the car market I'm talking about is still 5 years or so, not one year. But I also feel that someone will use some of that idle capacity that is still viable that gets shed when these people go belly up.

Me too. But, I think we agree that the next few years will be "interesting".

But this issue is not really new. Part (and I can not say how big a part) of the reason the Big 3 failed is because they didn't produce what the market wanted. Yep their big gas guzzlers still sold well, but they never made a good mid size or small size that people wanted.

They tried to compete in the small and mid-sized markets, but they failed and rather than "reinvent" themselves, they settled to focus on the remainder.

The other thing to consider is where demand is going to grow. I still contend that the demand is going to grow in the smaller car sizes that the failing companies had more issues in.

I think the best idea would be to rethink the societal problem of transport, then work toward a unified strategy that involves the vehicles, as well as the energy sources and the roadways. There are numerous reasons for road use (e.g. from Dad off buying groceries to the truck driver hauling groceries to the store), and so each of those problems needs to be resolved.

So to go back to your food issue.

If I'm hungry enough, I'll eat mushrooms.

So I still say that we can easily still fill 60-80 of the production under the current plan and that we really only need what can be produced on 90 acres.

I doubt it. I think the US is losing about 40% of its ability to produce vehicles, and therefore also the jobs that used to be associated with that production.

Lower quality vehicles will get purchased now too. Used cars that had a year or three of road life in them that got scraped before will be back on the roads, because yes cars that pass all the standards to be drivable get scraped.

The US government is actually paying people to scrape their old cars and buy new cars.

And yes prices will go up in all the car markets.

Nod.

You of all people didn't really believe there would be? Obama campaigned on Hope and Change, not Change and Hope. He put the real promise first. :) I never said he was a great candidate. I've never had a great candidate to vote for in my voting lifetime though. :)

Yes, I knew it was the latest incarnation of a snake oil salesman blowing sunshine up my kilt. I still *hope* he doesn't do to much damage during his four years in office.

And this problem actually goes back farther than that. Didn't Reagan push a lot of regulation out on car markers too?

I wouldn't be surprised. The problems with the US government are systemic, and Washington fights to remain in control of everything globally (including the US economy).

Also as I mentioned earlier, it's not like Japan doesn't have similar standards and they still seem to be able to produce vehicles that meet all our requirements.

Japan is having problems as well.

It looks like in 2008, the big 3 made up 48.4% of the US sales. So we have to keep in mind that everything we are talking about is less than half of the total vehicles sold in the US. Yes, it will have an impact. But some of the trends and issues in the market are related to the GLOBAL recession. If that changes it will have impacts as well. Back in May of 08 Chrysler was only the 5th biggest manufacture in the US market. ... There are also several Chinese manufacturers that have been looking to get into the US market. Do you not think they will try to step that up if all the Chrysler plants close. ... You're thinking still seems to be rooted in a local market, not a global market.

Yes, and no. GM is a global company, and its plants and suppliers span the globe. Ask Mexico or Canada how the big 3 failures will affect them.

Of course the thousands and thousands of people out of jobs (unless one of those Chinese plants does what Toyota and Honda have done and make plants in Kentucky, Ohio, Missouri, etc) they won't have incomes to buy cars with. Of course I covered that a bit in my falling demand.

China will probably not be willing to build plants in the US, unless the US government gives them away along with a bunch of guarantees.

Hah! I live in a town of 16,000 - 20,000, we do have a 24 hour cab company and if you plan really well you can get a greyhound bus to pick you up in the parking lot behind McDonalds. I don't live on a transit corridor. :)

I wasn't only concerned about your commute. :)

I also realize that if circumstances hadn't forced me to, I wouldn't have willing gone without a car that long, but I couldn't do much about it. However it taught me some good lessons, and while I'm in process of fixing up an 88 Honda Civic to have as an option, I'll still get around on my bike and feet mostly. I'll still use my cooler attached to a two wheeler to assist me in shopping and getting clothes to the laundry mat.

There is the bed of an old rail line about 4 blocks from my house, which is designated as a light rail corridor and has been for the past 20 years.

I also realize that this can't work for everyone, but I would bet that over 40% of the population could get away with it, they just don't think they can. Honestly I hope they don't have to either. It can be a real pain in the ass and really limit options. But a car is not a requirement to survive in the United States.

Neither is fuel oil, or natural gas. But, heat and transportation certainly make surviving easier.

On a final note I'm still not sure what you want. You don't want them to collapse, you don't want them propped up. What do you want to happen to a company that hasn't responded to the pressures that have been hitting them for decades. Do you think that if the Feds hadn't bailed them out they would have survived? We are going to have an aftermath. My personal opinion is that we would have been better of to get the natural aftermath of the failures than this crap we are going to have with the Fed in the middle, but I also feel that while it will hurt, that we'll be fine.

To me, the perfect solution would be to divide GM back into multiple car companies and divide the stocks accordingly. Then, give each one 1 year of bankruptcy protection to reorganize, and figure out how to emerge if they can with a vibrant new competitive company. Back off on the CAFE standards as a mandate, but instead turn them into some type of incentive system. Bring the UAW and all the car companies in the US to sit down at the table and hammer out a realistic labor plan for the next 10 years, then everyone signs it and lives with it. I would be more comfortable with the members of the UAW owning 60% of GM, rather than the US government. The way to make these companies succeed is to give them a predictable future. Which means, you need to have a comprehensive transportation plan that considers roads, transit, energy, and industry. The problem is that what we have now is the beginnings of at least a $100 billion quagmire.