Hell Hath No Fury Like an Auto Writer Scorned

By David Surace

12.04.2008

After absorbing all of the media over the last week or so, I’ve come to a conclusion. And I think it’s not safe for me to write about this industry.

I’m pissed.

What the heck is wrong with the denizens of this country, and the people we voted into office? Why are their opinions still hopelessly outmoded, after years of excellent products and the PR to back it up? Why is the poll-bearing public so convinced that there will be NO ECONOMIC FALLOUT from a Big 3 liquidation?

Why was there no problem at all when Wall Street jerkoffs arrived in Washington–in private jets, no less–to collect their $700bn without even so much as a wink and a nudge? “It’s all good! We believe you!”

What the hell happened to this mighty auto industry, that it couldn’t survive an (arguably sizeable) economic iceberg? After all the Previous Icebergs that have been spotted in these waters (the Suez Oil Crisis, the OPEC Oil Crisis, British Leyland, Audi’s Unintended Acceleration, the early 90’s recession, MG Rover, the meltdown of GM/FIAT, 9/11, two rounds of Gulf hurricanes, the subprime lending crisis), why am I getting the overwhelming impression that Future Economic Iceberg plans were not in place before the ship had even set sail?

Why wasn’t it obvious (even to us) that maintaining six to eight automotive brands in the same market space would surely lead to consequences like this?

Why are Saab and Volvo–loveable, awesome little guys, but clearly the scrawniest pack mules–being sent to the altar before an angry God, instead of tender and juicy fattened calves like GMC and Mercury?

Moreover, with some–or all–of these cars in jeopardy, how does one credibly evaluate the consumer value of an automobile (new or used) when its maker’s fate is so clearly hanging on a thread?

I have no good answers for any of these questions in the near term. I am worried that those answers will only be written in history. And we know who writes history–the victors.

In other words, the only thing I feel truly qualified to write: now’s a good time to buy a Porsche! But only if you can pay in cash.

COPYRIGHT Autosavant – All Rights Reserved

Author: Chris Haak

Chris is Autosavant's Managing Editor. He has a lifelong love of everything automotive, having grown up as the son of a car dealer. A married father of two sons, Chris is also in the process of indoctrinating them into the world of cars and trucks.

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6 Comments

  1. I don’t think anybody feels there would be _no_ economic fallout to a big 3 liquidation. What they feel is that the economic fallout of bailing them out is going to be just as bad – that these companies are _not_ going to make themselves profitable and these “loans” are not going to be paid back and are instead going to end up on their tax bills – money that doesn’t get spent in other places and will cause _other_ people to lose their jobs.

    If I’m going to spend this kind of money, I think I’d rather spend it retraining the (probably inflated) 3 million workers to do something else. And if GM+Chrysler getting forced into Chapter 7 could save Ford by helping their market share, so much the better – that saves a bunch of the jobs to boot.

    In the end, the number of cars sold per month isn’t going to stay down where it is right now, so a lot of the parts suppliers will just end up selling parts to different companies, or new jobs will open at different parts suppliers. Yes some of these will be foreign, but others will be domestic – Honda and Toyota make a lot of cars in the US, and sometimes it’s faster/easier/cheaper/better PR to make the parts here.

  2. Banks get what they want, and they’re outright grants, with no rules, auto companies get put through a wringer with all kinds of conditions for LOAN for a small fraction of what the banks get. I’m not seaying there shouldn’t be some conditions for the auto companies, it just should be fair and the same amount of conditions for banks.

  3. I couldn’t agree more. It’s a sad state of affairs when plenty of people, including our legislators and the media, don’t realize the reverberations that a Big Three liquidation will send through the economy domestically AND globally. Auto sales are down industry wide, and eventually they will pick-up, just like the stock market. It’s inevitable. But this isn’t going to happen overnight and it’s just something that needs to be accepted. I don’t think anyone should assume that Detroit will take the money and continue to make poor-quality cars. With strong demand for quality and innovation from consumers, auto workers, stock holders, and now government oversight, I think Detroit has gotten the jolt it needed to get back on the right path.

  4. Not to say that the bank bailout was necessarily right, but it was targeted at a very specific problem (bad mortgages). Banks have already tightened their lending standards to address the root cause. This gives good cause to believe it shouldn’t happen again (not to say that it won’t…)

    Where do you even start to fix all the things wrong with the domestic auto industry? UAW labor is too expensive, their cash cow (SUVs) has left them, and their market share is shrinking every day. Chrysler makes a bunch of cars that nobody wants, GM is stretched way too thin with too many brands, and so is Ford to a lesser extent. They all have way more capacity than is needed.

    How long until they turn it around? Right now they’re saying they just need a year and $34 billion. What if that doesn’t work? Another estimate was that it’d ultimately take $75-125 billion…and that still comes with no guarantee of long term solvency!

    A loan does nothing if the Big 3 cannot address these fundamental issues, it’ll just prolong the dying and ultimately cost the taxpayer even more.

  5. Yeah, SUVs are so bad. Its so wrong of Detroit to have made them…if gas stays under $1.80 a gallon, how long before demand for them climbs again? Come on. If we want an energy policy we should get one. In Washington. Tax gas. Don’t make GMFordChrysler try to do it alone on the supply side. “i’m sorry Mrs. Smith I know gas is cheap and you want an SUV but we can’t make them. Go buy a Toyota or a Honda, they still make them”. I can hear it now. Trying to make an energy policy only on the supply side is like pushing a wet noodle up a hill.

  6. The analogy with the bank bailout isn’t great, a functioning financial system is vital national infrastructure like highways or electricity transmission. GM? not so much. Someone will always make money building vehicles in the USA, if GM or Ford can’t compete they should be allowed to fail. What happens when the feds pump billions into failing automakers and damage those that are succeeding on their own merits? When people continue to avoid Chrysler products like the plague?
    Instead of putting money into failing corporations the loans should go to states and communities affected by job losses so they can invest in infrastructure and training to attract new jobs.

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