11.26.2008

Experts Say Bailout Will Not Bailout Chrysler

A wide spectrum of opinions are abound regarding the bailout. Here is one with some numbers, not politics, for us to contemplate: Full Article Here

Some excerpts:

"Auto sales are expected to fall from 13.3 million cars and trucks to 12.2 million vehicles next year, the lowest level in 26 years, according to a University of Michigan forecast released Friday.

"That's down nearly four million cars and trucks from the 16.1 million sold in the United States last year. The decline is almost double the 2.1 million cars and trucks Chrysler sold last year.

"Sales are expected to recover somewhat to 13.6 million vehicles in 2010. But that's far fewer than the nearly 17 million vehicles automakers sold annually earlier this decade.

"Chrysler is the most likely to file bankruptcy because it has little business outside of the United States to cushion it in a deep recession here"

(this makes sense, but consider the rumor that GM will be using $1B of the bailout money to invest in Brazilian auto markets. This has only been refuted by one source that I have found, here.

"Craig Fitzgerald, who heads the automotive practice at Southfield-based Plante & Moran PLLC, an accounting and business consulting firm, said domestic automakers might have to close at least 10 assembly plants to align vehicle production with demand."

"We disagree with the notion that the domestic industry is a herd of dinosaurs and destined to fail, Anderson said.

Wow, well at least their was some optimism in all of this, although Mr. Anderson was referring to a complete meltdown! Mr. Anderson and colleagues, may we conclude from your expert opinion that the destiny of the Big Three is ultimately in their hands and not those of the government?

For me, some questions come to mind: How is the government going to increase sales of cars by 4 million per year? Selling hybrid cars? Sorry, overpriced. Tell a young working family making $15/hour to purchase a $25,000 vehicle and report on the response o.k.? Gas prices have come back down and SUV/truck sales are trending back up, perhaps some pent up demand for work trucks is now being realized. Perhaps we don't realize the need for truck owners and the usefulness that trucks provide for people and the economy:

As one blog reader commented to a condescending (if not scathing) criticism of rural truck owners being ignorant: "Right, I'm an idiot for hauling wood in my Dodge Ram so I don't need to fuel my home with 'Big Oil'. Try hauling a thousand logs in your Prius, dude." To his point, in fact, oil demand is dropping and will continue to do so in the U.S. Despite this green trend, I contend that truck and SUV sales will continue to climb due to their usefulness, not willful ignorance as many critics tend to claim.

Before anyone makes the decision that the government can do work miracles for all of us followers...ask yourself the following questions: 1) has the government fixed their own house yet? 2) medicare, social security and a long list of other entitlements are in risk of insolvency. As taxpayers, do we want to take on the burden of adding auto manufacturing to the list?

The last time (that I know of) the government was awarded accolades from industry, i.e., people, was when the NJ Chamber of Commerce gave the TWI Service an "Industry Award". And truth be told, it was volunteers from industry that made the TWI Service a success along with the 1.7 million supervisors and their managers who had the common sense to put the fate of industry into the hands of people that were closest to the customer. In addition these volunteers had to do a whole lot of ignoring the government machine to pull it all off. But that was then and this is now. Public sentiment is different today then it was in 1945.

With that said, does anyone have any confidence today that the government will fix this problem, or are they really just buying votes with our taxpayer dollars?

Sources:
[mLive],
[Autoblog.com],
[Latin American Herald Tribune]
[Market Watch]
[Energy Information Administration]
Link


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2 Comments:

At December 3, 2008 at 12:34 AM , Blogger joshua said...

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


Sharon

http://www.autoloans101.info

 
At December 3, 2008 at 7:27 AM , Blogger Bryan said...

Thanks!

Bryan

 

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