GM and Chrysler

The boss of the US\’s biggest carmaker, General Motors, is personally lobbying the Bush administration for aid of up to $10bn (£6.3bn) to prop up a merger with Chrysler.

Political and economic pressure is mounting on the US treasury to step in to avert the possibility of a bankruptcy of one of Detroit\’s leading carmakers, which could jeopardise hundreds of thousands of jobs. As its woes worsen, GM scaled back financing deals on offer in seven European countries yesterday.

Nope. Let either or both of them go bust.

Let\’s have a little more of that creative destruction which, in the longer term, creates all this wealth that we enjoy.

12 thoughts on “GM and Chrysler”

  1. GM cars are (almost without exception) utter shite. Ditto Chrysler. Horrible bloated metal boxes that corner like container ships, have interiors like Del Boy’s flat, and consume fuel like the phrase “Peak Oil” doesn’t exist.

    Only God knows why Americans buy these things, because no-one else in the world does. Oh wait, not even Americans do now..

    Roll on recession!

  2. GM should be allowed to go bust, but the politicians might well decide that it is expedient to bail them out in order to be praised for saving thousands of jobs rather than criticised for allowing them to be lost. The decision will be made on political grounds rather than economic ones.

    A cynic might suggest that the whole purpose of the GM-Chrysler merger is to ensure that so many jobs will be lost if the combined company fails that it will be politically impossible to allow it to do so, especially during a global economic slump.

    American Leyland anyone?

  3. The nearly three months between the election and the inauguration would be a perfect opportunity to let those duds go bust.

  4. Kay Tie wrote:

    ‘GM cars are (almost without exception) utter shite. Ditto Chrysler. Horrible bloated metal boxes that corner like container ships, have interiors like Del Boy’s flat, and consume fuel like the phrase “Peak Oil” doesn’t exist.

    Only God knows why Americans buy these things, because no-one else in the world does. Oh wait, not even Americans do now..’

    Only God knows why Europeans buy the cars they do, because no-one else in the world does . . . although I will say, on my last visit to Europe, I was surprised by the number of late-model American cars I saw on the road.

    Americans generally don’t buy the kind of cars that Europeans, or Africans, or Chinese, or Japanese do because – guess what? They are different places, and different places have different needs.

    Funnily enough, in the real world of auto transportation, the lateral g capability of a car (aka ‘cornering’), just isn’t that important. The carpool really doesn’t care whether you can hit the apex of the corner on the perfect line, every time. I have never understood why Europeans place such emphasis on the most-arcane performance aspects of automobiles, and then berate American cars as though they somehow don’t measure up – like every trip to the grocery store is a stage in the RAC Rally.

    Your ideas about the fuel consumption of US autos are sadly out-of-date, Suggest you peruse the available data at http://www.fueleconomy.gov

    Americans are buying more-fuel-efficient cars – it’s the only stable/growing segment of the US auto market right now – and plenty of the competitive offerings in this class come from US makers.

    llater,

    llamas

  5. Of course, now the precedent has been set in bailing out banks, all sorts of people will be calling for the same thing for car companies “why do the banks deserve a bailout, when we dont?”.

  6. “Only God knows why Europeans buy the cars they do, because no-one else in the world does . . .”

    Hmmn. I think last time I was in the States my colleague picked me up in his Jaguar. And there were plenty of BMWs, Volvos and Porsches in the car park (sorry, parking lot). Perhaps you’re referring to the little small cars like the new Mini. Err.. Well, it must be the Japanese cars that Americans don’t buy, like Lexus and Honda and Subaru.. Err.. Actually, I think the only major European makers that don’t sell in the US are Renault and PSA.

    “Funnily enough, in the real world of auto transportation, the lateral g capability of a car (aka ‘cornering’), just isn’t that important.”

    Keep driving in straight lines (my friend had a long drive from Detroit down to a plant in Indiana and the sat nav said “bear.. slight.. left.. in.. three.. hundred.. miles.”

    “I have never understood why Europeans place such emphasis on the most-arcane performance aspects of automobiles”

    Tell you what, go and drive an M5 and come back and tell us you still believe that.

    “Your ideas about the fuel consumption of US autos are sadly out-of-date”

    Rather like the US auto industry 🙂

    “Americans are buying more-fuel-efficient cars – it’s the only stable/growing segment of the US auto market right now ”

    Yep, what comes around goes around. Have you read Lee Iacocca’s story of his Chrysler turnaround? The industry failed to anticipate the oil shock of the late ’70s/early ’80s and were caught on the hop. Chrysler were bailed out by the Reagan administration in order to complete the development of their K cars. The US government did very well indeed from the turnaround. It’s an interesting story with almost identical parallels to today.

    Good luck to GM and Chrysler in a merger. At least they’ll have a car guy (Bob Lutz) at the top. They need to bite the bullet and lop off a chunk of dead wood management and get back to making good cars that people want to buy.

  7. Kay Tie :

    September 2008 sales for GM, Ford and Chrysler in the US = 504,000 units.

    Jaguar = 969 units (oh, my!)
    BMW = 14,744 units
    Volvo = 4054 units
    Porsche = 1458 units

    These are the examples YOU cite of the European cars that, you claim, Americans are buying. About 4% of the number they buy from just the Big 3, about 2% of total US vehicle sales.

    The Mini? 3762 units in September ’08. 1/3 of 1% of US auto sales.

    Subaru? 14,491 units in September ’08. 1½% of total US auto sales. And Subaru is a popular import brand with a large and devoted following. Mrs llamas drives a Subaru, as does MILlamas.

    Would you like me to pile on some more, or do you now accept that Americans simply do not buy European-style cars very much? Your anecedotal observations to the contrary?

    We just got shot of our BMW Z4 – so I do have some idea of what you’re trying to say. But what you don’t grasp is that that sort of performance, as much fun as it is, is just completely unimportant for 99.995% of automobile usage, which is grocery-getting and going to work. Most American consumers buy what works for them, and spending extra money for performance they’ll never use just doesn’t make sense. We bought our BMW as a toy car for weekend enjoyment. As a grocery-getter and work car, it sucked , and you can’t even get a cased shotgun into the trunk. And you have to park it for 5 months of the year because it’s just impossible to drive in the winter. That’s what we drive Chevys – and Subarus – for.

    I’m glad that you added your observation about ‘straight lines’ – that is my exact point. So you agree with me? US driving is significantly-different than European driving? Now tell me again why US automobiles need to corner better?

    You wrote:

    ‘Good luck to GM and Chrysler in a merger. At least they’ll have a car guy (Bob Lutz) at the top. They need to bite the bullet and lop off a chunk of dead wood management and get back to making good cars that people want to buy.’

    On the first part, we can agree. On the second part, you’re talking out of your hat – GM and Cherysler already make cars that people want to buy, as evidenced by US sales figures. GM and Chrysler alone sell more units than Honda, Toyota, Mazda, Nissan, Hyundai, Mitsubishi and Subaru combined, and their sales dwarf the combined sales of all European makers. The problem is not that GX/CX make cars that people don’t want to buy – the problem is their excessive labour costs, bone-headed middle management, and the vast legacy costs of healthcare and retirement.

    Always ready to refute anecdotal evidence and silly prejudices with simple facts,

    llater,

    llamas

  8. Oh, I guess I will pile on just a little more.

    Total US passenger car sales, September ’08 vs September ’07

    Domestic makers = – 14%
    Import makers = – 25.9%

    All car sales are down. But import car sales are down almost 2x the amount that domestic car sales are down. Apparently, US buyers are finding what they need in smaller, less-costly, more fuel-efficient cars being delivered by domestic makers rather than import makers.

    Toyota Prius? Sales down 13%
    Ford Focus? Sales up 4%

    Nissan Altima? Sales down 42%
    Chevy Impala? Sales up 17%

    Toyota Camry? Sales down 27%
    Chevy Malibu? Sales up 79%

    And so it goes.

    Data? Don’t you love it? So much better than anecdotes.

    llater,

    llamas

  9. And for your next question – where was the Ford Focus developed and designed? (clue: Koln)

    [and why do I think you’re cherry-picking somewhat in the list above? I note you haven’t listed big 3 sales vs domestically-produced non-big-3 sales, which would be the relevant data]

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