Bailout for the Big Three?? How will it help??

How is giving (or lending as they say) $27 Billion to the car
companies going to help them sell vehicles??
The Feds can give Chrysler all the money in Fort Knox, I still won't
buy another Chrysler product.

 

My guess is that the auto makers desperately want to downsize or shed
jobs, but that due to existing contracts they would be looking at huge
payouts to shed those jobs, so at the moment it costs them less to keep
unneeded people employed vs handing them a check and telling them to get
lost.

If the auto makers had a pile of new money dumped on them, they'd use
that money to let people go, close plants, cancel supply contracts, etc
etc. They would emerge with a smaller operation where their product
output more closely matches market demand.

You, like a lot of other people, probably can't afford a new car at this
point, or are otherwise not in the market for a new car purchase anyways
(regardless who makes it).

 

this is what happens when people won't support the country they live in!
supprot it by buying it's products and instead go out and buy imports esp
Hyundai's susuki's and diawoos
Mitsubishi's toyota's and hondas
the domestic companies have to be bailed out with tax dollars instead
the real bad part is if we go into a war like ww2 or ww1 we do not have the
ability to make our war equipment like we did we lose our freedom no if
ands or buts
if you don't believe this just look at some ww2 pics were there is
factories making war equipment and you will see automotive factories making
the stuff we need to keep our country on the winning side
some sort of ww2 is coming it is just a matter of time esp if our oil supply
is shut off
and just to state a fact i now work on more imports the break than the
domestics
so i don't by the shit about hondas toyotas being better adn ththe import
parts are 30 more in your cost
i just had to replace a 02 sensor in a lexus and the freaking thing was
700.00+ just for the sensor wtf?so if we want to keep our country free we
need the big three just look at the bigger picture and forget about the
little shit my state has been in a recession since 04 and it's is now
hitting the rest of the country with no quick end in sight so keep buying
imports and help us lose our abilty to remain free
if 10 people buy a import and it costs them 20 k each
then add that up
it comes up to 200k!
that leaves our shores and you took out a loan to send that money out of the
country to other contries and some of those are communist goverments! wtf
then you wonder why we need to bail out companies that provide us with the
standard of living we have
no wonder guns sales are up 75% i had to rant

 

<rant snipped>

Rewarding Detroit's incompetence with a bailout will only breed more
incompetence and short sightedness-such as Ron Gettelfinger saying that
Detroit did nothing wrong, it was the economy alone. The UAW and Rick
Wagoner are in Denial (which is in the place called LaLa Land). Toyota
and Honda caught the Detroit Disease and built some trucks and SUV but
they hedged their bets (especially Honda) and have the wherewithall to
survive-Detroit is buck naked and flat broke (both of money and solid
planning). R.I.P. Detroit because of stupidity and and greed.
My rant.
i had to rant

 

Maybe you can clear this up for me. Is it "buck naked", or is it "butt
naked". I've heard it both ways. Seems it should be the latter 'cause
the first doesn't make any sense.

 

Good point, see:

http://ask.yahoo.com/20040927.html

http://www.randomhouse.com/wotd/index.pperl?date=20001005

 

man of machines top-posted:

No, this is what happens when the US house and senate enact trade laws
that allow foreign car makers full access to the US retail car market
while US car makers don't have the same access to the foreign markets.

Why not enact a trade law along the lines of - for every Korean,
European or Japanese car that is driven off a ship at a US port of
entry, that a US-made car must be exported to Korea, Europe or Japan?

And if Korea wants to charge an import duty of, say, 15% on US cars
shipped to Korea, then the US would do like-wise. Same with Europe and
Japan.

Level the playing field, and then let auto makers compete with each
other globally.

 

Setting aside the issue of restrictive trade barriers for the moment,
is the Korean marketplace large enough for Chrysler to build a
profitable distribution network and, if so, how much would that cost?
Would the return justify the investment or could this money be better
spent elsewhere?

More to the point, are Chrysler's products well suited to the taste
and needs of these foreign markets? My sense is that if Chrysler, GM
and Ford can't win the hearts and minds (and wallets) of North
American car buyers, they're not likely to do much better elsewhere.

Cheers,
Paul

 

But these restrictive barriers already exist, and work against the
domestic US auto makers.

Ok, so you're going to focus on Korea, and not Europe or Japan.

If the Korean marketplace is large enough to support it's own intrinsic
manufacturing, sales and distribution network for vehicles, then it's
large enough to support the sales and distribution network of foreign
vehicle makers.

South Korean auto makers rely inordinately on foreign sales for their
operations (the Jap auto makers are also relying more on US sales in
recent years as domestic Jap car sales have been declining).

In 2006, total SK automobile production was 5.81 million units (increase
of 11.5% over 2005).

Of those, 1.15 million were for domestic sale, and 4.66 million were for
export.

http://english.peopledaily.com.cn/200701/03/eng20070103_337790.html

There were 1.67 new vehicles (cars and trucks) sold in Canada in 2006.
52% of those were cars (868k). Of those, 1/3 or 290k cars were built
overseas (presumably not built in North America).

If a market that bought 290k foreign-made cars is large enough to
justify foreign companies to set up sales and distribution networks,
then I'd say that the Korean market (48 million, or 45% larger than
Canada's population) could easily build within a few years to that level
of foreign sales (assuming a level playing field).

To put things into perspective, total new vehicle sales in the US in
2006 was 16.55 million (I think this is both cars and trucks). In 2007,
this number dropped 3% to 16.14 million.

US auto makers would not have to outlay a lot of cash to sell into South
Korea, assuming that South Korean import laws, customs and duties were
equitable or on-par with US counterparts. Let individual Korean
investment groups and individuals set up franchises and dealerships to
sell US-made cars. That can't happen if the cars aren't being allowed
to be shipped into the country in the first place.

Obviously if the foreign car makers are selling their foreign-made cars
in both their own market and the US market, that there is a commonality
between the "tastes and needs" of both markets. So there should be no
such barrier to sales of particularly the small US-made cars in those
foreign markets.

The US is the dumping ground of ALL foreign car makers. Only the US
allows foreign car makers complete and free access to sell their
products. All other countries with a domestic auto industry protect
their markets from foreign imports.

Until or unless there is a level global playing field with respect to
the importation and sale of foreign cars, we will never know if US-made
cars would, or could sell in foreign markets to the extent necessary to
change the financial bottom line of the US big-3.

 

Korea charges an 8% tariff on all U.S. vehicles. Note that the U.S.
imposes its own import tarrifs on Korean autos -- 25% in the case of
pickup trucks.

My question would be relevant to all three examples you mention; there
was no intention to limit my focus to Korea alone.

Just so I understand this correctly, you're saying U.S. vehicles
cannot be imported into Korea?

Personally, I think the real issue facing Chrysler, GM and Ford is
perceived value. A growing number of North American car buyers are
purchasing Honda Accords, Toyota Camrys, Hyundai Sonatas and the like
-- often at a sizable dollar premium -- because they believe these
vehicles offer better overall value and a superior "customer
experience".

Price wise, in Canada, a Dodge Caliber SE equipped with a 23A Quick
Order package currently retails for $13,487 CDN. A four door Hyundai
Accent, if you consider this vehicle to be more or less its
equivalent, starts at $14,295.00. If you equip both vehicles with
automatic transmissions, that price rises to $14,787.00 and $15,295.00
respectively.

As you move up the chain, the suggested retail price of a Dodge
Advenger SE equipped with the 24Y package is $19,975.00 CDN. If the
Hyundai Sonata is a fair match, the base GL model with automatic
transmission is $23,395.00 CDN.

In both cases, as you start loading on the options, the price
advantage for Dodge grows wider. Is the U.S. market any different
from that of Canada?

Cheers,
Paul

 

South Korea has (or, perhaps, had) an 8% tariff on foreign cars. It was
announced in April 2007 that the tariff would be eliminated (not sure
when). When other local taxes are factored in, the effective tariff
worked out to 10.5%.

In return, the US will abolish it's --> 2.5% <-- import tax for South
Korean cars with engines 3L or smaller. Tariffs for sedans with larger
engines will be removed over 3 years.

Yes, the US does have a 25% tariff on pickup trucks, which will be
removed over 10 years.

A 7.5% tariff differential working against US vehicles doesn't help.

Your example of the Dodge Caliber being less expensive than the Hyundai
Accent begs the question - why doesn't the Caliber sell well in South
Korea?

 

Well, that's good news. Within ten years, the United States can no
longer be accused of duplicity.

It may not help but, then again, I don't think this is Chrysler's
biggest worry right now.

The real question Chrysler should be asking itself is why its October
sales fell by 35 per cent and year-to-date sales are down 26 per cent.
After all, if you can't sell American cars to the American public,
arguably among the most brand loyal and patriotic automotive customers
in the world, you might as well turn off the lights and lock the door.

Cheers,
Paul

 

As mentioned in the Wikipedia discussion pages for the US-Korean FTA,
there has been very little reported in the press about it. Perhaps the
term "media blackout" is justified.

http://en.wikipedia.org/wiki/U.S.-Korea_Free_Trade_Agreement

By all accounts, it has not yet been ratified by the US Congress or the
National Assembly of South Korea. So the current tariff regime on cars
would still be in place.

The way I read it, it seems likely it will die unless the next Congress
ratifies it.

Just to re-cap the relavent point here, SK exported 700,000 cars to the
US in 2006, but imported just 5,000 cars from the US.

Beef exporters also have it rough. SK was the third largest market for
US beef in 2003. In that year the US exported 200,000 tons of beef to
SK, up until December of that year when SK halted imports of US beef due
to a single case of mad cow disease discovered in the US. I believe
imports have resumed only this year, but still face a 40% import tariff.

South Korean culture is, by some accounts, incredibly hostile towards
the US and this appears to influence consumer purchasing habbits.

I believe all auto makers (domestic and foreign) are seeing drops in
their US sales.

And so, after all, we still have the fact that US domestic auto makers
face an uneven international playing field and the US Congress or US
Gov't foreign trade policy is to blame. Years of preferential treatment
of foreign car imports have taken their toll on the domestic US auto
industry and have left them with a dwindling warchest of operating cash.

 

Factor in the overall automotive market drop of all cars sold in the
USA, foreign and domestic. Asian and European cars aren't doing much
better in the USA.

 

i think most folks might remember there were no Lexus, or Acura or Infinity
at one point in the U.S. The Government told the Asian importers they could
only bring in the small econo-boxes, no luxury stuff. A few years later they
said "ok...bring em' on in boys". when was that? late 80s? I remember
when Toyota started saying they were going to build a full size truck. I
remember saying "yeah right, they'll never make anything as good as an
American truck".

maybe it was supposed to spur the American companies into doing better
because now they have more competition? i dunno. but as soon as the gov.
dropped that import stipulation and others, that's when we should have seen
the train coming....laziness and greed has really taken its toll on a lot of
the folks in this country,

 

They still don't. They only make a 1/2 ton, same with Nissan. Toyotas
first attempt was the T100 which did very poorly. Their 2nd attempt is
an improvement but still just a 1/2 ton. Not sure if Nissan or Toyota
could compete with the big 3 3/4 and 1 tons and above.

 

Well, if, in your words, "South Korean culture is, by some accounts,
incredibly hostile towards the US and this appears to influence
consumer purchasing habits" this doesn't strike me as a promising
market for Chrysler. Wouldn't it make more sense for Chrysler to
focus its attention on markets that are a little less "hostile"? [I'm
thinking, maybe, North America?]

At a time when gasoline prices nation wide were peaking above $4.00 a
gallon, what were the vehicles Chrysler was trying to sell us? The
Chrysler Aspen? (*gag*) Dodge Durango? Jeep Grand Cherokee? Dodge
Ram? Gasoline prices have backed down [for now], but with the economy
continuing to head south, what vehicles can Chrysler offer us? The
above? Nein, danke!

"Years of preferential treatment of foreign car imports"?!? I think
it's safe to say we see things differently. Can't we just admit that
GM, Chrysler and Ford screwed up and stop trying to pin the blame on
someone [anyone] else?

And for fear I leave you with the wrong impression, I have a strong
emotional commitment to this company and with one exception, all my
vehicles have been Chrysler products, most recently a 300M Special and
a Dodge Magnum R/T. I would dearly like my next vehicle to be a
Chrysler but, as I've stated on this forum before, I'm not the least
bit interested in driving a truck or SUV, and whilst the new 300 is
OK, it's doesn't drop me to my knees (frankly, if I wanted a cheap,
plasticky interior, I would buy a Tercel).

Cheers,
Paul

 

What train was that?

That the US gov't likes to formulate trade laws that benefit foreign
countries?

That the US gov't wanted to destroy whole sectors of the US
manufacturing economy by dropping taxes on imports?

Are you saying that in spite of anti-American trade policies, that US
companies were supposed to be able to out-compete foreign companies at
home? Maybe you want to explain how exactly they were ever going to
pull that off...

 

True, not a whole lot better, but compared to their North American
counterparts, perhaps as good as can be expected. As of October 31st,
the score card, year-to-date, is as follows:

GM - down 20.4%
Ford - down 18.6%
Chrysler - down 25.9%
Toyota - down 11.5%
Honda - down 3.2%
Nissan - down 6.2%
Volkswagen - down 1.8%
Mitsubishi - down 23.9%
Mazda - down 7.5%
Hyundai - down 7.8%
BMW - down 4.8%
Daimler AG - up 4.7%
Subaru - up 2.1%
Kai - down 5.3%

Source: Autodata

The credit crisis, the sour mood of consumers and a tanking economy
will ensure there's enough pain to go around for everyone but, as we
can see, it won't be shared equally. Sadly, it becomes a matter of
who can best weather the storm and if I were a betting man....

Cheers,
Paul

 

Consumer sentiment can always be changed. But it makes no sense to even
try if import tariffs are stacked up against you, with the intent to
form a trade barrier.

Why do you give absolutely no credence to the effects that gov't tariffs
have on global trade flows?

When gas was $2, even $3 a gallon, "WE" (Canadians and Americans) were
busy filling our driveways with pickup trucks and SUV's. That was only
a year or two ago.

And it's NOT like the big-3 don't have small car options to sell when
gas hits $4. They have always had small cars with small engines, and
they always do sell a lot of them. They just don't make much profit on
them, and they can't when Korean and Japanese cars are effectively
dumped into the US market, and the big-3 face trade barriers trying to
sell their small cars into those foreign markets.

It's been said for a long time that Jap companies uses their protected
domestic market to sell their cars at home and make healthy profits, and
then sell into the US at practically a loss and build market share.

Maybe the big-3 were giving us large vehicles because they couldn't
compete with the Korean and Japanese imports which were coming ashore
helped by low duties and tariffs?

Maybe if the US import tariffs were evenly matched with Korea's and
Japan's import tariffs, then we would have seen a different mix of
domestic vehicles from the big-3.

Yes, and you have posted nothing to counter that statement.

You can't, or won't, admit that tariffs and taxes affect trade and
access to markets. The trade barriers that domestic US makers face when
selling (or trying to sell) into Korea and Japan never get much press,
because those societies are so alien to us and so far away.

Read this:

http://www.constitutionpartyofwa.com/articles/article_CS_America_victim_ftaa.html

-----------------
"Here is an example of how it worked: If Toyota produced a car with a
basic dealer price of $8,160 it would pay a commodity tax, $1,840, to
the Japanese government causing the dealer price to rise to $10,000.
That tax was then paid by Japanese consumers as a hidden part of the
total price, along with other taxes....

"However, the fine print in Japan's tax manual revealed that if that car
was exported to the U.S., Japan would rebate (kick back) the commodity
tax."

Toyota could sell the car in America for $8,160...$1,840 less than its
price in Japan.

"On the other hand, if a U.S. car carrying a similar dealer price of
$10,000 was exported to Japan the U.S. government would not rebate even
one dime from $4,000 of taxes that had been imbedded in that price
through income, PICA, property, and many other taxes. When the $10,000
U.S. car entered Japan it would not be released from customs bond until
the manufacturer paid the 22-1/2 commodity tax, thereby causing the
price of the U.S. car in Japan to rise to $12,250, plus other
charges...."

As a result of these assaults on American auto manufacturers, Stelzer
says, "GM has closed at least 70 plants and offices in the U.S. while
reducing its domestic work force from over 600,000 to barely 300,000
today, and opening plants in many other countries. At the same time,
GM's role as the largest private generator of federal, state, and local
tax revenue shrunk by at least 50 percent." He points out that federal,
state, and local governments have enacted millions of tax and regulatory
laws that have been responsible for over 80 percent of the cost of the
average American product. That being a ratio of 4- to-1, it constitutes
a tariff of 400 percent on our products. Yet we assess a tariff of only
2 percent on imported cars and parts which are assembled in Japanese
plants in the U.S.?
---------------------

Why not buy the new Challenger then?

Last time I passed 2 or 3 car carriers full of Challengers on the 401
heading west, they didn't look too much like trucks to me...