Bankrupt Sheetmetal?

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Just wrapped up the press days at the 2008 Los Angeles Auto Show, and the best way I can explain my current state of mind is "confused." As regular readers of this column will attest, I am asked at a pretty regular rate to join news services like CNN, MSNBC and Fox News to discuss the auto industry and offer my "two cents" on where this important industry is headed. Over the years, topics have ranged from the introduction of hybrids into the U.S. market to the impact of fuel prices on car shopping behavior to the latest and sexiest sheetmetal at annual auto shows across the globe. No matter what the subject, it is always exciting and enthusiastic.

The first vehicles off GM's Baltimore Assembly Plant

But all I am asked to discuss these days is the "Big Three Bailout." Neither exciting nor enthusiastic, it seems to be all that the media is focused on these days. While I can appreciate the newsworthy nature of such coverage, I suddenly find myself yearning for the days when we talked about new technologies or the closing U.S. vs. import quality gap or the importance of considering Cost of Ownership in your next purchase. Instead, there is nothing but fear-mongering and perpetrating of negative impressions and opinions that the Big Three did nothing to avoid these dark days or that they are incapable of designing, producing and marketing world-class automobiles. Both could not be further from the truth. What we are facing today is the impact of the lack of financial credit availability to both U.S. car buyers and U.S. car manufacturers. Please note that Toyota, Honda, Hyundai, VW, Mercedes, BMW and a host of other import manufacturers are also taking it in the shins so far in 2008. A generally accepted annual sales total for the U.S. hovers around 16 million units sold...we will be lucky to sell over 10 million this year. And those 6 million lost sales are not all coming out of the hides of GM, Ford and Chrysler. It is just that these three were already on shaky financial standing thanks to rounds of "rightsizing" their businesses.

Granted, many in the U.S. feel that our country and culture should only reward those that work hard and pull up their own proverbial "boot straps" when times get tough. I personally agree with this creed. However, the collapse of GM, Ford and/or Chrysler would ignite a firestorm that would make the current $25 billion loan (please note: loan and not "bailout") look like pocket change in real cost and future impact. And it would be very unfair to these three manufacturers that have already closed many factories, laid off many blue- and white-collar workers, and cut old expectations from their halcyon market share days...especially in light of the protectionist behavior and "investments" made by many local governments on behalf of their foreign manufacturers over their many years in the U.S. market.

Posted on 2008-11-25 | Permalink | |

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