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.
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"Pete E. Kruzer" wrote:

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).
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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
MoPar Man wrote:

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man of machines wrote:

<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

--
Civis Romanus Sum

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Jim Higgins wrote:

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.
--
Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
  Click to see the full signature.
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Bill Putney wrote:

Good point, see:
http://ask.yahoo.com/20040927.html
http://www.randomhouse.com/wotd/index.pperl?date 001005
--
Civis Romanus Sum

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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.
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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
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"Paul M. Eldridge" wrote:

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.
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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
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"Paul M. Eldridge" wrote:

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?
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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
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"Paul M. Eldridge" wrote:

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.
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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,
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rob wrote:

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.
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Full-Quoter rob wrote:

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...
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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
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"Paul M. Eldridge" wrote:

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...
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What I've been saying is that Chrysler needs to focus its attention squarely on the North American market and not get distracted trying to sell its products in countries where, for a variety of reasons, it's not likely to perform well. It goes to the point I made earlier, that if you can't sell North American cars to North American car buyers who, in the past, have been largely loyal to you, it's not likely you'll fair much better in foreign markets where the general public is even more committed to supporting their own domestic manufacturers.

It's not like $4.00 gas jumped out of the blue and smacked Chrysler in the face. Like GM and Ford, they chose to ignore the fact that America was becoming increasingly more dependent on foreign oil, most of which originating in countries that don't exactly like the U.S. -- did they simply forget the '70s? And, yet, they've done everything in their power to expand their full-size luxury truck and SUV sales, whist efffectively abandoning the passenger vehicle segment to foreign competitors.

And North American car buyers have, for the most part, rejected them. I read this morning that, in 2008, the Dodge Caliber hatchback has sold for an average of $1,717.00 *less* than a Honda Civic. Why then, even with this price premium, does the Honda Civic outsell the Dodge Caliber by, what, I'm guessing, ten to one?

The same ones that, as noted above and in my previous posts, are *more* expensive than the domestics?

I'm sorry, did I fail to mention the 25% import duty that applies to foreign made trucks?

Actually, I can and I will. My point is that Chrysler has bigger fish to fry right now than worring about an 8% duty on cars it doesn't sell in Korea.

The '74 Dodge Challenger was my first car and so the 2009 Challenger holds considerable appeal. However, I've decided my next car will be a hybrid or, better yet, plug-in hybrid. Don't get me wrong, a 5.7 or 6.1L Hemi Challenger would be an incredible ride, but I'm not convinced it's the type of car I want to be driving now or two to three years from now, given the general direction of our economy.
Cheers, Paul
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"Paul M. Eldridge" wrote:

The whole world is entering a recession, possibly deflationary in nature.
Most every sector of every economy is shedding jobs.
The US auto industry has been maligned as inept and foolish, but the big-3 have done better than most mega-corporations in other sectors. How many airlines have been in and out of bankruptcy protection over the past 10 years?
How many technology, energy, telecom, banks and financial services corporations have folded or have seen their share prices reduced to penny-stock value in the past 10 years?
There is no correct path for any company right now. Every company is in survival mode as consumers flee the markets. Now is not the time for the big-3 to hatch long-term product planning and expensive R&D. Now is the time to reduce costs and hunker down and hope for the best.

The big-3 have roughly 50% market share in the US. Saying that they "can't sell North-American cars to North American buyers" is hyperbole.

More hyperbole.

http://www.tennessean.com/article/20081120/BUSINESS01/811200320/1003/RSS6004
The Caliber does sell $1,717 less then the average Civic, but that's better then the Chevy Cobalt and Ford Focus, which sell for $4,192 and $3,371 less than the Civic.
However, Caliber 2008 sales (through the end of October) are less than half of Focus sales (176k Focus) with Civic volume of about 304k units.
---------------- If the Detroit Three lower their labor costs, and retool to build more compact and subcompact cars, but still have to get by on $3,000 to $4,000 per car less than what Honda takes in for each Civic, they will face a painful struggle to survive.
It will take years for Ford, Chevy and Dodge to heal the damage done to their small car brands by years of second-tier quality, uninspired styling and technology, and marketing strategies that focused on filling rental-car fleets at the expense of resale values. ----------
Translation: The US Big-3 have never before relied so heavily on sales of their low-end cars as much as they do now.

Advertizing.
You can get a Challenger with the 3.5L engine.
I have no problems getting 26 - 28 MPG on the highway in my 9-year-old 300M with the 3.5L.
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