Bailing Out The Big Three

$2 5, 0 0 0, 0 0 0, 0 0 0.00

That's really a lot of lettuce and that's what the big three are asking for, of course they showed up for their second senate hearing day in separate private jets. I know it seems picky but the senators asked them point blank, if they were willing to give up their jets to help save the companies. None of them said yes. They released a statement saying that the CEO's travel by private plane for "security reasons." I'm surprised they're allowed to sit next to each other during the senate hearings. Perhaps the cited "security reasons," have nothing to do with each other, but instead have to do with other competitors. Of course everyone knows that first class on commercial airlines is just a breeding ground for espionage; is there a fear of them being kidnapped and tortured until they give up secrets for failing? Is someone that works for Toyota or Honda, going to beat the crap out of one them, asking repeatedly, "I want your secret for making cars that don't sell!"

Maybe not.

Here I go Again

I'm getting all nostalgic and reminiscent with not so warm and fuzzy memories of the 1970's, specifically the gas shortage. Some of you might remember only being able to buy gas on certain days based on your license plate, even or odd numbers indicated the days you could buy gas, if there was any to buy. You might recall long lines while waiting to buy gas. People screamed for more fuel efficient cars then, which is why Toyota saw America ripe for the picking. Of course Ford answered the call by giving us the Pinto, which had this nasty tendency to explode when rear-ended. Then people screamed they wanted economical and safe cars to drive however by the time that happened, the gas crisis was over and Americans being a fickle bunch forgot. I still recall hearing Walter Cronkite saying that by the early 1980's American made cars will be getting 20 miles to the gallon. He was being clearly optimistic because not only did that not happen, we're still struggling with it today. The average car (I won't use the term American made), built by the big three gets around 13 MPG and there it stayed until 2004, when the average started to rise to around 20 MPG. However during that same time foreign companies (Toyota, Honda, etc) were getting on average 18 MPG, and now hover somewhere around 25 for their larger cars and trucks. Smaller cars do better.

The Big Three want people to believe that the credit crisis has brought them down but it's not the only reason. The main reason is their resistance to change, they believed if they could make a big SUV and sell it for less (a few thousand) than say Honda, Joe consumer would just buy theirs because it was cheaper. But somewhere along the way, Joe consumer got smarter and realized that he would spend a little more on buying a competitor and save money at the pump, maintenance and everything else that goes along with car ownership. Joe the consumer could also keep the vehicle longer. Joe consumer demanded that cars be reliable, economical, and safe. The Big Three answered with cars that were cheaper than their foreign competitors but also lagged behind in safety, and mileage. They continued with brands that wouldn't sell, like the Impala, hoping their SUV sales would make up the difference. It worked for a while. During the mid part of this decade, when everyone wanted an SUV to feel important--okay that's not exactly true...

The SUV Boom

For a while it seemed dealers couldn't keep SUV's in stock and it didn't matter who was making them, it was about a self serving self importance that drove the sales, I also believe it was the fact people were tired little cars with nothing around them but other cars on the road. Now in some mountainous regions an SUV or other four wheel drive vehicle makes sense. But lets also admit for a moment they looked darn nice parked in front of the new house. It seemed to go along with the new lifestyle people were being told they had. The Big Three will tell you that people can afford their cars because repossessions aren't climbing to the levels that the banks are seeing with homes. Home foreclosures are HUGE in most areas around the country but lets be honest, most people realize that if they can't afford to make their mortgage payment to the tune of $5000 a month, not making their car $400 payment isn't going to help. Generally car payments are MUCH smaller, therefore people are more likely to continue making those payments because they NEED a car, they didn't need that 6 bedroom 6 bath house, with the gourmet kitchen and media room in the suburbs. People wrongly blamed the SUV drivers in the increase in gas consumption, but that's just not the whole story, blame also falls on the Big Three for not making those SUVs more fuel officiant when they had the chance.

The REAL IMPORTANT PART

When Clinton was president the Japanese Government gave their auto makers money to develop what we would call now hybrids. Our government answered in 1993 with the Partnership for a New Generation of Vehicles or PNGV for short, the government gave the Big Three somewhere around 1.5 billion dollars to invest and develop hybrid technology. Each of them actually produced a hybrid car but did little else. In 2001 the Big Three appeared before the republican congress asking them to repeal the act because it was too difficult. Naturally with an Oil president, vice president, and congress deep in the pockets of the oil industry it easily passed. A huge opportunity was missed, and the Japanese got more than a decade head start on hybrid technology and making it useful.

Too Big To Fail or Just Too Big?

I know, but what about the jobs? I don't want to see anyone lose their job. Especially in this economy. But that said something needs to be done. Maybe it's time for the Big Three to merge, and restructure, to rebuild themselves and remake their reputation. Its hard to let that dream die, especially since we're the ones that invented the auto. However we have to be pragmatic, today cars are lasting longer, people when times are good are more likely to replace their car because they've grown tired of seeing it, than to replace it because it stopped running. The Big Three cannot continue the way they have, jobs will be lost, dealerships will close or merge with others, things MUST change. I doubt 25 Billion will be enough. If the money is given, more money will likely follow and I seriously doubt it will change the outcome.

© 2008 Whimsical Ranter
All Rights Reserved