GM and Chrysler

[Michael Hill]

It would be a little difficult to merge stocks considering Chrysler is a privately funded company

[sanddrag]

(edited). If domestic car companies are to survive, they'll need to step up their designs, quality, and reputation to that of foreign car companies.

For GM, I think the real mistake was made when they let the vice chairman Robert Lutz speak on 60 minutes. The reporter asked about the upcoming "Volt" that supposedly will be revolutionizing the automotive market as we know it. Here is what Lutz said, in my own words/interpretation:

"We wanted to make an electric car. It can only go 1/4 as far as the electric car we made a decade ago, but that's okay, because after that far (40 miles) then it uses a gasoline engine. (errrr????). I said 'this needs to be a car every family can afford. We need to sell it for $20,000.' The engineers said I was crazy, because they couldn't build it for less than $40,000. This is a problem because people won't spend that much on it (because it only goes 40 miles without gas). So, since we've spent so much on it already, we'll keep going, and we'll sell it for $30,000 (which most families can afford) and take a $10,000 loss on each one."

Then he was on MSNBC later in the evening explaining how they're burning through mountains of money every day, and getting back little.

Their stock fell 31% two days later. And they wonder why...

I don't think the Camaro will save them either. It only suits a very small portion of the market.

[DarkFlame145]

The Volt wont hurt them any as long as people will pay the high price tag, which i think a lot of people who can afford it will buy it. If they can keep it on the production lines for a few years prices will go down as cheaper ways to make the technology become available, just like with the Prius. But compared to 10 years ago the Volt is a huge leap forward in Electric cars. People that love the Camaro will buy it. It's going to be a car that people who love V8 Muscle cars will buy (like me, but I'm a Ford guy, So im Mustang all the way).

[Michael Hill]

They're releasing cars at a completely idiotic time...when nobody can get a loan for one!

[artdutra04]

Originally Posted by Michael Hill

I can't even believe the two are thinking about merging. On one hand, you have GM, a failing company, then on the other, Chrysler, another failing company.

Last time I checked, when 2 failing companies merge, they just end up forming 1 bigger failure of a company.

The talks of merging have to stop now.

The "merged" company might end up being the Penn Central of the auto industry.

[Billfred]

Originally Posted by sanddrag

If domestic car companies would just stop making cars that look aweful and absolutely suck, perhaps they wouldn't be in this trouble.

Through my line of work, I spent the better part of a half-hour today driving a 2009 Buick Enclave. CXL, Gold Mist Metallic, as I recall. Church quiet, beautiful looks (though I prefer the look of the White Diamond one I shot today), and pulled 23.9 MPG in spite of my uncanny ability to catch every red light on a 45-mile-an-hour road. In every measurement I can think of, it blows the doors off its predecessor, the Buick Rainier. I can't speak for the other auto makers, but I do know that GM's product has improved dramatically over the past four or five years. By 2010, its roster should be even stronger*. (That's coming from someone who's driven Hondas for 5.5 of the last six years, and rode in them for the sixteen before that!)

Were GM to join up with Chrysler, I think anyone connected to the automotive industry would be in for some hurt in the near term. GM does have a product hole since pulling out of the minivan segment at the end of 2007**; the Lambda crossovers*** filled some of the gap, but not all of it. The Jeep brand has some allure, particularly as gas starts to come back down to sane levels. The Chrysler's GEM and ENVI divisions may also prove fruitful in helping along alternative methods of propulsion; the latter recently released a trio of prototype plug-in hybrids, one each for Chrysler, Dodge, and Jeep. Almost everything else clashes, which results in tough decisions. I would not want to be in that boardroom.

Were I not employed by a company who has to live with the decisions made in Detroit, I'd say it's time to pop some popcorn and watch the show. Because I am employed by such a company, I'll forgo the popcorn and just watch closely.

*For 2010, the Buick Lacrosse (Allure for you Canadians) is getting an all-new model, the GMC Terrain replaces the Pontiac Torrent and GMC Envoy, the Saab 9-4X replaces the Envoy-based 9-7X. Before then, Pontiac dealers will receive the G3 (cousin to the Chevy Aveo), Solstice Coupe (for those opposed to the wind in their hair), G8 GXP (what's Australian English for yeeeeeeeee-haw?), and the G8 ST (which is the closest I think we'll get to the El Camino in our lifetimes).

**Alright, to most people; they sold the Chevy Uplander to fleets as a 2008 and exported some as 2009 models.

***Buick Enclave, GMC Acadia, Saturn Outlook, Chevy Traverse. Full-size crossovers with three-row seating and V6 engines.

[Tom Line]

Unfortunately, I think the biggest hurdle that the U.S. auto companies have to over come isn't one of quality, technology, or product line. Ford's quality is now on par with Acura and Toyota by every important industry measure. Ford's sync, sound systems, gps navigation, smart key etc. are all industry firsts or industry leaders. Ford's 2010 product line is unbelievable - the new Taurus actually got gasps from the plant guys when we saw it. Ford will be the leader in fuel economy in every segment by 2010.

Ford did a bunch of very interesting market research when the new Fusion came out. They took the car, unbranded, to the west coast and east coast and let people drive it. The vast majority of people said they would buy it. Those people were shocked when the found out it was a Ford.

That's what the Big 3 have to contend with. The perception that they can do nothing right: that they can't build a good car no matter how hard they try. The fact that their cars are world class right now doesn't matter - it's the perception that has to change. And that takes time we simply don't have anymore. We let our reputations sink, and it takes a long time to get them back.

[EricH]

Originally Posted by spazdemon548

In my opinion, these companies do not "absolutely suck".

He was referring to the cars, not the companies.

In my opinion, though, any car that gets you where you need to go, is reliable, and has some "extras" like AC and stereo is a good car.

[sanddrag]

Perhaps my above comment was a bit crude. I apologize. What I mean is that it is no secret that foreign cars often take the lead in numerous categories.

I think the main problem in the auto industry is a vast discontinuity between what auto makers think people want, and what people actually want. More extensive market research programs must be implemented.

[Cory]

Originally Posted by sanddrag

Perhaps my above comment was a bit crude. I apologize. What I mean is that it is no secret that foreign cars often take the lead in numerous categories.

I think the main problem in the auto industry is a vast discontinuity between what auto makers think people want, and what people actually want. More extensive market research programs must be implemented.

Unions are right up there too, but that's neither here nor there.

[Michael Hill]

Originally Posted by Cory

Unions are right up there too, but that's neither here nor there.

Well, unions ARE a huge part of why the auto industry is failing. It's the reason why Delphi went under. Their whole idea revolved around this idea that they could rip up the UAW contract if they went into bankruptcy, so that's exactly what they did. However, Delphi has never been able to pull OUT of bankruptcy.

Unions inherently create an inefficiency in the workforce. If some new guy starts on the factory line, wants to impress his boss, so he works extra hard and pumps out a few more units than most others, he WILL be approached by other union workers and tell him to cut it out.

[Adam Y.]

Originally Posted by sanddrag

(edited). If domestic car companies are to survive, they'll need to step up their designs, quality, and reputation to that of foreign car companies.

For GM, I think the real mistake was made when they let the vice chairman Robert Lutz speak on 60 minutes. The reporter asked about the upcoming "Volt" that supposedly will be revolutionizing the automotive market as we know it. Here is what Lutz said, in my own words/interpretation:

"We wanted to make an electric car. It can only go 1/4 as far as the electric car we made a decade ago, but that's okay, because after that far (40 miles) then it uses a gasoline engine. (errrr????). I said 'this needs to be a car every family can afford. We need to sell it for $20,000.' The engineers said I was crazy, because they couldn't build it for less than $40,000. This is a problem because people won't spend that much on it (because it only goes 40 miles without gas). So, since we've spent so much on it already, we'll keep going, and we'll sell it for $30,000 (which most families can afford) and take a $10,000 loss on each one."

You didn't watch the whole entire show. The right interpretation was that building an electric car that people would want to buy is still expensive, hard to do, and something that companies like Tesla are going to find reality biting them hard. Unfortunately, people who aren't engineers would not get the concept of using gasoline engines in a electric car.

[ComradeNikolai]

I hate to see this happen because it will inevitably result in some losses; however, what's the alternative? If they DON'T merge, is it possible that they could both independently fail, resulting in ALL loss of sponsorship?* It seems unlikely that they would merge unless it was absolutely necessary. I just hope that all the teams fare well, get funding, and retain mentors.

Originally Posted by Michael Hill

Well, unions ARE a huge part of why the auto industry is failing. [...] Unions inherently create an inefficiency in the workforce. If some new guy starts on the factory line, wants to impress his boss, so he works extra hard and pumps out a few more units than most others, he WILL be approached by other union workers and tell him to cut it out.

I guess that's the price we pay for unions, but without unions, we'd be far worse off. It's not guaranteed that it would be the same, but the industrial revolution is evidence of what bad comes from unions. Sure, we would possibly have a more successful industry without unions, but we may have less mentors due to an increased necessity to work and less compensation for said work.

*that's a genuine question: I haven't researched it.

[Andrew Schreiber]

Originally Posted by Adam Y.

You didn't watch the whole entire show. The right interpretation was that building an electric car that people would want to buy is still expensive, hard to do, and something that companies like Tesla are going to find reality biting them hard. Unfortunately, people who aren't engineers would not get the concept of using gasoline engines in a electric car.

You bring up another failing car company, Tesla Motors is closing their Michigan facility.

I would have to disagree with the statements about the UAW being needed. I would rather see a company cut half of its employees and survive so those 50% can still have a job than see a company TRY to cut half its work force have the Union strike and kill the whole company. Yeah it sucks for those people who are out a job but it is overall better because more people stay employed. I almost blame the unions for the problems that the companies have been having. Its not all their fault but a good deal of the damage was done when the unions wanted more and didnt realize that the companies couldnt give them that. Granted, I dont work for these companies and this is just my personal observations.

[artdutra04]

Originally Posted by Michael Hill

Well, unions ARE a huge part of why the auto industry is failing. It's the reason why Delphi went under. Their whole idea revolved around this idea that they could rip up the UAW contract if they went into bankruptcy, so that's exactly what they did. However, Delphi has never been able to pull OUT of bankruptcy.

Unions inherently create an inefficiency in the workforce. If some new guy starts on the factory line, wants to impress his boss, so he works extra hard and pumps out a few more units than most others, he WILL be approached by other union workers and tell him to cut it out.

That mentality isn't restricted to only unions; at every job I've had so far other employees (even supervisors) have told me to slow down, except if some urgent emergency or a tight deadline looms.

Why? The reason why supervisors have repeatedly told me to slow down can literally be summed up as "inertia". All companies usually know how long it takes to get something done, so managers allocate time accordingly. When I come to them finished with a project revision in a day that they expected to take a week, they kind of get mad, since now they have to take time out of their schedule to find another project for me to work on, or just watch me sit around and play Solitaire/take long lunches/leave early/etc for four days. To still come out ahead, I usually just hand in the work a day or so early; the managers don't seem to mind that as much, and usually take note, which is how I got an unsolicited $2/hr raise at my summer job two weeks after I was hired. ;-)

Yeah, it seems weird, since getting things done quicker on paper is cheaper for them. But people in general don't seem to like abrupt change (especially if they have to change themselves), and would much rather have everyone else "go with the flow" and "do it like it's always been done"...