Hilarious Video - US Car Industry

[August1991]

Sadly, this video is too close to accurate in some ways.

Governments can't pick winners and they shouldn't try.

Edited January 24, 2009 by August1991

[kimmy]

Sadly, this video is too close to accurate in some ways.

Governments can't pick winners and they shouldn't try.

That's delightful! However, I'm a bit worried about what this kind of competition means for the Kimmy Green Energy Center for Wind Powered Scooter Innovation. (don't steal my subsidy plz?)

As I have mentioned a few times before, I'm baffled by the disconnect between what I read in the papers ("Detroit is failing because they built cars that nobody wanted anymore") and what I see on the street (the most popular new vehicles I see are still North American "big 3" products.)

I am skeptical to the degree which the popular assumption ("People wanted green fuel-efficient cars and Detroit didn't give them any") matches up with actual sales figures. I am wondering whether this is an actual fact, or ideological spin that has been imparted. I am of the suspicion that people have projected their own biases onto the reasons for Detroit's struggles.

I have heard that the federal money is not coming with no strings attached, and that money will be given only if the US lawmakers are satisfied that the companies will be proceeding in a manner they find satisfactory. If US law-makers have a hands-on role in determining how the automakers proceed and what steps they take in cutting costs, things might not work out well. For example: if the "Hope and Change for American Auto Manufacturers" committee goes in with the attitude that Chrysler is floundering because consumers want fuel efficient cars, and proceeds to cancel Dodge Ram trucks, Dodge Charger, and Jeep Liberty, and concentrate on the Caliber economy car, how well does that pan out? Well, I suspect anybody who has spent any amount of time in traffic would agree that the Ram, Charger, and Liberty are ubiquitous, while the Caliber is seldom seen. Chrysler's bigger vehicles have been pretty successful, while their compact is dismal. If they chose to cancel the larger vehicles and concentrate on the economy entry, it would be a disastrous decision because the Caliber is among the worst vehicles in its segment.

Hopefully common sense and the actual profitability of each product line are determining factors of what lives and what dies in Detroit, not ideologically-guided assumptions about what should or should not be built.

-k

[bush_cheney2004]

....Hopefully common sense and the actual profitability of each product line are determining factors of what lives and what dies in Detroit, not ideologically-guided assumptions about what should or should not be built.

North America already expereinced such folly...we had a number of Trabant - Ladaesque products to choose from during the 1970's.

[Michael Hardner]

That was possibly the funniest anti-leftist bit I've seen yet. Well done.

[msj]

Governments can't pick winners and they shouldn't try.

Sure, I think most people can agree to that.

But then, the government shouldn't be "loaning" money to these companies in the first place.

If the company comes begging and the government does "lend" money (for whatever "reasons") then one would hope that the politicians would mitigate taxpayer risk with appropriate oversight/rules and ensure that the Board of Directors and management of the begging companies are fired and replaced with the best possible candidates.

Hey, maybe that would reduce the amount of companies that come begging for money? Maybe that would reduce moral hazard in the system?

Nah, can't have that - that's not how US "capitalism" works.

Now, where is that youtube video showing the 70% of GM/Ford/Chrysler models produced and "marketed" over the past 20 years to show how poor the Big 3 have been at picking winners and losers.....

[bush_cheney2004]

....Now, where is that youtube video showing the 70% of GM/Ford/Chrysler models produced and "marketed" over the past 20 years to show how poor the Big 3 have been at picking winners and losers.....

Doesn't exist.....because over the past 20 years (1988 - 2008), GM/Ford/Chrysler have picked far more winners than losers for automotive production around the world. This would include the following models/platforms:

Chrysler Minivans

Ford Escort / Focus

GM B & W platform (e.g. Chevrolet Impala)

Ford F-Series light trucks

Ford Fiesta

Various light trucks and SUVs derived from the same platforms were so successful that Japan based manufacturers developed competing models, as was done with the minivan.

Past 20 years.....not such a bad run at all.

Edited January 25, 2009 by bush_cheney2004

[msj]

B_C, I should have been more precise - I should know better than to try and use a vague rhetorical device on forums such as these (which often are taken way to literal by all of us).

More precisely, the Big 3's economic model has been a dismal failure over the past 2-3 decades (I shouldn't have been so flip and specific about "20" years) and it is this failure for which the government should have said "no" to Chrysler in the early 80's and "no" to various other Big 3 requests over the past many years.

For more info about such matters try out The Truth About Cars blog....

[Smallc]

For more info about such matters try out The Truth About Cars blog....

You can't be serious. That is a terribly biased blog. It's laughed at in the online car world.

[ironstone]

I could use some help here please.As I only have dial up internet available where I live,Youtube is a site I can't really check out.What exactly,is this car video about?

[bush_cheney2004]

B_C, I should have been more precise - I should know better than to try and use a vague rhetorical device on forums such as these (which often are taken way to literal by all of us).

Your chosen rhetorical device isn't at issue, just the facts of world-wide automotive production since 1988.

More precisely, the Big 3's economic model has been a dismal failure over the past 2-3 decades (I shouldn't have been so flip and specific about "20" years) and it is this failure for which the government should have said "no" to Chrysler in the early 80's and "no" to various other Big 3 requests over the past many years.

The government loan to Chrysler was signed into law very early in 1980....the debt was retired early by 1983 by Iacocca & Chrysler because of the very successful K-car platform, sale of Chrysler Defense, and military procurement of Chrysler trucks.

For more info about such matters try out The Truth About Cars blog....

No thanks....living through the experience is better than any blog.

[eyeball]

I could use some help here please.As I only have dial up internet available where I live,Youtube is a site I can't really check out.What exactly,is this car video about?

The theme as usual, is the-government-can't-do-anything-right because, as usual, the government is dominated by socialists who as usual, are responsible for every single thing that has ever gone wrong in the world.

The video is nothing you probably haven't seen, read or heard ad nauseam elsewhere. As usual.

I actually agree with the video's premise - but not because the government is dominated by society but that society is dominated by the government. Myself I suspect the government is actually dominated by corporations but that's probably because I'm a socialist and don't have my head screwed on right or correctly as the case may be.

There's only one right wing and all the rest are wrong you see.

Edited January 25, 2009 by eyeball

[kimmy]

More precisely, the Big 3's economic model has been a dismal failure over the past 2-3 decades

That's a very different statement from claiming that they're building the wrong cars.

-k

[msj]

The government loan to Chrysler was signed into law very early in 1980....the debt was retired early by 1983 by Iacocca & Chrysler because of the very successful K-car platform, sale of Chrysler Defense, and military procurement of Chrysler trucks.

You don't think that Ford/GM would be stronger today, not to mention more competently managed, had Chrysler failed like they should have?

[msj]

That's a very different statement from claiming that they're building the wrong cars.

-k

To some extent they have, and do, build the wrong vehicles (I mean relative to other auto companies).

Wrong product mix, wrong business model, and wrong government response each time (once again, relatively speaking).

[bush_cheney2004]

You don't think that Ford/GM would be stronger today, not to mention more competently managed, had Chrysler failed like they should have?

Nope. Ford and GM, flush with money, actually went on a consolidation buying spree around the world. Any hypothetical discussion about Chrysler's absence must include this context and product mix. The impact on North American Tier 1 -3 suppliers would most certainly have been negative.

Chrysler Corporation (and Chrysler Credit) survived partially through it's own consolidation of American Motors makes/models. It has been very hard to kill Chrysler.

[msj]

You can't be serious. That is a terribly biased blog. It's laughed at in the online car world.

Of course they are laughed at. The MSM hate independent thinkers.

As for being biased - yeah, like all those other sites aren't biased.

[msj]

Nope. Ford and GM, flush with money, actually went on a consolidation buying spree around the world. Any hypothetical discussion about Chrysler's absence must include this context and product mix. The impact on North American Tier 1 -3 suppliers would most certainly have been negative.

Chrysler Corporation (and Chrysler Credit) survived partially through it's own consolidation of American Motors makes/models. It has been very hard to kill Chrysler.

Fair enough.

Who knows what would have happened if the US allowed free enterprise to work rather than come running at every request of every company that claims that it is too big to fail (you know, like actually allowing "creative destruction" to actually take place).

[bush_cheney2004]

To some extent they have, and do, build the wrong vehicles (I mean relative to other auto companies).

Wrong product mix, wrong business model, and wrong government response each time (once again, relatively speaking).

Relative to which other auto companies? "Business model" (including labor's collective bargaining), market share, and niche segment success are impacted by demographics, fuel prices, and government regulation. How many of these are controlled by auto makers?

[msj]

Relative to which other auto companies? "Business model" (including labor's collective bargaining), market share, and niche segment success are impacted by demographics, fuel prices, and government regulation. How many of these are controlled by auto makers?

Hmmm, let's see - when my partners and I strategic plan for our business we do a SWOT.

And we plan, as best we can, around these things that we can control and can't control.

I suppose, relatively speaking, other auto makers have been better at doing their SWOT's than the Big 3?

Oh, but that brings us back to picking winners and losers (in terms of business models) doesn't it?

In my first response in this thread I made the mistake of using automobile "models" as a poorly chosen metaphor for "business model" but hopefully my last several posts have cleared that up now.

[bush_cheney2004]

....In my first response in this thread I made the mistake of using automobile "models" as a poorly chosen metaphor for "business model" but hopefully my last several posts have cleared that up now.

I don't think it matters....the "business model" was fine when profitable sales of high margin vehicles was fine. Other companies have been impacted as well, and still others have been failing for longer than the so called Big Three. There have been product and production partnerships between manufacturers, new model segments, and even rebirths of discontinued models....on an international level.

[msj]

I don't think it matters....the "business model" was fine when profitable sales of high margin vehicles was fine. Other companies have been impacted as well, and still others have been failing for longer than the so called Big Three. There have been product and production partnerships between manufacturers, new model segments, and even rebirths of discontinued models....on an international level.

To the extent that these failures occur without taxpayers bailing them out then it is all good and fine.

As soon as they pretend that they are too big to fail and ask for government "assistance" - well, TFB, fire your board of directors, fire youy management and lets get on with selling off the valuable parts of the business to those who are competent.

Oh, right, there already is a bankruptcy system in place. Tell me again why the taxpayers are bailing these bozos out?

[bush_cheney2004]

....Oh, right, there already is a bankruptcy system in place. Tell me again why the taxpayers are bailing these bozos out?

Because a majority of their elected representatives voted to do so....it's not complicated. Government picks winners and losers all the time.

[msj]

Because a majority of their elected representatives voted to do so....it's not complicated. Government picks winners and losers all the time.

Sure, I agree with the realpolitik part.

I just find it funny how people will complain about the government picking winners and losers when they have been asked to do that by everyone from the incompetent board of directors, to the incompetent management, to the incompetent shareholders (at least the one's too stupid to get out of the way) to the incompetent bondholders (ibid) to the employees and taxpayers (varying degrees of ineptitude - I mean, have you seen some of the people in elected office).

And then, once the government does what most people have asked, people complain because the government isn't any more competent than the failed businesses are in the first place.

Here's an idea - why not let the government do what the private sector won't do and let the private sector succeed and fail without such nonsense?

Oh, right. We're back at the beginning of this vicious circle.

[bush_cheney2004]

....Here's an idea - why not let the government do what the private sector won't do and let the private sector succeed and fail without such nonsense?

Sure...as soon as you figure out how to provide government revenue without any complicity or regulation.

Good luck with that......

[Wild Bill]

That's delightful! However, I'm a bit worried about what this kind of competition means for the Kimmy Green Energy Center for Wind Powered Scooter Innovation. (don't steal my subsidy plz?)

As I have mentioned a few times before, I'm baffled by the disconnect between what I read in the papers ("Detroit is failing because they built cars that nobody wanted anymore") and what I see on the street (the most popular new vehicles I see are still North American "big 3" products.)

I am skeptical to the degree which the popular assumption ("People wanted green fuel-efficient cars and Detroit didn't give them any") matches up with actual sales figures. I am wondering whether this is an actual fact, or ideological spin that has been imparted. I am of the suspicion that people have projected their own biases onto the reasons for Detroit's struggles.

I have heard that the federal money is not coming with no strings attached, and that money will be given only if the US lawmakers are satisfied that the companies will be proceeding in a manner they find satisfactory. If US law-makers have a hands-on role in determining how the automakers proceed and what steps they take in cutting costs, things might not work out well. For example: if the "Hope and Change for American Auto Manufacturers" committee goes in with the attitude that Chrysler is floundering because consumers want fuel efficient cars, and proceeds to cancel Dodge Ram trucks, Dodge Charger, and Jeep Liberty, and concentrate on the Caliber economy car, how well does that pan out? Well, I suspect anybody who has spent any amount of time in traffic would agree that the Ram, Charger, and Liberty are ubiquitous, while the Caliber is seldom seen. Chrysler's bigger vehicles have been pretty successful, while their compact is dismal. If they chose to cancel the larger vehicles and concentrate on the economy entry, it would be a disastrous decision because the Caliber is among the worst vehicles in its segment.

Hopefully common sense and the actual profitability of each product line are determining factors of what lives and what dies in Detroit, not ideologically-guided assumptions about what should or should not be built.

-k

I suspect you're quite right, Kimmy. Most folks seem to inject their biases into their observations. We never seem to see any specific polls. We're told by one side that the American mfgrs missed the boat with a lack of small cars and by another side that North Americans actually wanted big cars and trucks!

I suspect the true picture is a combination of factors. One factor is that ever since we took the OPEC shock back in the 70's Detroit has never seemed to be as good at building small cars as Europe and the Japanese. I remember the Chevette, which seemed to have a V8 chopped in half to make it a V4, which boasted a mighty 40 horsepower! Those of us driving German Rabbits laughed our asses off at them when we passed them on the highway. Import small cars always seemed to be quick and snazzy. Domestics were lumbering clunks.

So basically domestics just haven't been competitive in the small car market.

Meanwhile, of course we want big cars! Few of us enjoy being cramped! We just hate paying for the gas!

For decades we've suffered price shock and then relief, shock and relief. It was like 'Charlie Brown and the football'. Every time we bought a bigger vehicle that was more comfortable and useful we just seemed to get a year or two into the payments and bammo! Gas prices would go nuts again!

We'd swear that our next vehicle would be a gas miser but when the time came things had adjusted once again and the price was either stable or actually lower.

I think that Lucy from Exxon just yanked that football away one too many times. Charlie Brown the public has given up! He's finally cottoned on to how he's being 'hosed', if you'll pardon the pun. The last spike in gas prices was so high and came on so quickly that he just threw in the towel. Now gas prices have plummeted but Charlie doesn't care! He's convinced that if he buys another SUV he's just going to get fleeced at the pumps again!

So he's committed to buying gas misers. Unfortunately for the domestic mfgrs, they've been lagging the pack when it comes to having suitable offerings. It wasn't GM who came out with the Prius hybrid. It might shock some of us to realize that it's been 10 years since the Prius came out! The Big 3 are just starting to play catch up now.

Why couldn't GM have led the way with hybrids? Well, I'd say it's because GM for some time has been run by accountants, with the usual tunnel vision that goes with it. You make more money running existing lines for as long as possible. My 1978 VW had fuel injection as a mature standard technology, followed immediately by the Japanese. The Big 3 didn't let go of carburetors until 1986! They didn't want to pay the retooling costs.

I still remember my old Dodge van refusing to start on many winter mornings. Neither the dealership nor myself could ever get that automatic choke on the carburetor to behave. There I'd be, freezing my nuggies opening up the engine bonnet to stick a pencil down the carburetor to force open the butterfly valve and get the damn thing to start! I eventually ripped the damn thing out and put in a manual choke assembly.

The accountants philosophy may have made more money at the time but it left their companies blindsided and unable to react to the changing circumstances quickly enough. You would have thought that a company as rich at the time as GM would have covered its bets by having a few alternative programs in the wings that could be quickly ramped up if needed. Sadly for them, they seem to have missed the boat on that one.

It almost seems like the companies that had both invented and pioneered the automotive industry had reached a point where they wouldn't innovate if you put a gun to their head! They had good company. It wasn't Timex who invented the digital watch. Or Underwood Typewriters who came out with the first computer/word processor.