12-03-2008, 10:34 PM
karsen wrote:
This is a serious question, not trying to be a smart ass here:
How is it the Big Three ALL need money at the same time? How is it that these once fierce competitors are now united in an effort to ALL receive Government funds? If the problem really is the credit crunch and the Big Three really just need some funding to help them through this downturn in the economy then why aren't we hearing about Toyota and Honda woes?
I find it hard to believe all three of them are on the brink of complete failure. I find it EXTREMELY hard to believe that ALL THREE will fail if they do not receive Billions (perhaps trillions) in bail out funding. Maybe I'm just being cynical but if one of the big three fails, isn't that great news for the other two? I could see a scenario where one fails and the other two are stronger because of it.
To be serious, in my opinion it is because all three basically followed the same "safe" and "short term" business decisions over the last decade or so. Oil and gasoline prices were relatively low for a while, let's push high profit margin light trucks and SUV's in the consumer market. Instead of putting R&D money into improving fuel economy, they lobbied for no changes to the CAFE standards instead. Also to keep those high profit LT's and SUV's out of the CAFE calculations.
As for quality, most of the improvements I have seen have been only in reaction to market pressure from the quality of the cars from the Japanese makers and then the Koreans once they got their act together. Too many reports of cars from the Big 3 with less than good reliability in transmissions, engines and other components during the late '90's and earlier this decade. For some models they have finally achieved parity with Toyota and Honda, but some of that has been through decreased quality from some of the US assembly plants for those makers compared to imported from Japan.
As for one failing being good news to the other two, how well did that work out for Chrysler? They got a little bigger when AMC was absorbed by them, but only short term. In another way, it was also a journey down that path towards short term profits from the Jeep line of SUV's.
So all three put much into a market segment that basically imploded after a few years of high fuel prices. Ford appears to have seen the writing on the wall first, and seems to be the closest to retooling and realigning its production. But all were behind in getting to that point. Some of it could have been avoided or sped up if they had put the money and time into R&D, for instance GMC restarting its electric vehicle development recently after killing off the EV1 line and the work connected with it back in the '90's. Add the credit crunch on top of that, and they are all in almost the same condition, though it appears GMC is in the worst. As for Toyota and Honda, they are also hurting, sales for them were down about 30% the last few months compared to down around 40% for the US companies. But they have alternate vehicles in their product line already, they are not needing to retool as much.