What's wrong

[cactusjack]

What's wrong with the American automakers - in my opinion...

I went to a Ford dealership today with my 24 year old son. He found a late-model used car on the dealership's website and I drove him out to test ride and buy it. While I was waiting for him to complete the deal, I was browsing the cars in the showroom and on the lot. Other than the Focus, I didn't see any Ford vehicle that had an EPA rating better than 18 MPG city. That's ridiculous! No wonder people are buying Toyotas and Hondas instead of Fords.

Oh, and they had a really sweet 2009 Mustang Shelby GT Barrett-Jackson special edition for $45k that was absolutely gorgeous! Black with red GT striping. It was #46 out of only 100 made. It was EPA rated at 15 MPG city, but that's to be expected with a muscle car.

Food for thought.

[Idaho]

Yep, American car companies have a tendency to make gas guzzlers. GM is trying to change that but Ford is behind the curve. Chrysler seems to be silent from what I've seen and heard. But that is what "the market" will take care of. If a company makes bad decisions and people don't buy their product they either change or go out of business. At least that is the way it used to work until Congress and the Federal Reserve decided to start writing checks at the drop of a hat. Who knows what will happen now.

[rksaw]

one word:

<marquee>UAW</marquee>

just my .02

[bosko]

Doesn't explain fuel economy but Here's a few more words to ponder. :)

"Ford CEO: $28M for 4 months work
Former Boeing exec got $18.5 million bonus, almost $9 million in stock and options and base salary at annual $2 million rate, according to proxy.
April 5 2007: 6:31 PM EDT


NEW YORK (CNNMoney.com) -- Struggling Ford Motor Co., which posted a record $12.7 billion net loss in 2006, gave its new CEO Alan Mulally $28 million for four months on the job, according to the company's proxy statement filed with the Securities and Exchange Commission Thursday."

I got the story from CNN, here's the link. http://money.cnn.com/2007/04/05/news.../ford_execpay/

[glwilson]

For what it is worth....

There are plenty of reasons for the U.S. automakers' problem; and plenty who should shoulder the blame... including management. This problem is less rooted in today's current UAW and management issues (wages; benefits; and etc.) than it is with regard to the benefits of the retired workforce's benefits.

Without a doubt; contract negotiations in the distant past were very short-sighted; without regard to the any future complications that could occur. (such as what has occurred with the increased life-expectancy of the retired workforce; and the increasing cost of medical benefits -- just to name a few issues).

It appears that automakers have "managed" their business much like airlines had for many years... no one cares about the future of the industry as they currently "dip their cup" into their "money-pot". They appear not to care mostly because "they" feel that no matter what, the government will bail them out -- thus continued "short-term" decisions are made without reference to any long-term effects.

This attitude does not exist as much in the airline industry once the "gov" refused to bail-out United Airlines and have not given any indication of any future bail-outs to the industry. Airlines are now allowed to fail. The free-market forces appears to be working more now in that industry -- creating competitive businesses and pricing.

I realize this is a "heated" topic for many, depending on which side of the isle you are on. If you are a taxpayer; you don't want to pay for the benefits of retired UAW workers (not to mention huge bonuses for the execs). If you are a retired UAW worker; you are not wanting to take a reduction in benefits.

I have however always wondered about how much "anyone" can "tighten their belt". In other words; what is a retired-worker's minimum budget? If they were required to pay more for health-care; or medical deductions; and other such items -- how much would it change their lives? I would wonder if that would mean they would have less food on their table -- or would it mean they couldn't gas-up their huge mobile-home; or keep them from going to the gambling boat; or would it keep them from eating steak instead of hamburger?

I have seen people in many different industries "crying" about their benefits being reduced; and how much more they are having to pay toward benefits... but when I look at their situation... the individuals I have "heard" directly from are not starving... they aren't losing their homes. They are however being required to reduce their "excesses".

Yes; there would be collateral-damage to some. (losing their homes and etc.); however; that could happen to anyone at any time. There are no guarantees in life.

I am not in favor of "bailing-out" GM carte-blanc. Chapter 11 bankruptcy (restructuring) appears to be the only way to force concessions on all sides. I would be in favor of having a committee oversight of the restructuring; whereby if enough concessions and positive changes are made that would give the company a chance to survive and compete globally; then short-term loans could be made to get GM through the process. If the progress does not head in the right direction; then we would allow for the dissolution of the company.

Just food for thought on how much Chapter 11 would affect the estimated 3 million.

[rksaw]

GL, you always have really good insight about these kinds of things. I appreciate your input.

[cactusjack]

GL you are correct, I know with GM specifically, the past is killing them and hampering them from being competitive. The same may or may not be true for Ford and Chrysler, I don't know.

I was shocked when I was wandering around that Ford dealership yesterday. I find it hard to believe that all but one of the models I saw on the lot didn't rate better than 18 MPG. I don't believe the "they make what people want to buy" argument for one second. Ford wouldn't be so close to being broke if they were making the cars people wanted to buy, because people would be buying them.

This problem isn't a result of high gas prices or the bad economy, it's been building for years. The current state of the economy just makes an already bad situation worse. After I saw what I saw yesterday, I don't think the taxpayers should bail out the automakers. Let them reorganize under bankruptcy laws and force them to become meaner, leaner companies. These companies have been sitting all fat and sassy for years while they turned a blind eye to what people were really buying. People have been buying Hondas and Toyotas, and that's what the big 3 should be building.

I remember the last time Detroit got caught with their pants down, during the Arab oil embargo in the 1970's. How did Detroit respond? By building some of the worst vehicles ever made. The Pinto, the Vega, the Pacer, the Chevette and other junk that were designed to be thrown away rather than repaired. I was working as a mechanic around that time and remember these cheap pieces of crap. They were miserable to work on, poorly designed, and ugly as hell. It took Detroit until the mid to late 80's before they started building decent vehicles again. Apparently they didn't learn anything back then.

Those who don't learn from history are destined to repeat it.

[trip]

Keep in mind too that for many years, we've built our cars with a kind of "timed" obselesence....something to help our economy. Buy a cheaply made car for more and sell for less. That's what Detroit has been used to. When foreign cars started really competing with us, there was no way for us to change our paradym and catch up.

I agree in that the Union hasn't helped. In fact, that's why Honda and Toyotya have been so successful....they use non union employees. Their employees get paid about 10.00 less an hour. But, they have jobs and jobs that will last. All it takes is planning.

My 2 centavos worth.

[bobzinger]

My 95 Lincoln Mark VIII gets a consistent 21.8 MPG combined city/highway. It has a 32 valve, tuned port 4.6 liter V8 (it really scoots). If they could do that with a big car in 95 it seems like it should be pretty easy to get a smaller car over 30MPG.

[socwkbiker]

But bob, that defeats the idea of more horsepower equals better sales. If you take a good look at the cars being manufactured, you will see certain trends which explain a lot. Ford is great at building trucks and suvs, but, other than the focus, when was the last time they built a truly fuel efficient, practical car? Chevy claims to have 8 vehicles that get 30 mpg or better highway. But you have to get specific cars. As for Dodge/Chrysler, well, it's got a Hemi never did quite equal good mpg. My oldest has a '06 Dodge Calibre, 4-cylinder and it only gets about 22 mpg. That's retaarded.

The foreign auto makers realized a long time ago that small, well built, fuel efficient cars sell. Just add the gizmos and bling, and people will buy them.


The American public encouraged this though with their bigger is better, more horsepower is mandatory and who cares about gas mileage just as long as I have my status symbol? attitude about vehicles.

When the govt bailed out AIG and others, they set the stage for every corporation to come with their hand out and a sob story lined up. The auto makers are just doing what the others are doing. What gets me though is how out taxes will fund this, and yet you won't see the price of a car drop one cent.

[formikec]

+1

Nail on Head!

Originally Posted by glwilson

For what it is worth....

There are plenty of reasons for the U.S. automakers' problem; and plenty who should shoulder the blame... including management. This problem is less rooted in today's current UAW and management issues (wages; benefits; and etc.) than it is with regard to the benefits of the retired workforce's benefits.

Without a doubt; contract negotiations in the distant past were very short-sighted; without regard to the any future complications that could occur. (such as what has occurred with the increased life-expectancy of the retired workforce; and the increasing cost of medical benefits -- just to name a few issues).

It appears that automakers have "managed" their business much like airlines had for many years... no one cares about the future of the industry as they currently "dip their cup" into their "money-pot". They appear not to care mostly because "they" feel that no matter what, the government will bail them out -- thus continued "short-term" decisions are made without reference to any long-term effects.

This attitude does not exist as much in the airline industry once the "gov" refused to bail-out United Airlines and have not given any indication of any future bail-outs to the industry. Airlines are now allowed to fail. The free-market forces appears to be working more now in that industry -- creating competitive businesses and pricing.

I realize this is a "heated" topic for many, depending on which side of the isle you are on. If you are a taxpayer; you don't want to pay for the benefits of retired UAW workers (not to mention huge bonuses for the execs). If you are a retired UAW worker; you are not wanting to take a reduction in benefits.

I have however always wondered about how much "anyone" can "tighten their belt". In other words; what is a retired-worker's minimum budget? If they were required to pay more for health-care; or medical deductions; and other such items -- how much would it change their lives? I would wonder if that would mean they would have less food on their table -- or would it mean they couldn't gas-up their huge mobile-home; or keep them from going to the gambling boat; or would it keep them from eating steak instead of hamburger?

I have seen people in many different industries "crying" about their benefits being reduced; and how much more they are having to pay toward benefits... but when I look at their situation... the individuals I have "heard" directly from are not starving... they aren't losing their homes. They are however being required to reduce their "excesses".

Yes; there would be collateral-damage to some. (losing their homes and etc.); however; that could happen to anyone at any time. There are no guarantees in life.

I am not in favor of "bailing-out" GM carte-blanc. Chapter 11 bankruptcy (restructuring) appears to be the only way to force concessions on all sides. I would be in favor of having a committee oversight of the restructuring; whereby if enough concessions and positive changes are made that would give the company a chance to survive and compete globally; then short-term loans could be made to get GM through the process. If the progress does not head in the right direction; then we would allow for the dissolution of the company.

Just food for thought on how much Chapter 11 would affect the estimated 3 million.

[formikec]

I will add, however, that we have an '07 Mercury Milan V6 that gets 23-26 in town and 26-28 on the interstate with two people and a loaded trunk.

The Milan and the Fusion are the best cars that FMC makes to compete against the Toyota and Honda. GM's Malibu is still a little big in my book. We test drove it as well. But they both really have come a long way, and I can't believe you couldn't find anything over 18mpg because Ford makes them. The dealer must not have stocked them.

The two vehicles that should help Ford are the hybrid Escape and the upcoming hybrid fusion. Anyone that needs an SUV should consider the hybrid Escape. It has a good warranty, and it is already on the road around here for a couple of years.

[cactusjack]

Originally Posted by formikec

I will add, however, that we have an '07 Mercury Milan V6 that gets 23-26 in town and 26-28 on the interstate with two people and a loaded trunk.

The Milan and the Fusion are the best cars that FMC makes to compete against the Toyota and Honda. GM's Malibu is still a little big in my book. We test drove it as well. But they both really have come a long way, and I can't believe you couldn't find anything over 18mpg because Ford makes them. The dealer must not have stocked them.

The two vehicles that should help Ford are the hybrid Escape and the upcoming hybrid fusion. Anyone that needs an SUV should consider the hybrid Escape. It has a good warranty, and it is already on the road around here for a couple of years.

Not disagreeing with you, but they had a 2009 Milan on the showroom floor and it was rated at 18 MPG/city. I'll repeat - the only vehicle I saw on the lot that was rated better than 18 MPG/city was the Focus. I didn't look at every car they had. It was just a casual observation.

[glwilson]

Needless to say; there are several problems with automakers. They have a proven track record of poor decision-making policies for decades -- that include engineering products that have not been able to compete.

Needless to say; the demise of the U.S. automakers is a problem as well... a bigger problem than many know or want to think it is... with deep and longstanding consequences.

I had posted some time ago (on another thread) what some referred to as a "rather-dismal" economic forecast. My views and supporting resources haven't changed that forecast.

Unfortunately, at this point of the economic-cycle, more of us are just beginning to see first-hand job layoffs; or people we know whose jobs are getting "cut". This will continue to increase until practically one out of every ten eligible "workers" are unemployed. Unemployment at these levels will be almost self-consuming in its negative affect on the economy -- reaching deep and affecting the global economy -- let alone U.S. citizens.

It has been estimated that GM's demise will affect 3 million people (a debatable number; none-the-less a number that accounts for a large percentage of the currently-employed).

(3 million is approximately 1% of the U.S. population; thus making it a large percentage of the "work-force" since not all of the 300+ million population are in their "employment-years".)

If 3 million workers are displaced from the workforce due to the demise of GM; I retract my unemployment estimates of 9% and raise it to 11--12% unemployment -- a percentage that brings up a whole new set of circumstances that none of us want to live through no matter how you feel about "things".

So... I still stand with my preferences on how this should be handled; because I believe with a Chapter 11 bankruptcy, concessions will be made across the board at GM, leading to the next-step of GM having to work more effectively in providing quality cars that fit the needs of buyers globally.

My second idea (although less practical -- but certainly more interesting) would be for the UAW and other non-union employees to purchase GM through a long-term buyout from the shareholders.

Let the new-owners (employees) figure out how to work together to make "their" business profitable with a long-term future. If they don't; then who do they have to blame but themselves.

[formikec]

I'm not sure why that dealer would have a sticker with 18mpg on a Milan, unless it was the AWD model. Look at Mercury's own website. For the 2009 V6 model Milan it says 20/29:

http://www.mercuryvehicles.com/milan/

In any case, disagree or not, what I stated are our actual numbers. We are very conscientious about our MPG. It gets much better than 18mpg. We drive in stop and go traffic for 35 miles each way commuting each morning and evening to/fro work (with the V6 model) and get no less than 23mpg running only low grade gas with 15% ethanol.

I also found the following website pretty good when looking for new cars:

http://www.fueleconomy.gov/feg/findacar.htm

Personally, I believe the American automakers have been making what their customer's are buying. I mean, you still see them on the road, which means someone is buying them. The fact is that Toyota and Honda have a strong reputation for quality, not just MPG, and that is why people buy their cars over American "brand" cars...quality.

Originally Posted by cactusjack

Not disagreeing with you, but they had a 2009 Milan on the showroom floor and it was rated at 18 MPG/city. I'll repeat - the only vehicle I saw on the lot that was rated better than 18 MPG/city was the Focus. I didn't look at every car they had. It was just a casual observation.