Sunday, November 16, 2008

Auto Industry Bailout? Hold on. Let me check with my sales manager…

Did you say "25 billion dollars?" Well I just got off the phone with another failed industry, and there are two more on their way in right now, and there’s only one bailout left. Our bottom-line price is 12. Take it or leave it.

Personally, I’m torn because I don’t want to see what a failed GM or Ford would do to all those people employed in the auto industry - not sales so much, but manufacturing, their suppliers, and the towns that support them. And certainly I don’t want to see our U.S. economy take another hit.

You know, these last few months have felt like a surreal AA meeting, where industry giants step up to the podium one at a time, sharing their personal stories of greed and mismanagement in a unanimous chorus of conscience-clearing, yet without a hint of remorse.

Over the years, and through two energy crises in my lifetime, Detroit has spent lots of money lobbying against higher MPG standards, standards which they’re given decades to meet, with no regard for the consumer. And consumers are synonymous with taxpayers, who are now expected to bail their sorry asses out.

And Big Oil has been right along there with them - the lower the MPG, the more fuel consumption. So how about getting a loan from ExxonMobil, BP, Chevron, Royal Dutch Shell and ConocoPhillips and leaving us alone? Better yet, how about borrowing money from the banks who were infused with all that cash from the recent 700-billion-dollar bailout, since they’re not offering it to us?

If only we could put conditions on this money before they got it. I'd start with mandating a new business model: fixed fair pricing and no more haggling (a euphemism for cheating innocent consumers for as much money as possible). Arbitrary dealer markups and marketing fees would be considered criminal. MSRP? Now it's a CSRP (Consumer Suggested Retail Price).

And then I would demand reasonable replacement part costs and servicing. When I hear it’s going to cost $300 to change out a “cabin filter” in my car simply because of its inconvenient access, I would just say “Well, that's a poor design. Guess you'll fix that next year. Here's $30.”

And you absolutely better start walking the walk when it comes to quality. American cars are better than they used to be, but they still aren’t built for the long haul. I want a vehicle that requires routine maintenance, not guaranteed expensive repairs. There are 60 foreign automobiles on the Consumer Reports Best of the Best Used Cars list. There are only 4 American. And there are 23 American cars on the Worst of the Worst list, compared to 8 foreign (and half of those are VW). And when it comes to the Used Cars to Avoid list, it’s simply embarrassing. There is one Honda (Passport 1999-2002) and two Toyotas (2007 V6 Camry the 2007 V8 4WD Tundra). For Chevrolet, there are more than 20 models, most spanning multiple years. And the pattern continues for the other makers.

But alas, we can’t put conditions on this money. Just like we couldn't for the banks who will continue to charge unregulated fees and offer us mortgages that equal three times the value of our loans once fully amortized. And we can't prevent those who got us here in the first place from continuing to profit or fail.

So I'm really torn. Serious mistakes result in serious consequences, and much of this could have been avoided. Perhaps it's time to let economic nature take its course. But many of these decisions, like in most big business, were made by the hands of the few, so why should the many suffer?

For those employees in the auto industry, I’d offer the same advice I would offer to anyone working today, including myself: keep your skills up, cross train and always have a backup plan; no job is forever, no one looks out for you except you, and nothing is guaranteed…except change.


Jannie said...

I remember Used Cars, the movie. The one where there was a dollar bill on a fishing line, right? Or was it a $5, $10 or a $20? So long since I've seen it, probably worth renting for a blast from the past.

Gosh, it seemed like such a simpler time then. Was it really?

Mike said...

That's the movie! He was fishing for customers from a neighboring car lot, with a $10 or a $20. I don't remember. And, yes, I remember it as a simpler time. Of course, I also remember the flu as a week off from work and I'm pretty sure it was worse than that. Thanks for your comments!

Mediadude said...

So - here's my solution to this: provide each taxpayer with a $40,000 voucher to purchase a new car or two within the next 6 months. Non-transferable, must be used to purchase a car (non-SUV) from a domestic car manufacturer. States forgo sales tax on these transactions. Dealers must sell cars at no more than a 20% markup from wholesale price as of 11/1/08. This supports the industry, provides value to the consumer and only costs $8 billion. Of course, foreign manufacturers would hate it, but so what? Better than donating $120B to the mess that is Detroit now.

Mike said...

I like it, dude! They can also through in a fuel voucher so people start traveling again, boosting domestic tourism. And, we can mandate that alternative, cleaner fuel sources are part of the auto industry's R&D.