Nov

21

 It was the Big Three's mistake to agree to pay health care 20-30 years ago when that system was rigged. It was a bad bet. Labor costs are focused on because they are variable… but look at fixed costs. Toyota has made the most mistakes in the past five years, all combined. Look at Tundra in Texas at the exact top in 2006, and the new Alabama plant.  "Highlander, wait, $4 gas. Let's make Prius, wait, $2 gas. Let's not build anything."

There are too many cars produced at too good a quality globally for anyone to make profits without a subsidy. Toyota is subsidized by Japan and Alabama and Texas… Car prices in real dollars have fallen for a decade. New car tech and quality is simply amazing… I laugh my tail off as if some "pent up demand" will do it, when the "get the joke" people are about to realize all new cars now last 10 years + 150k miles EZ.

The financial and media morons who know nothing about cars, production and ruined Finance in this country are all calling for pre- packed BK for the Big Three. That is like stealing the NYSE. Gimme Jeep, Buick and Ford Trucks and I can build a Toyota-killer and pay the UAW all their dues. (Of course, I would have to revamp the dealer network but that's a state issue.)

Never in the history of Autos has a BK or restructuring weaker players into a new consortium (even with state concessions) worked… See Packard or Studebaker or AMC.

There is a good paper written in 1958 how America will never build a profitable small car. Honda has given it a go under the Model-T concept, you can get an Accord as long as you can only choose the color…

The most difficult restructuring has already taken place. It's called Visteon for F parts and Delphi for GM… all the rest of this talk is about a few guys running around feeding robots and about Health Care and Pensions.

David Higgs adds:

Slow down, you're going too fast. Who hasn't said the auto industry was headed for a three-way-crash? What was the story with the german VW Beetle — wasn't it designed due to financial issues there long ago, and hasn't it been one of the best get me from A to B cars ever? The sad thing about the autos is, like all other financial disasters we feel at the moment — greed under the hood.


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