Autoblog

As opposed as I am to government bailouts, the burden on the American taxpayer would have been much, much higher had the government just let Chrysler go under.

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I get you Holden, but the U.S.-Chrysler-GM relationship is terrible. Basically, we give them money so we can keep their jobs, and they use the money to outsource the jobs to Mexico and (let's not forget) China.

Meanwhile, Toyota's building new plants in Kentucky and California, and they're building reliable products that people want.

It's not that I'm opposed to bailouts as much as I'm opposed to giving them to inept corporations that will throw the money away on bad products. Toyota gets money from Japan but it's also among the most reliable and well-run automakers on Earth, not dead last like Chrysler or stupidly run like GM.

Basically, if I'm going to bail out a company I want to get rid of the shoddy management that crippled the company in the first place. When GM decides to ditch Bob Lutz and its other weak links in the executive chain then I'd give them a second chance.

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the Luigian,

perhaps you can tell me what you know about the "Chrysler bailout".

I'll just tell you the truth; I was there.

first and foremost, the government never gave Chrysler a penny. did you know that?

all Chrysler asked the governement to do was to guarantee the loans that it was receiving from banks. think of it like a co-signer.

Chrysler, in turn, did several things:

-first, since it had little money, it couldn't afford to pay the increases the UAW was requiring to keep it's employees in parity with what UAW members were receiving from the other manufacturers. instead, Chrysler gave their employees stock options. of course, all the "experts" said this was folly (sound familiar?). we'll get back to this in a minute.

Chrysler sold lots and lots of cars, and made lots and lots of money, much to the "experts" chagrin. it just wasn't supposed to happen. minivans? who would ever want those?

Chrysler made so much money, in fact, that they paid off all of their loans SEVEN YEARS EARLY.

...and remember all those stupid workers who took the stock options? by 1985, the average line worker was a millionaire, with the average payout being 1.2 MILLION dollars.

I always love the folks who "always" know what to do if they were building vehicles.

manufacturers build what the public wants. Americans prefer larger vehicles, and only buy teeny ones when they are forced to. this is just a historical fact.

and another historical fact is those same teeny cars will be tossed aside like last night's sushi when fuel prices drop and stabilize.

AZMike

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The Luigiian:
"Basically we give them money so they can..."

Are you railing against a bailout that you yourself made up? GM has received no bailout money and as they mention, they don't appear they are going to soon.

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"Bankruptcy is not an option."
-Rick Wagoner

The DET3 would likely see more harm than good done to their business during Chapter 11, as customers would be leary of buying vehicles from a bankrupt automaker.

Any meaningful loss of market share that could come from such a consumer abandonment would likely hurt all stakeholders, including bondholders, unions, shareholders, captive finance companies, alliance partners and existing customers as well.

Ironically, one automaker’s bankruptcy filing would provide increased market share to the others, and therefore domestic manufacturers may shun such filings in order to outlive their competitors.

Recapitalization is a better route. GM could restructure its unsecured debt while simultaneously negotiating better labor terms and new financing, possibly with a strategic partner.

Such talks would be complex, but the alternative of watching so many customers abandon you that you can’t recover, may be far worse.

Chrysler has already entered this process by forming alliances with Nissan. More such deals should be forthcoming soon.

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Chrysler already has a relationship with Nissan, Jamie... no need to await a press announcement. When Chrysler sold their Pacifica Design Studio in Carlsbad, CA They shipped all the equipment to a rented facility in Warren, MI.

My neighbor works for Chrysler & reports Chrysler designers/ engineers are working with a team from Nissan on a small car project. They wish the building could have been closer to Auburn Hills... burning a lot of gas to get back & forth!

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When GM decides to ditch Bob Lutz and its other weak links in the executive chain then I'd give them a second chance.

You mean the Bob Lutz that watched over the new Chevy Malibu? The new Cadillac CTS?? The Pontiac G8???The Z06 & ZR1????

The Bob Lutz that killed the armco- barrier cladded Grand Am & gave you the much improved G6? The Pontiac Solstice & Saturn Sky??

Oh yeah... dump that kind of dead weight at GM. Lutz & his leadership have worked despite the rest of GM's cluelessness

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AZMike: Your points are valid, but I never said Americans didn't like big cars, I said they like ones made by Toyota and other transplants and are showing that in ever-increasing numbers. Why? Because Toyota's still got a reputation for reliability. Yes, these little cars will be thrown out in the end but GM's probably not going to see the fruits of their laborious SUV construction because unless they fix their cashflow problems there's not going to be a GM around.

You know, because like Mr. Machado says below me, "If I was going bankrupt I would not admit it publicly either."

"Are you railing against a bailout that you yourself made up? GM has received no bailout money and as they mention, they don't appear they are going to soon."

No, I'm railing against something else entirely. Cities like Detroit compete for factories by giving large tax breaks to the companies and then (more often than not) close the plants in the United States and open plants in other places, such as Mexico.

http://www.nextautos.com/governmentlegal/gm-seeking-tax-breaks-to-build-volt-in-detroit/

http://www.gminsidenews.com/forums/f19/arlington-weighing-size-gm-tax-break-4903/

Am I against a bailout? Yes, because the taxpayers already pay for things like this. If a company is strong enough, it should be able to handle a recession like this without requiring a bailout. The local tax breaks and money should be enough.

"You mean the Bob Lutz that watched over the new Chevy Malibu? The new Cadillac CTS?? The Pontiac G8???The Z06 & ZR1????

The Bob Lutz that killed the armco- barrier cladded Grand Am & gave you the much improved G6? The Pontiac Solstice & Saturn Sky??"

Yes, the Bob Lutz that just can't seem to get his company to make a profit already.

It's not just product, it's management's ability to control his company. If Bob Lutz were a good manager, he would not be facing bankruptcy right now. The problems at GM can't just be fixed by good product. The tangled bureaucracy at GM is too complex at this point for that.

Getting rid of that bureaucracy will require shutting down hundreds of dealerships and unloading a dead weight. Can he do that? We'll see.

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That's not Bob Lutz' job Luigiian!!! He's in charge of PRODUCT. Your problem is with CEO Rick Wagner... He's the $$$ guy!!

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Edit: a lot of dead weight, as in several mismanaged brands (some of which they're already unloading, e.g. Hummer).

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Edit #2: Aw crap, you're right. Rick Wagoner, not Bob Lutz. I always get those two mixed up.

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Apparently, GM is not a car manufacturer but a poorly run financial and pensions company with car making as a side business, judging by its US offerings, its more an afterthought than a business.

Chrysler, well, they've been on intensive care for a while now so I think euthanasia would be the least painfull solution.

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"those same teeny cars will be tossed aside like last night's sushi when fuel prices drop and stabilize."

I don't think so. If you think gas is ever going back to $2/gallon you may be disappointed. And if you want to see America's future just look to Europe where fuel has always been expensive.

The days when the average Joe saw nothing wrong with commuting in a Suburban or F-150 are drawing to a close and as with Disco, nehru jackets and the pet rock, we'll all look back and wonder what the h$ll we were thinking.

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True, but I see Chrysler definitely going the way of Levitz.

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But they're not going bankrupt. Well at least not GM.

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I thought GM no longer makes the Cavalier.

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