Word: auto
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...chassis and parts across brands, a strategy that made sense at the engineering level. At the consumer level, it was a disaster. Internal clashes for control removed imagination from design, resulting in look-alike Buicks, Oldsmobiles and Pontiacs. Sales declined; cue another restructuring. The Germans, who have their own auto culture, were no match for Chrysler after they bought the company in 1998. No wonder they gave it back...
...truly desires, you have to price them that way and use rebates to move the metal off the lots. "They are building cars that they don't want to build. They have to build them because they have a fixed cost structure to amortize," says Nick Gidwani, a former auto-industry investment banker with Sankaty Advisors and now head of the startup auto-sales website CarZen. Particularly after the post-9/11 sales slump, Detroit got addicted to this strategy and used it to move plenty of SUVs...
...negotiate a solution to the problem. The incoming Obama Administration is expecting such talks to fall to it, but the automakers, especially GM, have warned they cannot wait. "I believe that we could lose General Motors by the end of this month," said Ron Gettelfinger, head of the United Auto Workers (UAW) union, which announced Wednesday that it would be willing to sacrifice job-security provisions and financing for retiree health care to save the companies - major concessions reflecting the seriousness of the situation...
Still, Zandi stressed that even that amount would be dwarfed by the costs of the alternative: the entire (or even just part of) the auto industry going under. Some Republicans like Corker argue that a bankruptcy reorganization - potentially aided by temporary government financing - is the only way for the automakers to make the serious reforms (closing factories and dealerships and cutting union wages and benefits) necessary to make them truly competitive with foreign competition. But Zandi stated what many experts believe, that bankruptcy for the already ailing automakers would mean only one thing: total liquidation and a potential loss...
...Carmakers' Woes The U.S. government is considering a multibillion-dollar bailout for the Big Three auto companies [Nov. 24]. Why not help consumers at the same time? For three months, every time a new car is sold, the government should absorb half the list price, paying that sum directly to the car dealer. This discount available to the buyer could be reduced in stages during the rest of 2009. In return for this boost, the Big Three must agree to increase gas mileage and reduce car sizes. This scheme would keep most Detroit workers employed while avoiding the indiscriminate award...