Pres. Bush’s Recallable ”Bailout” Loan & Missed Opportunity to Expand US Auto Market

[44 mpg by 2010]

Please see if this is a correct understanding of the “bailout” loan conditions with Chrysler and GM?

The only way that Chrysler and GM can each continue the loans beyond April 1, 2009 is to have an “acceptable” planned path to profitability by March 31, 2009. Otherwise, the Federal ”bailout” loan immediately becomes due. It appears that any company WITHOUT an “acceptable” plan will be forced into bankruptcy because of the recall of their loan immediately after March 2009.

Is this a correct understanding?

Unfortunately this does not change any of the economic or market conditions facing the domestic auto market and/or the Detroit3.


Pres. Bush missed the opportunity to expand the US auto market and production volumes by opening a previously unaddressed domestic market sector that could be done quickly with no cost to the taxpayer and almost no cost to Ford and GM. Unfortunately, Chrysler is not in a position to participate due to their current worldwide technology/product portfolio.


Simply put, there are more than 25 auto manufacturers in the UK market with approximately 517 models currently recognized by VCA that achieve between 42 and 65 mpg(US) [51 to 80 mpg(Imperial)] combined cycle fuel economy. Ford, GM, their subsidiaries/partners manufacture and sell approximately 20% of those models. This suggests that Ford and GM are well ahead of much of their competition in European fuel economy (and CO2 emissions).
http://www.vcacarfueldata.org.uk/sea...lConSearch.asp

This “fuel frugal” segment could be opened up to expand the US market simply with a 24 month waiver of ALL import, tariff, safety, and emissions restrictions on new vehicles achieving more than 44 mpg(US) [53 mpg(Imperial)] combined cycle and that satisfy Euro Step IV (or Step V) emissions plus current Euro safety standards. This waiver could be granted by Presidential Executive ORDER under the War Powers Act because oil imports/energy independence are National Security Issues. Of course OUR current economic mess is important too!

As soon as the waiver goes into effect, Chrysler, Ford, and GM, with their European partners, could begin importing this class of vehicles and selling them through their existing dealerships for IMMEDIATE CASH FLOW utilizing their current excess European inventories and production capacity. During the 24 month waiver the consumer gets the opportunity to buy and use/experience an entirely new class of vehicles. Meanwhile, Detroit discovers consumer preferences, retools/retrains manufacturing to DOMESTICALLY manufacture the newly clarified preferred product set. This same 24 month waiver period would also be used to bring this "new domestic design and production" into compliance with US emissions and safety standards.

This is a minimum resource/cost, quick response solution for Detroit to start generating REAL POSITIVE CASH FLOW (in OUR weak economy) through temporary use of their excess non-domestic product and production capacity while they retool domestically for a more appropriate domestic product set based on known consumer acceptance/purchase rates. This would be a serious step function jumpstart to a new level of fuel frugal automotive product with lower emissions requiring unusually low risk. In the simplest form, it may just require putting emissions abated FUEL FRUGAL Euro type power trains into appropriate existing US vehicle designs.

This strategy dictates NO alteration of current "traditional" domestic automotive product or production schedules since these "temporary imports" address the previously undeveloped fuel frugal market segment, so the impact should be small (unless the cosumer is "just settling" for what Detroit currently offers). The actual observed sales rates can be used to adjust future product strategies and volumes!

Of course, if the Detroit manufacturers did not wish to participate in the distribution of these 44 mpg plus vehicles through their dealerships, the consumer would be free to import on their own or through importers.

Here are some of the benefits ... IF ... demand in this "new" segment is real and significant and then Detroit commits to and quickly built these "new existing" FUEL FRUGAL vehicles within the US in relatively high volumes, we could "kill 16 birds with one stone" ... not limited to quick response, positive cash flow, expanded domestic market demand, job creation, improved economy, increased tax revenue, reduced fuel consumption/emissions/oil imports, stronger/more creative domestic auto industry/industrial base, improved National Security ... to name a few.

Of course the down side is IF Detroit failed to respond aggressively with quality cost effective product, then even more domestic market share could be lost.

Now … what is wrong with this idea?

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Did President Bush really miss an opportunity to make history in a positive way by NOT openning a path to potential success in the fuel frugal sector?

[wescoent]

Doesn't work.

You can't directly import those vehicles from Europe because a direct import, EVEN WITH ALL THAT WAIVED, would cost FAR too much to be an economically viable proposition.

Americans will not pay $32,000 for an I4 diesel Ford Mondeo with 110hp.

[prowlerjc]

Not to mention the logistic to support the 'not made in NA' parts on these vehicles...

Or the liability of these cars that don't meet safety standards...

[2002 Caddy]

Not to mention that it will flood the market with tiny diesel Volkswagons, Hondas and Toyotas which are already eating our lunch in this segment.

By your own post GM and Ford have only 20% of this market... That means that someone else has 80% of this market... 20% market share is NOT something to get excited about... We are loosing here as bad as we are loosing in North America.

This is the 4th or 5th time you have posted this idea...
It still won't work.

[44 mpg by 2010]

Originally Posted by 2002 Caddy

By your own post GM and Ford have only 20% of this market... That means that someone else has 80% of this market... 20% market share is NOT something to get excited about... We are loosing here as bad as we are loosing in North America.

The 20% refers to the number of models GM and Ford have relative to the other 20 or so manufacturers in the UK .... NOT MARKET SHARE.

Sorry, I do not have market share data.

Not to mention that it will flood the market with tiny diesel Volkswagons, Hondas and Toyotas which are already eating our lunch in this segment..

There are only 11 Hondas in this fuel economy range and one of those is the Civic Hybrid. Toyota has 12, one being the Prius. VW is the exposure with about 67 models. There is also an exposure to Audi and BMW with about 70 models between them.

These competitors would be up against the best of GM and Ford's approximately 102 fuel frugal machines.

I do agree that unless Detroit were very careful in their choices of what to manufacture and sell domestically, there could be further errosion of model volumes and the accompanying losses in the benefits of economies of scale.

I think you will agree that this segment will be "new" and offer opportunities for market expansion if properly priced, say in the range of current hybrids (or below).

[2002 Caddy]

Originally Posted by 44 mpg by 2010

Sorry, I do not have market share data.

Sadly the market share numbers are all too easy to find, you will find that GM market share is getting HAMMERED in all sectors in every location, except Asia. The smaller the car, the worse the market share that GM has and the more they have lost since 2000. Yes and that includes Europe. There is a reason that GM's "frugal" models are outnumbered in Europe by over 5 to 1.

Further, and even more depressing, GM is loosing money on all of the cars that you want them to bring here. They lose money in Europe, they will lose even more in when you consider the cost to ship the cars "home".

While energy independence is CRITICAL to national security and a desperately important goal... flooding the American car market with baby Audi's, VW's, BMW's, Smart Cars, Honda's, Toyoya's and the like will NOT help GM or Ford... This will BURY them!

We need a plan to help GM crawl out from under the devastating legacy costs.

Your plan will shift ALL manufacturing to GM Europe and GM China and will place even more Americans on the unemployment lines... This will INCREASE GM's legacy costs not decrease them... As more "American" workers take early retirement as more join the job bank etc etc... Shipping these jobs to Europe will KILL the US economy.. not make it better.

The truth is your plan was a good one about 15 years ago GM should have invested in cars like the ones that you want and should have built them HERE...

Now, I fear that it is just too late.

[fp115]

Have you not noticed all companies canceling or delaying their economical vehicles?

Your idea seems to miss out on the billions of dollars each company will lose out on.

[member12]

Well, the Smart car is just so dumb....

If that's how micro-euro cars are, then they can keep them. Just bring us the Mondeo, Astra, and Insignia.