by MrBill » Tue 17 Jun 2008, 03:37:35
BT wrote:
$this->bbcode_second_pass_quote('', 'M')rBill, I am befuddled, bewildered and confused as to why there are very few fuel efficient vehicles for sale in the U.S. It's incredible that the automakers are suffering the way they are, and they are not even offering what the people NEED right now.
The Big Three could not make money selling small and medium sized cars in competition with the Japanese, so they sold their customers on the safety aspects of larger vehicles.
In response the Japanese and the Germans had to offer both larger models, and bigger engines, in response to US customer demand for those larger, more powerful autos. Competitively they could not concede that market share. Meanwhile they developed smarter, more fuel-efficient models elsewhere using profits (partially) made in the USA.
If I am not mistaken I think that both GM (Opel) and Ford are profitable in Europe? That is where they are designing well-built cars. However, the sticking point is price. Not only do you have to market 2.0 liter, 4-cylinder, manual transmission autos instead of 4.0 liters, 8-cylinder, automatics to N. Americans, but you have to convince them to pay the same price (or more) for that better engineering.
Timing is everything. That job of selling becomes easier when gasoline is now $4 per gallon, but, of course, due to the credit crisis and weak US economy the car buyer has less credit to buy those newer models, so they are stuck with dinosaurs that are expensive to drive, but harder to sell.
You're right. If they are upside down on a full-size SUV they can no longer afford to drive they will default on their car loan. Those receivables have been securitized and have been bought by banks and investors. Those obligations will become worth far less or worthless. Ditto for credit card receivables. Those losses will further exacerbate the current credit crisis.
We should not confuse demand with the ability to pay. They are related, but quite different!
The organized state is a wonderful invention whereby everyone can live at someone else's expense.