What will become of the auto industry?

by **Denny** » Wed 06 Jul 2005, 22:15:07

Just look at the big problems now facing Ford and GM. They are such a major component of the eocnomy and if people start really cutting back, they'll get by on two cars instead of three in the driveway and thenon one instead of two.

I am concerned that this will spell the doom of the industry.

(And, I am not just academically concerned, I am a future GM pensioner, and worry that they will possible default. It seems like every two or three years they are now having to top up the plan as they underfunded during the good years.)

by **Eli** » Wed 06 Jul 2005, 22:49:34

I am very sorry to hear that you are a GM pensioner because I agree that they are going to default on their pension plans.

I think most on the board would agree that the auto industry is not going to have a very good future. That and the airlines.

The softer the landing the better it will be for the auto industry those auto makers who are heavy into light diesel engines will do better than those who don't have any. I know VW has some good diesels but not so sure about GM and Ford.

by **Jack** » Wed 06 Jul 2005, 22:49:55

I think you're right to be concerned.

Given the trend of sales, you might be wise to take a look at the Pension Benefit Guaranty site (located HERE). Early retirements are not well covered.

Best of luck - and please keep us up to date on the auto industry.

by **The_Toecutter** » Wed 06 Jul 2005, 23:01:35

What will become of the auto industry?

You have to look at the following factors:

a) How severe will the peak oil crisis be?
b) Will the industry begin thinking in the long term instead of the short term? Will the industry ever begin to understand that they cannot continue business as usual with unsustainable consumption of cars and parts?
c) The speed at which alternatives to oil get put into place.

If the peak oil crisis is very severe, the industry is done for, no two ways about it. If it is soft or in-between soft and hard, the industry could have a chance, but it must immediately begin thinking about selling cars that are sustainable: eg. pure battery electric cars, cars that run on B100. If it doesn't? Those bonds may as well be junk status for Toyota and Honda as well as GM. The severity of the crash will affect the possibility of getting viable renewables in place.

One thing is for sure. We cannot rely on continued and unending economic growth under the current form of capitalism we know today, or peak oil will show absolutely no mercy. If GM and the rest of the auto industry are to survive, they may very well exist on small scales, locally, and not globally, with many hundreds of other competitors.

GM defaulting? $300 billion in debt. So far it's looking like a government bailout courtesy of the taxpayer. I think they should be left to the market, but just like you, a lot of people would lose their benefits.

Flip a coin. Because that's what it will essentuially be with your situation.

by **RG73** » Wed 06 Jul 2005, 23:05:27

Toe I'm going to make sure to slash the tires on any electric car I see and pedal away while they wait for a tow.

Does the entire world revolve around how we should have electric cars?

by **jmacdaddio** » Wed 06 Jul 2005, 23:27:02

GM will not exist in its present form. Divisions will have to be shut down (Buick), sold to competitors, or maybe spun off (Saab / Opel). Right now their business model has more in common with Macy's than a carmaker. Macy's has incredible markdowns because they know you'll use your Macy's charge to rack up a tab and interest charges. GM can offer incentives because they make their profit from the loan they give you to buy the SUV rather than the SUV itself. The SUV-dependent business model won't work in the $60 oil era. The bottom line is that GM is making boring cars that nobody wants to buy and SUVs that suburbanites can't justify purchasing for kid-hauling duties. One again GM refuses to innovate and adapt, and this time they may not survive.

In some ways the imminent demise of GM could ironically put the issue of government-guaranteed healthcare back on the table. US businesses are at a disadvantage vs. overseas companies because foreign cos. don't have to pay for their workers' healthcare. The chairman of BMW was recently quoted as saying that BMW makes fine cars, and GM is a welfare entity that sells cars to pay for healthcare and pensions promised to its workers (I don't remember where or the exact wording).

My gut feeling is that Ford is in a better position globally to survive. I've seen Fords all over Europe and in South America. SUVs are a big chunk of their US business of course, but they've still got plenty of Focus buyers overseas to keep things afloat.

I'm sure we'll see theories that when GM idles a plant, the guy who owns the deli across the street will have to cut back, followed by the bakeries who supply the deli guy with bread, etc. leading to economic cataclysm. I don't think this is necessarily true in this day and age since the US economy isn't as dependent on autos as it used to be. I hope GM doesn't get a US gov't bailout but if TSHTF for GM in 2009-2010 when (hopefully) Dems will be in charge, I fear my tax dollars will go toward propping up an American dinosaur.

by **The_Toecutter** » Wed 06 Jul 2005, 23:30:06

$this->bbcode_second_pass_quote('', 'I') fear my tax dollars will go toward propping up an American dinosaur.

by **I_Like_Plants** » Wed 06 Jul 2005, 23:37:20

And good riddance!! My GM loan was supposed to be 5%, so why was almost half of each payment <i>interest</i>??

by **mgibbons19** » Wed 06 Jul 2005, 23:40:20

$this->bbcode_second_pass_quote('I_Like_Plants', 'A')nd good riddance!! My GM loan was supposed to be 5%, so why was almost half of each payment <i>interest</i>??

by **jmacdaddio** » Thu 07 Jul 2005, 00:02:33

Don't remind me ...

I went to a wedding in Alexandria, VA over the holiday weekend. I looked in to taking the train .... for my gf and I to go on Amtrak, it would have cost about 400 dollars. For us to drive, less than $70 for tolls and gas for my Subaru WRX (24 hwy mpg), not counting cheeseburgers at rest stops :-)

My gf is from Denmark and in her country the price situation would have been reversed - about $100 for train fare vs. about $200 for road tripping in a beat-up Opel or Nissan since that's what everybody has over there thanks to crazy taxes.

The entire US transport system is brought to you by GM and Standard Oil (before it was Exxon and Mobil, then ExxonMobil). Dick Cheney and friends want us to burn gas in our cars as we drive down interstates paid for by taxpayer revenues. Apparently passenger rail is a Communist mode of transport. Plopping down 12-lane roads creates car-dependency theoretically forcing us into GM showrooms. The plan backfired and now that GM is tanking they're crying foul. The situation is not as dire for Uncle Dick and friends: Exxon is still carting bags of cash to the bank since we still need to put gas in our Toyotas, and the US Treasury doesn't care whether Japanese, German, or GM cars get fueled up, sending 19.4 cents to Washington with every gallon.

Right now our taxes prop up GM in a roundabout way. In the future it will become much more blatant as the bailout begins.

by **EarthAbides** » Thu 07 Jul 2005, 00:34:43

What about the other 3/4 of the auto industry? Car repairs, collision repairs, parts retailers/wholesalers... We're all on the list of the soon to be unemployed, me thinks!

by **Eli** » Thu 07 Jul 2005, 00:35:27

Not to hijack the thread but...

we will need to prop up the airlines too. Or more than we already are anyway. I wonder if the government will bail out all the people who loose there jobs when TSHTF.

What the hell am I saying the average guy on the street does not have lobbyist
working for him.

Welcome to the board EarthAbides! :-D

by **gego** » Thu 07 Jul 2005, 00:42:08

Bankruptcy!!!!

Easy come, easy go.

by **jmacdaddio** » Thu 07 Jul 2005, 01:02:42

$this->bbcode_second_pass_quote('', 'W')hat about the other 3/4 of the auto industry? Car repairs, collision repairs, parts retailers/wholesalers

by **EarthAbides** » Thu 07 Jul 2005, 01:20:04

$this->bbcode_second_pass_quote('jmacdaddio', '')$this->bbcode_second_pass_quote('', ' ') Although if gas isn't readly available, reduced driving translates to a lot less wear and tear.

by **gego** » Thu 07 Jul 2005, 01:31:00

What happened to the buggywhip industry?

Going, going, gone.

What happens to anything else that does not work for humankind?

This car industry was a sleazy industry anyway; who ever enjoyed going thru the hastle of buying car? Sloppy union made crap. The average car was a POS, so it is good that we will no longer think we need them.

by **KevO** » Thu 07 Jul 2005, 02:27:51

$this->bbcode_second_pass_quote('Denny', ' ')I am a future GM pensioner, )

by **KevO** » Thu 07 Jul 2005, 02:28:52

$this->bbcode_second_pass_quote('Eli', '
')
I think most on the board would agree that the auto industry is not going to have a very good future. That and the airlines.

by **I_Like_Plants** » Thu 07 Jul 2005, 02:47:11

14 year loan on that Cavelier LOL!! :razz:

There was something messed up, that's why I got rid of the car and GM can go take a long walk off a short pier for all I care.

Really though, the auto industry and repairs, carwashes, etc are a HUGE part of the US economy, things are not looking good for Life As We Know It (tm)

by **fred2** » Thu 07 Jul 2005, 04:51:23

Leaving aside issued with specific companieis, I don’t think the car industry as a whole is doomed as such. Massive change, yes. Personal transportation is an essential part of life in developed countries. The looming oil crisis will force a sea change in direction for the car industry but it wont kill it. The recent trend towards the larger SUV type vehicles will of course collapse. Fuel economy will become the name of the game, and there will be a huge demand for fuel efficient cars, hybrids etc. And because effective personal transportation is an essential component of normal life in the developed world, you will see government intervention to ensure it happens e.g. tax policy to encourage (greatly) fuel efficient vehicles.

Airlines, they are different. A very large proportion of air travel is discretionary. And a substantial part of what business people probably consider as non-discretionary probably is too; if air travel becomes very expensive companies will cut down greatly. A true, permanent, oil crisis of the peak oil variety will see the end of civil aviation as we know it, and this is the correct response. We will need the energy saving there to help us in the transitions needed elsewhere.

When I first heard of peak oil I thought life as we knew it was doomed. I don’t think that now. I’m actually looking forward to a change to a more responsible way of life, with a respect for using resources wisely. It’s a good thing, just a shame the necessary response to it will only come as a forced reaction, not a prepared managed plan of change.

What will become of the auto industry?

What will become of the auto industry?

Re: What will become of the auto industry?

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