Are Seattle Car Dealers Getting Desperate?

“I got my Civic at $100 over invoice!” beams Leonard L., a Redmond resident who picked up a new 2009 Honda Civic earlier this year. Leonard is among the growing group of recent car buyers who have snagged up great deals as local Seattle car dealerships have begun feeling the economic recession.

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Chevy SUV Dies During PR Stunt to Crush Japanese Car

Last Friday, in an attempt to send a message to buy American cars, a Chevrolet dealer arranged to have a modified Chevrolet Suburban drive over a Honda Accord. The stunt was derailed however when the SUV blew a hose and failed to crush the truck. Utterly stupid?  Just a little.  Here’s the excerpt from the full article:

HILO, Hawaii – A Hilo Chevrolet dealer who tried to crush his Asian auto competition found the stunt a little harder to pull off than expected.

Island Chevrolet general sales manager James Severtson arranged for a Chevrolet Suburban SUV outfitted with massive tires costing $5,000 apiece to drive over a Honda Accord.

On the first attempt Friday, the monster truck blew a hydraulic hose and leaked vital fluid while the Honda remained intact and ready for more.

I drive a Suburban and I also drive an Accord. I would never want to crush either one of them, because they serve different purposes. That’s why it irks me to no end to see this type of cowboy attitude, especially in the middle of the auto bailout. We don’t need more chest thumping about American cars, we need reflection and re-organization.

And seriously, who in their right mind thinks the Japanese make bad cars? The era of the 70s and 80s where American automakers and consumers laughed at shoddy Japanese cars is nearly three decades ago. The fact that anyone can even think that the Big Three make more reliable cars than Honda or Toyota is laughable at best and plain sad at worst.

If Americans want to take pride in their vehicles, then it’s time for the automakers to sit back and do some reflection on why the industry they created from scratch is now in the dying throes of bankruptcy. The problem is that the automakers are not doing that reflection, but instead, blaming just about anyone they can for their current problems: the economy, the union, gas prices, picky consumers and yes, now the Japanese. It’s a sad day when a proud American industry is so in denial of it’s own faults that it resorts to pointless name calling to save face.

Domestic car enthusiasts are probably wondering where are the Henry Ford or Lee Iacocca of our modern times to lead us through this financial mess among our automakers. The answer, unfortunately, may be that those comparable visionaries are here today – they just work on the other side of the ocean.

It’s Done, a $17.4Billion Bailout for US Automakers

The US Federal govenment is getting into the car business. With this latest attempt to save the American auto industry, the Fed will partially own a stake in the Big 3.

What will this do for the future of American cars? 

For the long term is this good or bad?

Will every American car soon look like FBI vehicles?

For the immediate future it is needed, but keeping an eye on the long term effects will be interesting.

Here’s what Debb Reichmann wrote in the Associated Press

WASHINGTON (AP) — Citing danger to the national economy, the Bush administration approved an emergency bailout of the U.S. auto industry Friday, offering $17.4 billion in rescue loans in exchange for deep concessions from the desperately troubled car makers and their workers.

The Feds would then have the option of becoming a stockholder in the companies, very similar to that of the major banks. That would somewhat nationalize the US auto industry. 

A nationalized car industry, how will this effect local car dealers, if it does at all?

See the full AP article

 

What Will The American Auto Industry Do Now?

With Congress rejecting a $14 billion dollar bailout for US automakers, where does that leave Detroits Big Three? Unfortunately the decision came down to partisanship. Republicans voted against it, most Demorcrats wanted it. The auto industry will suffer deeply, and so will American jobs.

JULIE HIRSCHFELD DAVIS and KEN THOMAS of the Associated Press wrote,

WASHINGTON – A bailout-weary Congress killed a $14 billion package to aid struggling U.S. automakers Thursday night after a partisan dispute over union wage cuts derailed a last-ditch effort to revive the emergency aid before year’s end.

Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit’s beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with U.S. plants of Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.

If this union decision leads to the demise of the US auto industry, wouldn’t they be cutting their own throats? 

See the full AP article.

Al Gore on Auto Bailout: We Gave then $1 Billion 15 Years Ago and They Walked Away

In a recent Newsweek interview with Al Gore, here’s a telling quote on what US automakers have really thought about clean and efficient cars this whole time: Read more

Why Toyota Wins From the Auto Crisis

From a blog posting I just read:

Do you know how many hourly jobs GM has laid off from 2006 to July 2008? Take a guess. How about 34,000? And now, they’re talking about another 5,500 layoffs.

…

OK, here’s a better question. How many hourly jobs has Toyota’s American production system laid off in the same time frame? Zero. That’s right. ZERO. How? Isn’t Toyota experiencing the same slow down in auto sales as GM is? Yes, it is. And yes, Toyota has halted production at its Texas and Indiana plants for the past 3 months. But the 4,500 people who work at those plants have not been laid off. 

 

The answer: Toyota has a special culture, deep-rooted values, and respect for their workforce. Toyota’s tradition is to NOT lay off employees during hard times. This tradition hasn’t really been put to the test until now. And Toyota has stuck to its guns and its values.

“This was the first chance we’ve really had to live out our values,” says Latondra Newton, general manager of Toyota’s Team Member Development Center in Erlanger, Ky. “We’re not just keeping people on the payroll because we’re nice. At the end of all this, our hope is that we’ll end up with a more skilled North American workforce.”

 

For the full article: What Toyota knows that GM doesn’t

My thoughts on this is two fold. First, I’m impressed with Toyota as a consumer. Second, I’m sentimental to the fact that this really is the end of the American car industry. 

Back in the 80s, when America stopped importing “cheap” Japanese cars and Lee Iacocca was making history at Chrysler, the American car industry seemed pretty much unstoppable. The “Big Three” were called that because they were actually the biggest – not because they are the only ones left standing – as is the case today. 

Through mergers and acquisitions, the industry, even with all it’s clashes with the union, the auto industry had the history of supporting it’s workers and ensuring a career out of tens of thousands of skilled laborers at a time that many corporations dumped their workers en masse. 

But that was then and this is now. 

In a surreal flip, it would now appear that those clunky Japanese car companies are the industry leaders today; and have been for more than a decade. While Detroit was drinking the oil-is-forever koolaid and pumping out beefier and bigger engines, the Japanese were hard at work perfecting their engines and builds to six-sigma and improving efficiency.

With gas hitting $4 a few months ago and the credit crisis, it wasn’t so much that the Japanese won the bet, but rather, Detroit found itself with an empty hand. Saddled with factories meant to churn out beefy SUVs, Hummers and trucks, the new paradigm in energy and economics poured cold water all over the roaring party up until this point. 

GM is losing a billion dollars a month and will likely buy out Chrysler. Layoffs in the 30,000 – 40,000 range are to be expected, along with 12 factories closing. Morale is no doubt at an all time low, with every worker wondering if he’s next on the cutting block. Even if GM is able to magically survive with an infusion of cash (bailout), the Volt is still years out and a grasp for straws.

Meanwhile, Toyota has taken a page straight out of the American automaker book by proving its loyalty to the company workforce. Though Toyota is halted on much of its production, they are taking the down time to train their workers to be even better skilled, educated and efficient workers. When the economy picks up again, Toyota will be the equivalent of a fully rested team going to the playoffs against a miserable and beat-up team that has just played 10 losing games in a row. It’s no contest who will win. 

If the Seattle Auto Show was any indication, the consumers have already voted, as we saw crowds around Toyota, Honda and Jetta. All the while, the sprawling 2-ton Ford F150 rotating 360 degrees might as well been invisible. Chevy and Escalade Hybrids were looked on more with a sense of derision or perplexed bewilderment rather than consumer curiosity (though this is Seattle). 

The new automotive landscape is already here – it’s just across the sea.