What Your $60 Billion gets you

[Masterofreality]

I may be stupid about many things, and many more things according to some illustrious posters on this board, but after 37 years of working for A) A car company (Ford) and B) An international auto service company, one thing I do know about is cars and whether the public is getting it's money's worth.

The auto company bailouts are most, assurredly NOT worth it- for many reasons. Two of the chief ones are:

I) The incredibly wrong-headed decision to force dealers to close allegedly to save the GM and Chrysler companies money. (Total BS. The car companies had no investment in dealerships to begin with. They are all privately funded.) Talk about unemployment? While union jobs were saved in the politically sensitive midwest, nationally, thousands of dealership employees were needlessly thrown on the street- more than the claimed 55,000 auto company jobs that have been "created" by the bailout.

II) The garbage products that will be soon foisted upon the public as a result of political pressure to produce "clean" vehicles.

Below is a link to an article that was published by- of all newspapers- The New York Times. Just get a load of this crock of crap. Enjoy your lunch.

The Lemon Volt (http://www.nytimes.com/2010/07/30/opinion/30neidermeyer.html)

[XU 87]

This is what happens when you have government controlling a private industry. GM doesn't do what is economically sound. Instead, they make decisions based on political concerns. And as a result, we the taxpayers end up paying the bill- like giving wealthy owners of a $41,000 car a $7500 taxpayer funded rebate.

[SixFig]

It is an Op-Ed article...so take it with a grain of salt. The guy who wrote the article is the editor of "car review" website...hardly and expert on marketing and the inner workings of the auto industry.

Not saying he is wrong, but this article isn't gospel.

[Masterofreality]

It is an Op-Ed article...so take it with a grain of salt. The guy who wrote the article is the editor of "car review" website...hardly and expert on marketing and the inner workings of the auto industry.

Not saying he is wrong, but this article isn't gospel.

Except that he's right.

By the way, here's a USNews & World Report article on the dealership closures. To be fair, I would disagree with the dealership average employment count of 50. For the ones that are or will be closed, it would be probably closer to a little over 30 employees, but still that is a loss of over 60,000 jobs. As I said before- more than the 55,000 allegedly "created". That is one helluva "stimulus plan".

Dealership Disaster (http://usnews.rankingsandreviews.com/cars-trucks/daily-news/100719-Report-GM-Chrysler-Too-Hasty-in-Dealership-Closures/)

[smileyy]

My birds won't even *($# on the NYT when I line their cage with it. They, unlike that paper, have standards.

[XULucho27]

The auto company bailouts are most, assurredly NOT worth it- for many reasons.

More to your point, the recently approved "Frank-Dodd Act" specifically exempts the auto industry from its legislation. In other words, tax-payer bailouts of the auto industry are still very much a real possibility, should the companies need it again.

In all fairness, the Act does very little to prevent future tax-payer bailouts of financial services firms as well. :(

[pizza delivery]

The author of that opinion piece runs "The Truth About Cars" website.

http://www.thetruthaboutcars.com/in-defense-of-the-chevrolet-volt/#more-362005

The front page has the above article "In defense of the Chevrolet Volt" for those interested in clear weighing of the facts at it's source.

Do nothing! Do nothing!

It won't help to belittle American cars as they effort to catch up with the rest of the world. It's sad it took a political intervention to wake up that bloated mess that GM has been for years, but few would argue that the direction they've headed since then has been an improvement.

[xu95]

I traded in my X5 for a Ford F-150 last month. To me it was a no brainer to support Ford.

xu95

[Emp]

Help me out here.

What IS the manufacturer's savings, or claimed savings,for closing dealerships? Or at least, what is the argument. Less parts inventory? Less unsold car inventory? Fewer people to certify?

I like having multiple dealers competing to sell new and used autos. It is one part of the American marketplace that really works well.

What I don't understand is why car dealer originated loans should be exempt from loan disclosure requirements, etc. I realize car dealers make little on the actual sale, and make the most selling the loan and the term life, then servicing the car over a lifetime. But what is the logic (as opposed to the politics) behind exempting them from loan regulation?

[Masterofreality]

Help me out here.

What IS the manufacturer's savings, or claimed savings,for closing dealerships? Or at least, what is the argument. Less parts inventory? Less unsold car inventory? Fewer people to certify?

I like having multiple dealers competing to sell new and used autos. It is one part of the American marketplace that really works well.

What I don't understand is why car dealer originated loans should be exempt from loan disclosure requirements, etc. I realize car dealers make little on the actual sale, and make the most selling the loan and the term life, then servicing the car over a lifetime. But what is the logic (as opposed to the politics) behind exempting them from loan regulation?

Emp. My last job at Ford, one which I had for 6 years, was putting Ford dealers in business in all aspects that the process entailed. In answer to your opening question, the answer is ZERO savings- unless you count the fact that there are less dealers for the District Manager to counsel with- a nebulous time saving at best. A) The parts are paid for up front by the dealer- not placed on consignment by the manufacturer. B) The cars are paid for to the manufacturer up front and the dealer "floor plans" or finances those cars through a finance source until they are sold. C) The onus on getting people "certified" like service technicians is on the dealer, not the manufacturer. D) Having multiple dealers competing on price helps the consumer and does not hurt the manufacturer. The manufacturer has already been paid for those vehicles at the full "dealer cost"

Some may claim that by having fewer dealers the manufacturing companies will save "incentive" money because there will be less dealers who may earn it. That is patently false. If an automaker needs to sell 1,000 cars quickly, they'll incentivize those 1,000 cars whether there are thirty dealerships or twenty to pay the money too. Same for advertising. The car maker will advertise the same whether there are 30 or 20 dealers.

This whole "close dealers to save money" is a total scam. I still have no idea what the F was going on with that.

[madness31]

I'm against all bailouts because it is important to let markets work. When the government steps in whether through central banking or other means it only delays the problem and often leads to bigger less manageable problems down the road.

The technology bubble formed primarily because of easy money by the Federal Reserve. When that finally burst the Fed pumped in even more money and created the housing and debt bubbles. Obviously the banking system is not innocent as they removed all lending standards in order to create the debt explosion and housing price spike but had the Fed not been so loose with monetary policy the banks would have worried more about risk. The execs saw their chance to get the big bonuses and made a decision to get theirs while the getting was good. When it blows up they already got paid so who cares. Then to add insult to injury for all those who bought houses at inflated prices and saw their equity evaporate congress comes in and saves the jobs of all the greedy/ignorant executives. They take more bonuses from bailout funds thinking the government has given their blessing on such greed. It is a reasonable conclusion to come to given that there were no stipulations attached to the bailout.

I have no insights into the auto industry but agree the bailouts should not have happened. If there is no direct savings for the manufacturer when dealerships are shut down then I wonder if it was more about maintaining proper inventory levels at the dealerships. If the company needed to conserve cash flow then they likely intended on producing fewer cars. If you have the same number of dealers then each gets a smaller share of the inventory and consumers may have trouble finding the the car in the color/style they desire. Are the dealerships linked to the manufacturers pension in any way?