So it’s descending to chaos. Senate has rejected the life-support plan for Detroit. Earlier this week the House of Representatives and the White House stitched together a plan. But when that bill was put to the Senate, a hard-core of Republicans kicked it out. Ford might be able to save its own skin, but GM and Chrysler, in their present form, look doomed.
One flicker (no more than a flicker) of hope is that the President could still divert some funds, from the $700bn bank bailout plan, into the car industry. But a week ago he refused to do this.
So now GM has hired bankruptcy advisers. Chapter 11 bankruptcy in the US is like going into receivership in the UK. A company doesn’t have to pay a lot of its debts, while it’s hacked about by accountants into a shape where, with luck, it can be sold on.
People point out that many US airlines went into bankruptcy in the months after people stopped flying following the September 11 attacks. And it didn’t cause them to lose any more passengers. Well yes, but buying a ticket from a bankrupt airline is simple: all you need to know is that it’ll still be in business when the plane takes off. You can presume it’ll then land safely.
Buying a car is different from buying a plane ticket. You want the company still to be in good shape several years down the line, to protect your car’s used value and parts supply.
So I reckon if GM and Chrysler go into bankruptcy, their sales will fall catastrophically. Even more than the fall (by up to half) they’ve seen in the US these past weeks while they’ve been in limbo-land. Just look what happened to Rover sales when it became clear the company wasn’t long for this world.
I think Chrysler will inevitably fail now. Someone (Koreans? Chinese?) will buy the Jeep name cheaply afterward. And if there are no Chryslers or Dodges for sale, that will give a bit of market share to GM and Ford.
But GM? No idea. The spectre of mass unemployment in the US sent Asian stock markets into decline as soon as the news came through. Shockwaves will be felt everywhere for a long time.
And as for Vauxhall, Opel and Saab, your guess is as good as mine. Or as good as that of anyone who works there.
Remeber when MG Rover went kaput, even though you could still get the parts from the likes of honda etc, the dealers were still forced to sell them as bargains. Which wasn’t so bad for us I suppose.
Question: Paul as you are a font of all knowledge, would you be able to get spares (for the engines) of chrysler cars in the mercedes era?
who thought it would ever come to this eh?
buti think it`s good that they`ve let a non-profitable company, go into bankrupcy, and not let it continue in such bad shape.
does anyone know how many jobs will be lost?
can’t say im suprised
if gm goes down will vauxell seel their parts and accesories cheap, if so im getting the irmscher kit for the astra cheap
Well I’m all for these companies tanking – they have been ridiculously inefficient and uncompetitive for decades and have built a fake empire based on heavy subsidies, unrealistic employee benefits, and mass over-supply of vehicles.
It’s just a pity that it’s happening at the worst possible time, when the global economy is in ruins and unemployment is skyrocketing.
Had past US governments not been so desperate over the last 10-20 yrs to get votes from the 2.5 million Americans employed in the auto industry, they could have taken a harder line with the unrealistic auto-workers-unions ages ago, and slowly wound down these 3 companies to a realistic size and level of efficiency. Once again, common-sense lost out to politics.
Correction: 2.5 mil employed in or connected to the motor industry in their everyday line of business.
I’m surprised that the Senate vetoed the decision…after it got through the House of Representatives and the White House, I’d have thought they’d see some sense in the plan.
They should stop thinking of the Chrysler, GM and Ford has the Big Three and start to look at it as ‘250,000-directly-unemplo yed-and-a-few-million-mor e-in-the-wings.’ Hell, they’re bailing out banks to the tune of $700bn – a sum that they don’t deserve, but desperately need. In the big scheme of things, $14bn to save countless numbers of jobs is cheap.
Like the banks, a bailout could have at least kept them going until this financial mess has sorted itself out, THEN allow them to pass judgement on years of total and catastrophic mismanagement.
From an engineer perspective, I support the bankruptcy completely. I think I can could the number of decent cars made by the three in two hands. And most of them Ford. It’ll teach them a lesson about how to make proper cars again, and a start from scratch is just the CHANCE they need.
But from a human perspective, 10% of all Americans will be jobless. That is really terrible.
And now all the subsidary companies are in limbo as well. Volvo, Opel, Holden, Vauxhall, etc all open to the highest bid
Banks are different those loans where there to start banks lending again so people can borrow money to live there life n if banks stop lending and interest keeps going up everybody world wide would be effected, the big 3 collapse and 2.5mil people lose jobs for now and the crap cars get canned. As soon as the brands are bought the factories will start producing dealers start selling parts can be supplied and all the brands will make better cars and most of the people get there jobs back, this is the best thing 4 the world!!!
See, I told you the unions were the problem! There has been poll after poll here that show most Americans really would rather see the “big 3″ left to themselves. I’m not surprised that at the end it was the unions who were unwilling to take one for the team and help turn things around.
As for the banks the democrats passed a bill in clinton’s era – uggghh – that forced banks to do these bad loans that got this all started in the first place. So it makes more sense to make sure they don’t tank.
I just look forward to having a whole bunch of new euro cars on American roads – maybe we can start learning to drive well too!
PS – Why isn’t this being discussed on topgear.com/us? Seems more relevant there.
let’em fail. business is the only thing that can save business. I don’t want my tax dollars paying for a company that hasnt supported itself, and doesnt intend on it. By the way, kiss the volt goodbye. GM is digging into its “environmentally friendly car fund” as we speak. Even if GM survives this will be the EV1 and EV2 all over again.
I’m not sure the unions’ demands were met by the government though. As Iacocca said in the 80’s: GM always coughed up the doe without question, scared of strikes as they were. Nor do I think that the employee benefits were all that ridiculous. US don’t have national healthcare or a lot of wellfare, so an employee has to rely completely on his employer for that. Which in itself is quite ridiculous off course.
Ford has Ford EU and GM has Opel/Vauxhall and Daewoo to get them through this dark age. Also Volvo is quite an asset. Chrysler is pretty much doomed, though. Merc parts don’t fit well on a Hemi I guess.
I live in Vancouver, Canada… my friends and I are very much into cars and all have varied opinions on the subject. Some of us are really big into Japanese cars (minus Toyota, because there is nothing to get excited about there); others fully support the European manufactures; but one thing we can all agree on is that US Manufacturers are just abysmal (OK, maybe in Europe Ford isn’t that bad, but in North America we never get anything good from them).
However, on the news that the bailout, for the time being, has failed and companies such as Chrysler may be taken out back and shot, I cannot help but feel a little sad. I mean there was a time, before I was alive, when these companies were not such a joke.
There are plenty of reasons these companies are in such dire straights, but more than anything it is because they lost the support of people like me, the not so average person.
The revised unemployment numbers for the month of November show that 573,000 more people are now unemployed. As I said before, that’s the number of people collecting unemployment that were previosly not, and not the total number of layoffs and people without work.
I think that there is an even greater problem that will come out of the mass layoffs that GM and Chrysler will now be forced to take part in. November and December are hiring months for American companies, and we are experiencing large number of layoffs instead. Come January, when the companies that hired on extra Christmas help lay those people off, we could see Depression era levels of unemployment.
Time will tell what is to happen. As it stands, things look grim.
hmmm…even thought its a though pill to swallow for the Americans, this has been coming for a while, I mean its like when was the last time that GM, Ford, and Chrysler made a good line of successful cars? The 90s were crap…well as far as I can remember and even up till now, they are still crap. The only reason why they didnt crash earlier is because the American mentality of “bigger is better” and everything small and clever is stupid, so everyone bought the rubbish cars…Now though I would like to think that since the gas crisis, and the foreign car presence being better and well known, people are finally starting to make sense of their world and realizing the severity of American cars… Im a hard core fan of GM, but i think of it like when my dog died, I could of saved him by paying thousands of dollars on an operation, just so that he could live a couple months or so…he was very very old….
Seems the president has changed his mind again. Who saw that coming..?
As it seems, the german goverment is willing to save Opel. But only after GM is closed, they don´t want their money to be sent to the US.
Good news for the japanese and german manufactureres, but unbelievebable stupid from the US goverment.
Damn, think we can pick up a ZR1 cheap now?
Can anyone tell me the name of the replica car Richard Hammond drove that looked like a 1950s racing car. It was green and had a xjs v12 engine. Single seater? Sounded like ‘Vanguard’ or something?
There are just to many US jobs at stake,not just the manufactures,but also the suppliers and their suppliers, the total job losses would be in the millions. The US government will step in at the last moment, but it will be all on their terms…It’s just a very expensive game of poker in reality.Just as the banks can not be allowed to fold nor will Ford. GM and Chrysler will be slimmed right down, the unions will be powerless (take it or leave it)but they will keep trading.
Damn! I feel sorry for Yanx now.
I guess we all saw it coming, but it’s still sad. I hope someone wise enough buys child companies and save good cars. Because, it’s not all in money and missmenagement, it’s also in being a part of automobile history. Altho Yanx made unefficient, extralarge cars, you can’t say you are happy to see Vipers, Challengers, Chargers, Mustangs, monster trucks, supersized limos, etc only in (private) museums, right?
Kim, I believe the answer is “Vanwall”
http://buffalobeast.com/1 33/bigthree.jpg
Very droll!
I think this expresses my feeling better than anything I could write:
http://us.cnn.com/2008/WO RLD/americas/12/12/zakari a.autobailout/index.html
Now don’t forget, this doesn’t mean the bailout is dead, it just means the Senate is playing hardball. They could possibly doing to make GM sweat a little, before the White House rides in with the cavalry.
Bare with me as i do have an automotive point.
I still find it incredible that we’ve all managed to get so far into this mess. This downward spiral has been calously manipulated by irresponsible journalists (not the TG boys) searching for a quick buck, taking advantage of admittedly highly suspect banking practise. What still astounds me is the mob-mentality we’re now seeing. If the general populous stayed calm, and only spent what they have, or at least could REASONABLY afford to repay, then it still wouldn’t be an issue.
Relating this to the car industry, i simply can’t understand how people have ever gotten to the point where we’re so obsessed with consumerism that we’re prepared to commit ourselves to high interest, high repayment loans, just so we can have a new car on our drives every 3 years. I appreciate many people are sensible enough to keep their cars for longer, but an astonishing number of people have been buying and selling cars at a rate they can scarecely afford to maintain even when money is good!
It’s little wonder we’ve seen car sales in America drop so far so quickly, the consumer bubble has well and truly burst.
Perhaps, just perhaps, once the dust has settled, the automotive world will settle down into a sustainable business model, not a hyperinflated overactive marketplace.
Saving these businesses is good money after bad. they WILL be back for more if they are saved.
Their cars weren’t in good and that’s how they got into this trouble, and the fact the demand has dropped means these businesses are not viable.
Daving these companies will just destruct the American economy. THEY HAVE TO FAIL! Jobs will be lost in the short run, yes that’s hard, but it has to happen.
The money that hoes into these companies has to come from SOMEWHERE. This is somehting people forget. If it’s printed money then the side effect is inflation and this takes money away from OTHER businesses that are more viable. Alterntaively the money comes frmo debt which has to be paid back in more tax. Again other businesses LOSE out because of the businesses that would be BAILED OUT!
The US economy has had too much interference in recent years and it’s time for the US government to let go and let the market re-adjust. Instead they are digging a bigger hole.. if they bail out the companies of course!
I live in Detroit. We are so dead.
And shut up whoever says the big 3 should fail. every thing in michigan depends on them, the schools, the hospitals, recreation, absolutely everything. So if you say they should fail, its not only the big 3 that will be failing, it will be about 10 million people in Michigan alone. Come to think of it, Ontario, Canada will also be screwed. If this happens, the people of detroit will be heartbroken, they will feel betrayed. Detroit was once the arsenal of democracy, it bailed out the world in WW2, i don’t see why our own senators won’t bail us out when we need help, they let us down.
The U.S is in turm-oil, that will teach you for using up all the worlds stuff , you greedy lot,
now the price of fuel has dropped enormously, now we can afford to drive any new car we like….
like v8’s …. oh dear , well it’s just as well I as well I drive a 41 year old Toronado, no problem with parts, nothing brakes and if you hit some Japanese tidler, your “purfectly” fine…except for the paint…well there you go.
Hope Vauxhall doesnt go. And British Ford and Saab. The rest can go to Hell.
I just bought an Opel Astra GTC 2,0T OPC… if Opel goes bankrupt do I still need to pay it off then? :p
Whilst it appears very expensive in the short term to lose so many jobs, i do feel that the loss of probably Chrysler with Ford & GM surviving in a slimmed down form will ultimately prove to be of benefit to the US taxpayer, and the unions would need to realise that a fair deal that is affordable,is best for their members, otherwise Chapter 11 will eliminate a good number more, as the bailout would only be a temporary fix.
shamzahm you seem to fail to understand that these companies are doomed anyhow, and throwing money at them only increases either
1. Debt
2. Inflation
If America continues this course of bailing out companies then you are heading for a depression and it won’t be just Detroit who suffer.
You watch the dollar crash in the next year or two and your opinions may change
Short time pain is VITAL.
It is vital these companies fail so new, more efficient ones can be created. this is provide more SUSTAINABLE jobs for people that have lost theirs.
Bailing out companies is NOT the way forward and WILL LEAD to a depression!
dear top gear
i am 11 years old ond i have been driving motor bikes since i was 3 and a car since i was 10 and a had a fiat uno and now i have a peught 205 and i was wondering could i drive round your track but dont film it,thank you
from taylor
mastercraft1@hotmail.co.u k
Hmm Paul, you say “You want the company still to be in good shape several years down the line, to protect your car’s used value and parts supply.” Well the car companies could make life so much easier for themselves if they followed the shabby example of the IT business, where consumers are forced into continual upgrades because manufacturers simply stop ’supporting’ their products after a couple of years…. Not great for consumers, but since we’re all so spineless that we’ve never stood up to this abuse in the IT arena, only a matter of time before some motor industry marketing whiz spots the opportunity!
To bad Gm is just now starting to make good cars again, (after 30 some odd years) if it wasnt for the failing economies the Camaro ( if it will make it to production) would be a huge seller in v6 form, not to mention the zeta platform would help cut costs by making their line up more standardized. Not to mention the ZR1, and CTS-V, on the performance side of things. Plus the volt would be a huge seller. I think they could have saved themselves if they just released some of their models earlier instead of waiting it out trying to create more hype. Same goes for ford, if they would have just revised their line to have the EU models as their bread and butter this could have been avoided (especially the new fiesta, that thing is sweet). Chrysler has nothing going for them.
Duvsta,
I agree a “bailout” isn’t the way to go, but atleastsome short term loans should have been provided to the companies to last a couple months and restructure. Ford, although in bad condition, will makeit out alive. As for GM, loans are crusial to help the company survive, and with their new product line and the UAW backing down, GM will emerge as a vastly different and much more effiecient company. As for Chrysler, a company that i have great emotional ties to, will either fail and be broken up by Cerburus, or (im praying) be bought up by a foreign company looking for a greater marketshare in the US, perhaps Nissan. Overall, it is crusial to aprove the LOANS (lets not call it a bailout) because atleast two of the three companies have a fighting chance to become efficient, even if it means deep cuts to manufacturing and white-collar jobs.
My dad works for Chrysler btw, so either way, the future doesn’t look too bright.
shamzahm unfortunately you have fallen victim to the effects Broken Glass Fallacy, or the Invisible Opportunities Lost.
I don’t think you realise what a bad state the US economy is in, and by inflating the money (through printing money) you only remove confidence from the dollar. And when it crashes it will crash hard. Bailing out these companies will only do the workers more harm in the future.
These companies need to fail because they are bad companies. unfortunately the Feds low interest rates meant these companies could over inflate in a false economy and cause this bubble. Loaning MORE money will only MAKE IT WORSE!
The Government is full of trumpted up lawyers and idiots who’ve never run a business in their life. I have absolutely ZERO faith in their ability to run a muilti-billion dollar cvar industry. they just can;t do it.
These companies NEED to fail because you free up so many more opportunities that could create a REAL SUSTAINABLE industry whatever that may be.
The house is built on sand and rather than wasting resources and man power keeping it up you have to let it FALL so a house built on rocks can be built!
Yes, Duvsta, lets GIVE 700 billion to the big banks while we’re at it too, because they’re not insured by the FDIC, and we must save them and their executives!!!! err umm oops! Who has faulty logic here?
We should never loan money to essential business and industry, because we want millions of people to be out of work! Down with the Proletariat! Make the rich richer! Export all our jobs to India, China, and third world countries!
I rest my case.
I still think that the big 3 aren’t 100% to blame. Any US customer will, as soon as he’s got a bit put by, demand a V8 for the price of a Toyota. So those who could, made that kind of car, ie the big 3. It’s only natural. And still: the Toyo’s that sell in the US, don’t have 1.6 4-cylinder engines I guess. Here in the EU, the Aygo is the big seller. Also, gas over here is near $5 a gallon. If in the US gas wasn’t so ridiculously cheap, the big 3 might have made more sensible cars.
I do not believe that the Big 3 can be rescued. The reason is they don’t WANT to learn. The WANT to build old gasguzzlers.
The U.S. congress is in a constant struggle with them since 1973 about emissions, fuel efficiency, safety and so on. And EVERY time they are forced to improve their cars (so they can meet worldwide standards) they either find a way around it (for example SUV and Pickups are no “cars”, they are “light trucks” and are therefor extempt from certain regulations) or SUE the states or the federal government.
They even resisted a provision in the bailout bill that would have forced them to NOT use the bailout money to sue the states or the feds. They WANT to bite the hand that fed them!!!
What kind of thinking is this? What can an investor or a government expect from such companies. Mercedes Benz gave Chrysler their best DNA and what came out of it? Big V8 musclecars!
I say let them fail. Honda, Toyota, Volkswagen, BMW and Mercedes are in the U.S. and will pick up the slack in demand and maybe some workers. But the management, ALL of the management, has to go for good, as have the designers of these terrible, terrible cars!
Ford of Europe, Vauxhall/Opel, Saab and Volvo deserve a second chance, especially Ford. Americans must realise that small cars ARE the way forward. They need our models of Ford over there NOW and we want theyre Mustang over here, or at least changed to fit the new global design language. Chrysler can die and so can Pontiac, Buick and Hummer.
At worst government could partially own these companies and pay for the running expenses so these companies wouldn’t go down. This leads to a situation where employees are making products for nothing as who would buy these cars, it’s like digging a hole and next day filling it etc.
And if you just dump those cars to market it eats away healthier companies profits, and you’ll end up saving them too.
Instead, if say chrysler goes down, it leaves a bigger market share for the other two, if they have a product for the market… else foreign companies will take that share to themselves.
Also this turmoil may lead to give room to grow for new companies like Tesla.
Morty:
“I do not believe that the Big 3 can be rescued. The reason is they don’t WANT to learn. The WANT to build old gasguzzlers.”
You live under a rock don’t you? The Big 3 have invested billions of dollars in future fuel efficient automobiles. They know that gas won’t be $1.50/gallon in the near future, they’re not stupid.
And what Chyrsler did with Mercedes help wasn’t smart, but Mercedes sucked the blood out of Chrysler. It gave them the underpinnings of an outdated car and asked chrysler to do their best with a limited budget. The Chysler 300C was created and it sold very well, but under the management of Mercedes, who was just looking to further expand in the American market, an opportunity to cater to the global market was non-existant. That is the reason why Chrysler only cared about its American costomers who loved to buy V8’s.Thats why there was no spectacular deisel or I-4 turbo, or even a sensible hybrid.
Overall, the only way Chrysler can survive is a short term loan from the government (theres a lack of credit folks), not a “bailout” while Cerburus finds a company willing to buy the Chrysler. Hopefully it will be some one like Nissan who wants to expand in America and will allow Chrysler opportunities to expand globally.
From the US here(though an ex-pat Aussie)
That SPECIFIC Senator got 2/ 2/3 of his hard and fast rules met, and is only off in the specific dates for the UAW to take their pay cuts (2010/11 instead of 09)
While I WANT them to get stripped to the bone so then can toss off a lot of things that they have refused to do before hand, no one in the WORLD can afford for the big3 to die out, especially right now.
Ignoring just the company jobs, the COMPETITORS need them so that suppliers can keep enough lines going instead of them cutting back and over time getting out slightly less quality parts (the electric engine in toyotas – US)
Bush will give them the loan, no choice
if chrysler and gm do go bust…things like the new hamsters challengers are gna be rare …REALLY rare
like hamster’s new challenger i meant
Dear Evan (Mr. Nice) re Vanwall
Thanks for that – I’ve been looking for the name for nearly a year but never found it! Cheers
Kim
I went to the enfield car pagent two years ago. I saw panda blue morris 1300. I told the owner, when I was 10 my oldest brother brought one. My thoughts were ,what dispeakable piece of shit. But now that I’m thirty years older, I believe it’s got to be the most grotesck piece of elephant dung ever built. they should all be crushed along with the owners and the designers and all the other employees.
P.s. that marina got it’s just deserves, please burn more of theses B.L. car. I don’t remember bodie and doyle and B.L. cars, so there you go.
Shamzahm:
“The Big 3 have invested billions of dollars in future fuel efficient automobiles.”
Oh yes? Then why are they 5-8 years behind on hybrids? And why do they only place hybrid technology in their big SUV’s? There are no small, fuel efficient cars build by the Big 3. There never have been (look up the AMG Pacer). And there never will be if they have their way.
Go ahead and try to buy a Big 3 car with a Diesel engine (to use bio-diesel). You can’t. They don’t offer it. Soon there will be a PORSCHE with a Diesel! A PORSCHE!!!
And let’s not even START about quality and durability! What good would a U.S. fuel efficient car be if it breaks down all the time and is ready to be scraped in 5 years? Mercedes, BMW, VW, Honda, Toyota, even Landrover, are more eco-friendly overall because you can drive them for 10, 20 years.
PS: At least i know the answer to my second question: because their gasguzzlig SUV’s would be ILLEGAL (in terms of EPA’s fleet MPG) if they didn’t! Thats all! Not for the benefit of the customer, only to get around a regulation! Great companies they are, aren’t they?
I just hope the Yanks know what they’re doing. Because if they don’t make the right decsion, it’s pretty much Bye bye Detroit and Australia
Let’s start a mass panic so the value drops futher and more people will be interested in a bankrupt gm with no pentions or heathcare overheads and lots of developed cars for the future all at a rock bottom price, or private equity firms buy them and sort the mess and sell everything off
Morty, chill out.
The Prius gets ridiculed because hybridising a car makes it heavy and expensive, so putting such a drive-train in a small family car is daft. Put hybrid technology in a heavy, expensive SUV, and the increases in weight and price become less of an issue. That’s the reason hybrid SUVs exist.
Back on topic, do you think that Ford will finally succeed in attaining a global range of cars?