Government Bailout

[chevyguy]

I agree, we need an incentive to get people buying again. A government bailout is needed to stay alive, but only a temporary fix. Sales tax forgiveness and Federal income tax credits could be enough to get this thing going again!

I remember consumer confidence was so low after the attacks on 9/11. The following 2 weeks,..........I thought we would never sell a car again. Then came 0% and consumer confidence went through the roof!

[TheOne]

The national shock and outrage of 9/11 was a distraction, the economy was humming at the time. This is quite different. The economy itself is the problem, The shock and outrage has been directed at the subprime mortgage business which no one saw as a problem when these loans were being made, and the contractors building the homes were buying trucks and escalades.

I'm afraid the answer is not so neat and tidy as a bailout or a tax break. Yes the big three are going to need a bailout, but I believe it ought to come in conjunction with bankruptcy reorganization. The bankruptcy can provide the opportunity to get out from under ridiculous UAW contracts in favor of new more equitable agreements. Done in concert with bailout financing can signal to the American public a sense of creating something positive rather than merely attempting to limit a looming negative economic impact.

As for fixing the problem at the Dealership level it is time for reinvention. Vehicles have become a commodity, and should be viewed as such. they can be purchased anywhere buy anyone at any time, and for all but a few model at triple net. Just as Dealerships reinvented themselves with the advent of F&I products its time to do so again.

Any Dealer not actively and with urgency developing fixed operations into a true profit center is a fool gambling with his business and the families that it supports. Gone are the days that one good weekend event a month can sustain a dealership as a viable on going concern. It has been my experience that all but the smallest of dealerships, or the most ridiculously over built can achieve 100% fixed absorption IF THE DEALER PRINCIPLE IS COMMITTED TO IT, and willing to disregard what he or she "thinks to be true" in favor of changes that give the "back end" the opportunity to become the "front end". Many will disregard this and other warnings in favor of the "hope" that big grosses and full showrooms will return. I look forward to reviewing their resume's in the coming days. Those that have taken a more pragmatic view of what business will look like in the coming days I congratulate you on your foresight and courage to transform your business......

[badass]

How about let them try this.
No bail out.
Goverment Match's All manufacture's Rebate's
Example if GM has a 5,000 rebate the gov's matche's 5,000. That mean's 10,000 off vehicle.
If somes get's caught cheating the system send them to federal prison.

[KevvyG]

Tough pill to swallow, but my personal opinion is...they should let them sink!! This whole bailout thing in regards to the financial institutions and now with the automakers, makes my stomach turn. Sure, 1 in 10 are employed in some form by the auto industry, but where do you draw the line??

CEO's will still be collecting fat paycheques for running a business they can't keep above water!! If I lost my DP untold hundreds of thousands of $$$, my a$$ would be out the door!! Welcome to the real world!!

[smalltownpartsguy]

Please no. Won't fix the problem one bit. People will buy cars again. If these companies aren't sound fiscally and obviously can't make good business decisions, they need to sink. The suppliers will need to regroup and sell to the next manufacturer who makes cars.
I only wish I made what the union members make and had the same benefits.

[btk]

I agree with THE ONE, it has to go through bankruptcy process and the UAW contracts are a significant problem and have been for over 20 years , I dont think it will happen especially since the Labor Unions were big supports of the incoming President and they expect something in return.

As far as the car business goes, we have to shed alot of dealers, in the 1980 recession we lost 20,000 dealers. You will see that again only BIGGER no doubt in my mind... the only ones left standing will already have strong or adequate fixed operations to carry them through the lean years(many). The dealership Sales stores will be gone.

The good news is the strong dealerships will exert downward pressure on independant repair shops trying to capture more business, and they too(independants) will continue to close.

[Gasser]

I AGREE.....HOWEVER,I THINK YOU'RE WHISTLING IN THE GRAVEYARD WITH YOUR STATEMENT "STRONG DEALERSHIPS WILL EXERT DOWNWARD PRESSURE ON INDEPENDENT REPAIR SHOPS". HOW CAN YOU COMPETE WITH THEIR LABOR RATES? IT IS TRUE THE ISC's ARE CLOSING....IT's NOT BECAUSE OF THE DEALERSHIPS..... ANSWER~ NO CONSUMERS


~TAKE AS DIRECTED~

[sallen1]

The problem with domestic auto mfg and more specifically GM is that they are more like giant health care companies that happen to manufacture vehicles. All revenue goes to provide the benefits.

I find it most hypocritical that the same politicians harping on Corporate Welfare last year are all over themselves trying to fund these so-called bailouts.

The bad news, I'm afraid, is that the democratic side of government will look more towards protecting the auto worker (read: UAW) than anyone else down the food chain. Won't be much left for those dangling at the end of the chain (the dealers).

But then again, I bet you pay your mortgage on time, too.

s

[Jeepman55]

Just so you know, bankruptcy would likely let the manufacturers out of honoring franchise agreements as well. Anyone remember Daewoo????

[TheOne]

Jeepman makes a good point!

Bankruptcy reorganization should put everything on the table. It however does not automatically mean that the Manufacturers get a cost free pass on breaking individual franchise agreements. The Dealers that would be harmed by losing their franchises would also be able to file a claim with the bankruptcy judge for real damages. It would create a good opportunity to shrink the dealerbody. It's going to happen anyway. Dealers are going broke daily and will continue to regardless of manufacturer bankruptcy. There are larger forces looming in our economy than just the car business.

Closing franchise points is a good idea from the retail side as well as the wholesale side. Think about the expense and redundancy of that expense with multimillion dollar facilities dotting the landscape just like 7-11 used too. Is it really any wonder the retail side is imploding? Those that hope to make it through to a better time should start finding ways to thrive in the market today. In doing so the gamble should be to aquire neighboring same badge franchises at prices based on the value of the market area only, so the franchise points can be absorbed into existing facilities. Price control and consistent volume may be stating the obvious, but until facility consolidation begins in ernest it will not happen. Too many facilities trying to stay afloat on too few car deal will never let price stability and reasonable average gross profits happen.

For those of you that are going to point to quality of product as the source of the problem it is a rearview mirror point of view. This may very well have caused the domestics to lose market share, but it has nothing to do with the dramatic slowdown of total vehicle sales.