Linked below is one of the most astute analyses of the decline of the Big 3 U.S. auto companies. The article linked below by NY Times chief financial writer Floyd Norris focuses on one of several factors that led to the decline--going farther and farther into debt as a result of failure to adjust capacity to declining market share.
I would add that the market share decline was inevitable as the trickle of imports in the 1970s became a torrent in the 1980s and 1990s and "transplant" assembly plants popped up like mushrooms in the right-to-work states in the South. The Big Three managers apparently didn't see the handwriting on the wall that they were facing a big decline in market share as a result of free entry of imports into the U.S. car market (and their own failure to deal with product quality and durability issues).
Norris points out the irony that the government is now teaching capitalism to GM and Chrysler, forcing them to bite the bullet and reduce their production capacity and dealer network to match their market share.
"U.S. Teaches Carmakers Capitalism" by Floyd Norris in the NY Times, November 20, 2009 (Floyd Norris, chief financial writer of the NY Times, is, in my opinion, the best in the business.)
http://www.nytimes.com/2009/11/20/busin … .html?_r=1
I'm English and it's been the same over here. Seems like the trick was to build small affordable cars that are good all-round instead of big V8's, V10's etc. American manufacturs tried to counter this with cheap materials but the build quality was never there. The Caddy SVT is like plastic parts stuck together compared to the Germans who have much higher standards.
I just wrote a hub - "Why cars are expensive" and the source article is explaining a lot about the (American) auto industry.
You can read the full article here:
http://www.cars-10.com/2010/03/why-cars … g-premium/
http://www.freep.com/article/20100420/B … P-autonews
GM keeps loan promise
BY JUSTIN HYDE
FREE PRESS WASHINGTON STAFF
WASHINGTON -- General Motors CEO Ed Whitacre is to announce Wednesday that the automaker will soon pay off $5.8 billion in loans from the U.S. and Canadian governments well ahead of a June 30 deadline, a move it has promised since last year.
Whitacre is to announce the payment at GM's plant in Kansas City, Kan., and then fly to Washington to meet with House Speaker Nancy Pelosi and Michigan's congressional delegation, people familiar with the plans said Monday.
GM is to use the move to highlight its steps toward issuing shares to the public and helping the U.S. government get out of its 60.1% ownership stake in the automaker. GM officials have said the company could break even this year, thanks to massive cost cuts under bankruptcy. The automaker reported a $4.3-billion loss for the last half of 2009.
The automaker's payments are to include $4.7 billion to the U.S. Treasury and $1.1 billion to the Canadian government; it had already paid $2.3 billion on both loans. The money comes from a $16.4-billion escrow fund set up by the two governments as part of GM's bankruptcy that the automaker is required to pay back by June.
The U.S. government has put nearly $50 billion into saving GM from collapse, an amount Obama administration officials have said was unlikely to be returned entirely when GM begins to sell shares publicly. Based on analysts' estimates, the government's stake could approach the $30.1 billion spent by the Obama administration solely on GM's bankruptcy.
by pgrundy 9 years ago
Does anyone else think this is getting out of hand? I read yesterday that GM will close 5 more plants and lay off 20,000 more U.S. workers but they need $14 billion to do it. How many jobs could we lose for $28 billion? How many billion do we have to fork over to get them to eliminate ALL the jobs?...
by Julio E Olmo Sr 5 years ago
Are the Los Angeles joining the NBA's Big Three Fashion Trend Too Late?
by Medvekoma 22 months ago
Do you think the world is becoming less religious?When asked about their religion in the most recent global survey that was conducted in 2012, it turned out that the lack of religion and faith was the third most prominent one in the world, overtaking Buddhism and Hinduism.Do you think religion is...
by CHRIS57 5 years ago
I love America. I was raised in Michigan, i do business in the US, but then - i don´t live in the US. Professional life takes me all over this planet. May be that allows a more unbiased view on the state of the US and allows to compare developments in the US with other places. Results and my...
by phion 5 years ago
Taxpayers pay for $49,000 of the $89,000 dollars it cost to build a Chevy Volt. Sound like a good deal to you? That President Obama really wasn't joking when he said energy costs will have to sky-rocket was he? What a joke. See what happens when we rely on government?
by Demas W Jasper 5 years ago
Federal Reserve's monthly purchases exceed the cost of Sandy! Federal hiring just surged. Guess why?Last estimates for damage caused by Super Storm Hurricane Sandy place all damages somewhere between $10 Billion and $20 Billion. Every month since Bernanke announced the Federal Reserve's...
Copyright © 2018 HubPages Inc. and respective owners. Other product and company names shown may be trademarks of their respective owners. HubPages® is a registered Service Mark of HubPages, Inc. HubPages and Hubbers (authors) may earn revenue on this page based on affiliate relationships and advertisements with partners including Amazon, Google, and others.
|HubPages Device ID||This is used to identify particular browsers or devices when the access the service, and is used for security reasons.|
|Login||This is necessary to sign in to the HubPages Service.|
|HubPages Traffic Pixel||This is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.|
|Remarketing Pixels||We may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.|
|Conversion Tracking Pixels||We may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.|