auto bailout thought

[Rustic23]

I was listening today and the question 'What could we do from the bottom up to help the auto industry'.

Well why not offer a $5,000 tax rebate for the purchase of a U.S. owned auto co. car. Seems like that would spur the economy, sell US cars, and make voters happy.

 

[al_bundy]

my father in law's Acura was made in Ohio, does that count?

 

[FinanceDude]

I was listening today and the question 'What could we do from the bottom up to help the auto industry'.

Well why not offer a $5,000 tax rebate for the purchase of a U.S. owned auto co. car. Seems like that would spur the economy, sell US cars, and make voters happy.

How will that work? You would be creating, in effect, a tariff on the foreign carmakers. What you are saying, then, is because Honda, Toyota, Nissan, Hyundai, and Kia made GOOD business decisions, we should punish them for that? That's either nationalism or protectionism. The REAL problem is the UAW refuses to "pay the price" for the success of the Big Three. Until that happens, no amount of aid will help, because the legacy costs will still be there........

 

[FinanceDude]

my father in law's Acura was made in Ohio, does that count?

No....... There's a local talk show guy that suggested what Rustic did. However, he said he would put NO restriction on which brand consumers would buy. If that happened, Toyota and Honda sales would climb considerably.......

I wonder what Honda, Toyota, Nissan, and Hyundai think about all of this??

 

[FUEGO]

I know I own a bunch of Toyota and Honda shares through my Pacific index fund and International funds. So those companies are at least partially american-owned. Let's not forget that many of us are "owners" of "foreign" car companies, too.

And the foreign car companies are actually still worth something.

As long as the Big 3 retain their inflexible labor and plant structures, they never will amount to much. Maybe the Big 3 should sell out to one or more of the foreign car companies?

 

[lazygood4nothinbum]

so is the stang gonna be a classic or does it just become worthless first? what's a studebaker go for these days? maybe if i put it in self service storage for 20 years.

 

[Rustic23]

There are or were tax rebates for purchase of hybrid cars, and tax deductions for large cars used in business, so the mechanics exist.

If it were for a short time, i.e. 6 months to a year, then while it may act the same as a tariff, it would be very short lived. The object to spur the economy, and get the consumer buying. Detroit said they are in this fix because of finance and people are not buying cars.

I for one, am against the Auto Bailout. I would let them file Chap 11 and re-organize. I don't buy all the hype about people not buying from a company in Chap 11. Continental and United Airlines both were in Chap 11, reorganized and Continental is one of the strongest today. Will it hurt, sure, would it be a disaster, I don't think so.

Detroit must build cars people want to buy, at a price that makes a profit. They are no different than any other business. If they can't they should not be in business. Ask the workers of Eastern, Pan Am, Braniff, Ozark and many other airlines. They could not get their cost in line and they are no more. The U.S. Government should not be in the business of business!

 

[M Paquette]

No....... There's a local talk show guy that suggested what Rustic did. However, he said he would put NO restriction on which brand consumers would buy. If that happened, Toyota and Honda sales would climb considerably.......

I bet the dealerships would like this. My experience has been that if there is a rebate or similar credit for a vehicle, the list price rises to consume much of that rebate.

For example, there was a tax credit for up to 3400 dollars for partial/zero emissions vehicles. This was scaled back in 2007, and vanished in 2008. I was tracking the prices of one of theses vehicles to eventually replace an aging family ride, and noticed that as the credit scaled back, the advertised prices dropped by about the same amount. When I talked to a salescritter about one of these vehicles in 2007, his four-square started with the list price, and he 'threw in' the tax credit as part of a 'special deal'. (I didn't buy it.)

A rebate or credit winds up as something that the salescritter can take from the rubes, and offer as a discount to someone who's actually pushing back. (In the finance office phase, there would be a form assigning the rebate back to the dealer buried in the stack of forms.)

 

[saluki9]

Well why not offer a $5,000 tax rebate for the purchase of a U.S. owned auto co. car. Seems like that would spur the economy, sell US cars, and make voters happy.

You forgot about the fact that it would do nothing to fix any of these 3 companies.

Their problem isn't that people don't buy cars, it's that their cost structure is too heavy for their business.

 

[FinanceDude]

You forgot about the fact that it would do nothing to fix any of these 3 companies.

Their problem isn't that people don't buy cars, it's that their cost structure is too heavy for their business.

Throw in inferior quality,and you have where we are now..."The Perfect Storm"..........

 

[FIREd]

A tax rebate for the purchase if a US owned auto co. car might actually hurt the big 3. No doubts, if we go down this road, the rest of the world would follow suit and prop up their own car companies through similar "rebates". In other words, you might boost the sales of US cars in the US but hurt the sales of US cars overseas. And last time I checked, while GM is losing money here at home, GM is actually making money overseas (or at least it was in 2007).

 

[FinanceDude]

And last time I checked, while GM is losing money here at home, GM is actually making money overseas (or at least it was in 2007).

Actually, all THREE domestic carmakers make good money overseas, and I will submit it is due to lower labor costs and lack of legacy costs.

 

[FIREd]

Actually, all THREE domestic carmakers make good money overseas, and I will submit it is due to lower labor costs and lack of legacy costs.

Thanks. I thought it was the case for all three automakers but I just had the GM data to backup my claim. So a rebate for the purchase of a US owned auto co. car could in fact kill the last goose still laying eggs in Detroit...

 

[saluki9]

Throw in inferior quality,and you have where we are now..."The Perfect Storm"..........

I don't know if I agree. I'm no huge fan of the domestics, but the quality has gotten pretty darn good.

I drove a new Tahoe last week for 3 days and I was shocked at the quality, it's a huge leap from what I remember. I hope they're able to get their finances fixed.

 

[Bestwifeever]

I don't know if I agree. I'm no huge fan of the domestics, but the quality has gotten pretty darn good.

I drove a new Tahoe last week for 3 days and I was shocked at the quality, it's a huge leap from what I remember. I hope they're able to get their finances fixed.

We rented a Pontiac G6 for 10 days last month and totally agree with Saluki, we were also shocked at how much we liked it--great handling, fabulous mileage, very comfortable for the 3,000-plus miles we put on it. Definitely would consider a domestic next time.

I think the Big 3 (or one of them at least) should consider making a 5- or 10-year warranty standard--imho it wouldn't cost them that much and the longer warranty put a lot of Kias and Hyundais into U.S. garages.

 

[FinanceDude]

I don't know if I agree. I'm no huge fan of the domestics, but the quality has gotten pretty darn good.

A lot depends on the model........

I drove a new Tahoe last week for 3 days and I was shocked at the quality, it's a huge leap from what I remember. I hope they're able to get their finances fixed.

GM has put a LOT of their best technology and quality into their large SUVs. Some would say the BESt quality in GM has been in their large SUVs and pickup trucks. Hopefully models like the Malibus mean they can apply those same quality standards to their smaller cars.........

 

[FinanceDude]

We rented a Pontiac G6 for 10 days last month and totally agree with Saluki, we were also shocked at how much we liked it--great handling, fabulous mileage, very comfortable for the 3,000-plus miles we put on it. Definitely would consider a domestic next time.

A lot of the problems with the domestics have been reliability beyond 3 years or so. Everyone dones fairly well for the first 3 years, its the next 5-7 years that the imports clean up. Hyundai has now improved quality to the point their 10 year warranty is almost a moot point, but without it, they never would have gotten this far. Honda, Toyota, and Nissan don't NEED to have a 10 year warranty, because they have proven over time that their cars don't need such a long-term warranty........

 

[Eladio]

Hyundai = Reliability

I agree. I have owned three hyundai's and they have all been excellent cars. Still driving the one I bought new in 1997. Only had to use the warranty one time, but having it adds to your peace of mind. At this point I would be very concerned about buying a new car from any manufacturer that is on the edge of bankruptcy. The question in my mind is "Will they honor the warranty?"

Eladio

 

[Bestwifeever]

A lot of the problems with the domestics have been reliability beyond 3 years or so. Everyone dones fairly well for the first 3 years, its the next 5-7 years that the imports clean up. Hyundai has now improved quality to the point their 10 year warranty is almost a moot point, but without it, they never would have gotten this far. Honda, Toyota, and Nissan don't NEED to have a 10 year warranty, because they have proven over time that their cars don't need such a long-term warranty........

Exactly. The BF sentence is why I think the big 3 should offer the 10 year warranty--if their cars couldn't last past the warranty, it would hit them in the pocketbook, so it would be a spur to them to make better products. Any good product will outlast its warranty (as we all know when our washing machine breaks down the week after the warranty expires!), so a long warranty might affect our perception of (and willingness to buy) the Big 3's product.

 

[ziggy29]

Exactly. The BF sentence is why I think the big 3 should offer the 10 year warranty--if their cars couldn't last past the warranty, it would hit them in the pocketbook, so it would be a spur to them to make better products.

I've thought of that -- if nothing else, to show a commitment to stand behind their cars. I think Hyundai felt they had to do that to get buyers to put some trust in their quality.

The problem now is the perception that the Big 3 won't be around long enough to honor even a 3/36,000 warranty, let alone a 5- or 10-year.

 

[Westernskies]

I'm not in favor of any kind of a bailout for the US auto industry. The Big Three and the UAW got themselves into this mess, and they need to figure a way out- a handout isn't going to fix the root cause of their problems- high manufacturing costs, unrealistic compensation and pension programs, and product problems. Besides, the last multi-billion $$ government-sponsored financial incentive package ($400/taxpayer) went straight to Walmart for imported [-]crap[/-] consumer goods-in essence, just free TV's and ipods for most Americans and job security for the Asian factory workers...so, I'm not inclined to up the ante and buy everyone a car this time around ... But a free house? now that's another matter altogether...)

 

[73ss454]

Some sort of bankruptcy is the only answer to this mess.

 

[brewer12345]

Some sort of bankruptcy is the only answer to this mess.

I'd be inclined to agree, but the ripple effects on the economy might be pretty ugly. I am loathe to throw money down the automotive rathole (especially Crapler), but if these companies can make a credible case that they will be able to make it with a little help from Uncle Sam I suppose I would reluctantly come down on the side of helping them.

 

[jazz4cash]

We rented a Pontiac G6 for 10 days last month and totally agree with Saluki, we were also shocked at how much we liked it--great handling, fabulous mileage, very comfortable for the 3,000-plus miles we put on it. Definitely would consider a domestic next time.

I think the Big 3 (or one of them at least) should consider making a 5- or 10-year warranty standard--imho it wouldn't cost them that much and the longer warranty put a lot of Kias and Hyundais into U.S. garages.

I think longer warranties would be a smart move for the domestics. GM's warranty is 5yrs/100k miles on the powertrain. Ford's is 60k/5yrs...these are transferable to the 2nd owner. Chrysler has unlimited miles/unlimited yrs to original owner.

 

[Bestwifeever]

I think longer warranties would be a smart move for the domestics. GM's warranty is 5yrs/100k miles on the powertrain. Ford's is 60k/5yrs...these are transferable to the 2nd owner. Chrysler has unlimited miles/unlimited yrs to original owner.

Those are all powertrain only warranties, correct?

I want a bumper to bumper warranty for let's say, seven years and transferable to next owner, to inspire my purchase....