Big3 bailout loan -Caller on C-Span made sense

Discussion in 'Economy' started by TR_GOP, Dec 5, 2008.

  1. TR_GOP
    Offline

    TR_GOP Member

    Joined:
    Nov 30, 2008
    Messages:
    77
    Thanks Received:
    7
    Trophy Points:
    6
    Ratings:
    +7
    It's so simple and perfect it's has a zero chance of ever being considered.

    Fact: Car dealerships are dying from low sales figures.
    Fact: The best cure for an idle manufacturing sector is a healthy stack of orders.
    Fact: People are understandably hesitant to purchase cars offered by firms with an uncertain future.
    Fact: The public requires an adjustment period in order to gain widespread acceptance of unconventional auto engineering such as plug-in hybrids or full electrics.
    Fact: Part of the reason for falling sales is the credit crunch.
    Fact: A growing percentage of the population has fallen into the bad credit category by loss of income leading to missed payments, repos, or foreclosures.

    In light of all this a bailout straight to Detroit cannot correct problems preventing car sales, it'll be a waste of taxpayer money. In lieu of flushing away $36 billion (is that the latest number);


    1. Make available to tax filers a $5,000 down payment on any compact to midsized hybrid, flex-fuel, or electric vehicle produced by GM, FoMoCo, or Chrysler.

    2. Order banks standing in line for another serving of bailout bucks to set aside a portion for low interest taxpayer car loans. No loans, no more bailout.

    That'll

    A. Place 7,200,000 car orders into the system
    B. Provide a windfall of economic stimulus from the dealerships to the corporate offices.
    C. Finally benefit the average taxpayer along with bankers and CEOs.
    D. By putting a large number of cars on the road the Big 3 will have a chance to directly influence future car buyers through recent ownership of a (supposedly) improved product.
    E. State and local governments will receive a sales tax shot in the arm across the nation.

    Comments?
     
    Last edited: Dec 5, 2008
  2. DavidS
    Offline

    DavidS Anti-Tea Party Member

    Joined:
    Sep 7, 2008
    Messages:
    9,811
    Thanks Received:
    766
    Trophy Points:
    48
    Location:
    New York, NY
    Ratings:
    +767
    No! Car dealerships are dying for 3 simple reasons:

    The internet, the internet and the internet!

    In 1992, if you walked into a car dealership you met with a salesperson, told him what you're looking for, took the car for a test drive and if you liked the car, you negotiated a price for the car, a down payment with the salesperson and an interest plus any aftermarket options with the finance guy and took the car home that day or week depending upon insurance laws in your area.

    In 2002, if you walked into a car dealership you met with a salesperson, told him what you're looking for, took the car for a test drive and if you liked the car, you handed him the invoice for his car that he got off of Edmunds.com (the price the dealership bought the car from the manufacturer at) and told him you don't want to pay a penny more than that and you were putting no money down. You then walked into the financing office and got a 0% loan and didn't get any of the aftermarket options that the dealership offered because you read somewhere on an internet chat forum that you didn't need any of those options to protect the paint or the leather and that you didn't need to get an extra warranty.

    Take a 2003 Ford Explorer 4x4 Eddie Bauer edition. MSRP's for $32,500. Invoice is for $28,900. In 1992, you'd sell the Explorer for $31,250, get a finance charge of 7% when the bank was charging 6% and get a paint protector to make sure the car doesn't rust. In 2002, you'd sell the Explorer for $28,900, get a 0% loan and the dealership and salesperson would make no money. Meanwhile the salesperson has a kid and a very pregnant wife at home and is going home with $500 in salary for the week unless he sells a car for profit. So another customer comes in who has a 640 beacon score and wants $450 a month on a $40,000 expedition with no money down. You think I'm joking? I worked at 3 Ford delaerships in 2002-2003 as a salesperson. I ran into this ALL the time.

    So how the hell does a dealership make any money? How the hell does a salesperson make any money? How the hell does the manufacturer make any money?

    The stupidest thing that manufacturers ever did was make their invoices public!

    Who the hell buys a product for the price you bought it at??
     
  3. TR_GOP
    Offline

    TR_GOP Member

    Joined:
    Nov 30, 2008
    Messages:
    77
    Thanks Received:
    7
    Trophy Points:
    6
    Ratings:
    +7
    It was a long term dumb move in pursuit of short term sales figures. I see exactly what you're getting at.

    Q: How does a long line of credit approved customers bearing $5000.00 down payments strike you?
     
  4. cunclusion
    Offline

    cunclusion Member

    Joined:
    Dec 4, 2008
    Messages:
    221
    Thanks Received:
    20
    Trophy Points:
    16
    Ratings:
    +21
    This still does not solve the people who have lost jobs already. People are scared to invest in long term financial assignments due to possible loss of job. I have a different idea that actually heard from someone on MSNBC this morning. Have the big three retool to produce both cars and the parts that make up windmills(not the old school ones) but the ones used to make electricity from windmills. This will be supported by the government and private electric companies. They will request the parts and thus the big three with the industrial base already there retool to build what is needed like they did during WWII. In which a German officer was asking where all the tanks came from they pretty much all came from Detroit and the big 3.
     
  5. GHook93
    Offline

    GHook93 Aristotle

    Joined:
    Apr 22, 2007
    Messages:
    17,918
    Thanks Received:
    3,126
    Trophy Points:
    255
    Location:
    Chicago
    Ratings:
    +4,929
    I disagree! If anything the internet has helped them. This has hurt them:
    (1) Poor negotiations with the Unions! Who now-a-days still gets a pension? No-one. UAW have to come to reality that their jobs can get shipped across the border for pennies on the dollar; therefore, they have to be more realistic on wages, benefits etc.
    (2) The Economy has hurt them more than anyone! People don't want to spend. Therefore they will stay with their current car and not buy.
    (3) Poor products: Japan and Germany cars run better, have better resale value and have less problems
    (4) Gas-guzzlers: Consumers have been screaming for more fuel efficient cars since the 70s. What did the big 3 do? They came out with less and less fuel efficient cars! Its a joke. Don't cry when people like the Prism and other cars!
    (5) Poor Management! Prepare for a rainy day!
    (6) Over-expansion without justifcation!
     
  6. Andrew2382
    Offline

    Andrew2382 Gold Member

    Joined:
    Oct 1, 2008
    Messages:
    3,994
    Thanks Received:
    530
    Trophy Points:
    153
    Ratings:
    +537
    David,
    Dealeships won't sell the car if they don't make a bottom line profit on it. Also, you forget things that soem states are regualted for things like dealer fees. Florida being one of them, I have seen fees range here from 300 to 1500 bucks.

    Just because a customer knows what the dealer paid for the car doesn't mean jack really. The dealer will sell the car for what they want as long as its within the guidelines of the manufacturer. It's better to have the guy walk then to only make a 300 dollar profit on it.

    My father and brother are both in sales (BMW), when I started out in my isnurance career it was working in dealers Honda, ford, dodge, hyundai...

    I know for BMW for example, they tell people to piss off constantly.
     
  7. TR_GOP
    Offline

    TR_GOP Member

    Joined:
    Nov 30, 2008
    Messages:
    77
    Thanks Received:
    7
    Trophy Points:
    6
    Ratings:
    +7
    1) (hold on to your hat) A schedule of protection tariffs scaled to employee rights and environmental protections.

    2) double whammy of trade policies which have systematically destroyed manufacturing, and a housing sector substitute heated to boiling that simutaneously saturated the market and popped in valuation
     
    Last edited: Dec 5, 2008
  8. BaronVonBigmeat
    Offline

    BaronVonBigmeat Senior Member

    Joined:
    Sep 20, 2005
    Messages:
    1,185
    Thanks Received:
    160
    Trophy Points:
    48
    Ratings:
    +160
    Hmm yes that sounds like a very flawed business plan, perhaps they should radically overhaul it. Far fewer dealerships? Whoops, can't do that, there's too many state laws that stop car companies from shutting down excess dealerships.

    Or how about a totally different model, where dealerships are owned and run directly by the parent companies? Where the dealerships are run at cost, sort of like the way hollywood studios used to own theaters? Maybe have a handfull of cars to test drive, and if you like it you can order a car to be built and shipped to you. Built to order would certainly cure the excess inventory problem. And car companies would love to take direct control of dealerships as a means of stopping sleazeball tactics and improving the buying experience. Whoops, can't do that, it violates anti-trust laws.
     
  9. GHook93
    Offline

    GHook93 Aristotle

    Joined:
    Apr 22, 2007
    Messages:
    17,918
    Thanks Received:
    3,126
    Trophy Points:
    255
    Location:
    Chicago
    Ratings:
    +4,929
    Never said anything about scale back free! Smoot-Hawley Tarriff Act's effect scares me.

    Rather I prefer getting rid of the income, corporate and payroll tax and replacing it with the fair tax! Imagine how attractive our country would look to big business! Small businesses in America would be able to compete with businesses that jump south of the border! We would take out biggest vice (over-consumption) and make it a huge asset!
     

Share This Page