$25 Billion to Automakers -- Better Idea

[trebuchet03]

Originally Posted by RH77

...the advantage would be that cheaper vehicles are generally more efficient, and appeal to the masses....


Observation: the public isn't buying new cars, and probably won't for a while. What can we do to help the Citizen and Manufacturer both? Sending them a pile of cash gets us what? Not loaning them money gets us what, also?

I'm just brainstorming an alternative.

Rick, so first - you are to be applauded. Unlike so many others, you're laying out a solution rather than saying the somewhat cliche "something should be done" or the very obvious "we need to create [noun]s."

Allow me, for a moment, to offer a counter ripple to the cheaper vehicles (as I read, smaller) appeal to the masses... In very recent history, small cars were not appealing to the degree of large ones - for both mfr and consumer. That's why we have so many large vehicles on the road at the moment. I believe (feel free to poke holes), that smaller cars are becoming appealing mostly if not only due, to operations costs (essentially, cost of fuel becoming the largest cost of a vehicle).

Fuel is currently 2.314 according to AAA - and prices are falling. That $10,000 would buy 4,321 gallons of gasoline... At 15 mpg, that equals 64,822 miles

18mpg = 77,787 miles
20mpg = 86,430 miles

I foresee the consumer interpreting the 10,000 as roughly 5 years of free gas, deciding that they can now buy the bigger vehicle... Effectively putting a delay on the current issue - these cars and the economy they are building are not sustainable.


It comes down to the cultural fundamentals. At some point, we lost the ideology that better = better and replaced it with more = better, among other things. I think we are more in a dire need for a cultural revolution rather than an economic one. Somewhere along the lines, a sense of nationalism became synonymous with entitlement (beyond the nationalist entitlement to a sovereign country). One could blame marketing and advertising - but ultimately, it's the consumer that's wooed.

If the consumer is incapable of determining that they can't afford and go through with it anyway - it's the consumer that has a problem. That applies to automakers too, as consumers of resources.

[Volones]

Why stop at 3 automakers?
Why not give $5B each to:
1-GM
2-Ford
3-Chrysler
4-Tesla
5-Zap!

These are my top 5, but others could be substituted. Also, how about a few $B to the companies that do EV conversions? If we (we being our elected officials) are so intent on "freeing ourselves from foreign oil", then put our (our being us taxpayers) money towards that end, not to reward a few companies for narrow minded mis-management. [\rant]

[trebuchet03]

Originally Posted by Volones

4-Tesla

Tesla needs to become viable before I call it a car company and therefore worthy of such loans. Right now, they're a company that makes cars - but operating on VC money and not on vehicle sales (which, since 2006, is ~1,000 at the moment). With time, I think they'll do it - but until then, it's an experiment for lack of a better word

[Matt Herring]

Whatever is in the works for the Big 3...it better happen sooner than later...
GM 3rd quarter report story below...

GM reports $2.5B 3Q loss, says running out of cash: Financial News - Yahoo! Finance

Obama press conference today...supposed to address economy (or lack of) and auto industry..."stand by to stand by"

[trikkonceptz]

For what its worth, I firmly believe that it is the auto industry that will pull us out of this economic mess. Here is how it will go down. GMAC and Ford will become Banks, And by banks I mean their lending institutions not the car building side. By doing so they can go to the Fed window and ask for stimulus money to fund their loans instead of doing it through bonds as it is currently done. Once they have the liquidity to loan money by borrowing @ 1% you will likely see interest rates on car loans drop to 1.9% lets say for 60 mo instead of 6.9% + currently.

That ease in interest will bring consumers back into the car market and jump start this recession. The climb out will be slow, but mark my words it will start with the auto industry.

[trikkonceptz]

Remember what I said in the previous post ... Well how about that, today I learned that GMAC was applying to become a Bank, in order to take advantage of the bank bail out money. Also rumored was that Ford was following suit.

If nothing else this is going to change the way we buy cars. I am also predicting that showrooms and large lots will be a thing of the past. Holding on to 600 cars in inventory is a gigantic drain on dealers because they are paying interest on everything sitting on the lot. Instead, dealers will reduce themselves to locales with a couple representative models for you to see and test drive, then order your vehicle, built to your specs and delivered on a specific date.

[NeilBlanchard]

Hi,

I would suggest giving $1 Billion each to GM, Ford, Chrysler, Honda, Toyota -- and and all established car companies with production in the USA; and give $1 Billion each to Aptera, Tesla, (maybe ZAP! if they can show they are legit) and any other start up that has existed for say 4-5 years. We should not play favorites, or pick winners.

This totals ~$8 Billion; leaving 17 Billion.

Pay $7 Billion to the first car company to start production of a car that seats four-five that gets at least 50mpg on the combined EPA test. (The Prius already gets 40+ on the combined...)

Pay the remaining $10 Billion to the first car company that starts production on a 2+ seat car/vehicle that gets at least 75mpg on the EPA highway test. This car/vehicle would have to be a plug-in hybrid, or be a biodiesel, or be a pure electric with a range of 100+ miles.

[trikkonceptz]

I would hope that whatever is decided as far assistance for these guys that some of it would be trickled down to the local dealerships. From what I know dealerships in my area are losing as much as $200K per month because of this slow down.

If nothing is done to help them stay afloat, no amount of money may save local economies ...