Results tagged “auto” from Economic Alert

Hyundai has scored a marketing coup with its promotion that allows new-car buyers to return their car within a year after buying it, if they get laid off of their job.

I fear I may have been sucked in to the promotion frenzy today by doing a story.

But if so, I'm not alone. A quick Google search turned up stories by the Associated Press and CNN.com.

It's definitely unique, according to industry watchers.

And regardless of whether it forces other ailing auto manufacturers to do something similar, it has sparked a lot of free ads on television and in print.

As one local Hyundai dealership employee told me on Tuesday: "It's marketing genius."

NYT: "President Bush announced $13.4 billion in emergency loans on Friday to prevent the collapse of General Motors and Chrysler, and said another $4 billion would be available for the hobbled automakers in February. The entire bailout is conditioned on the companies undertaking sweeping reorganizations to show that they can return to profitability.
-  The requirements include quickly reducing their debt, in debt for equity swaps, and basically gutting the union of wages and benefits.

It was interesting to hear different takes on the billions the major American automakers are asking for from the American taxpayer to keep them from going under.

Whether people agreed or not that their should be a bailout, one thing was clear Friday: the industry is in for a big change, and that will trickle down to what we see locally.

There will be less dealership lots. We might live in a new world in which not as many car dealerships will line the sides of freeways. Credit to buy a car will be harder to get. And those cars will likely be more efficient and smaller.

But a couple of caveats also emerged.

One was, despite dismal vehicle sales, dealers continue to report more sales of trucks and SUVs as gas prices come back down.

In six months, if those prices are still low, the psychology of buyers might shift away from green fuel and back toward gasoline, one dealer told me.

Another caveat was just what will replace car sales tax revenue for local cities.

That was an open question, which both dealers and city officials were asking as of Thursday. 

Did anyone read L.A. Times automotive critic Dan Neil's piece today on the Big Three?

Here's the link: http://www.latimes.com/news/opinion/commentary/la-oe-neil2-2008dec02,0,7103298.story

I've got to say, I agree with Mr. Neil.

If we're going to dump billions in bridge loans into the Big Three's accounts, the government might as well buy them and let the force of taxpayer money and the government push GM, Ford and Chrysler toward vehicles that are truly ready for the 21st century.

Call it socialism, or whatever you want, but something has to give.

As Neil points out, GM is way too big for itself. Yet, it's full of talent that, if channeled in the right way, could not only create green-running vehicles for a new age, but wean our country off of our oil dependence.

As long as the kind of thinking that drove board directors to choose short-term profit of SUVs over a long-term future prevails, billions in loans to automakers will likely evaporate before our eyes.

That's because creating a profitable green-energy running car is likely many years away.

They simply can't be profitable right now. But they could be. And as Neil suggests, the Big Three, and their talent, could help us get there. And once we're there, the government could sell GM, and even the other two, at a profit. But it can happen only if there's willingness to sacrifice short-term profit for longterm gain.

In a radio interview this morning, Neil echoed a point I think many Americans these days share -- or at least are seriously pondering.

We are at a historic moment. Yeah, we could sit back and let the "free" market do its thing and let new players emerge. Or, we could seize this moment by seizing an entire American auto industry and re-gearing it for a new world, and in fact to lead change in that new world.

It was a world that this very industry changed when the first Ford Model T came off the line.

It's a world that American automakers could help change again, if we're willing to set aside ideology and put new ideas on the assemby line.