The 6 Pack Economist

This in no way an official poll by any means.  But I thought it ironic that while listening to the news talk about Obama and Pelosi fighting for a bail out of the Big 3.  I saw three cars with Obama 08 bumper stickers.  Two Toyotas and a Honda.

I am not one of those people that think you should buy american no matter what.  I just believe you should keep an open mind and buy on value.  But when you do that understand what that decision means.  Choosing one product over the other will cause one to lose money and possibly go out of business. 

In the meantime I take advantage of the fact that the perception of American cars is so bad.  I was able to walk away with a cadilliac for 10K less then an equivalent lexus.  And that price difference included an extended warrenty.  If I was purchasing in cash I could have put close to 10K into a CD and just waited for the breakdown to occur.  For 10K I could replace the whole drivetrain.  If my past experience is any indication I should get my money out of it. 

Keep an open mind about domestics, you may be able to save us 25 Billion.

The Top five on the JD Powers survey were

1. Lexus
2. Mercury
3. Caddillac
4. Toyota
5. Acura

So the Big 3 American Auto companies look like they are screwed.  I have mixed feelings about this.  First off I think they put themselves into this situation, from the CEOs to the UAW.  On the other hand I always like my Fords, Dodges, and Cadillac (I drive two GM products right now) so I would hate to think that they would be gone.

 I do believe that the big 3  treated their customers like a bunch of dumb hicks for way to long especially from 70’s to late 90’s.  In the late 90’s even GM realized they may have to put money into research and development.  In addition they had to at least compete with the imports (Japanese, the Germans have never been too much better then the domestics) on the issue of quality.  The Japanese put out a very reliable automobile in most segments.  By the time the 1990s came around the Japanese cars have established a reputation for reliable cars (sure the wheel wells rusted out, but it still ran).  Meanwhile GMs, Fords, and Chryslers were making a reputation for inferior quality.  The market began to change and the big 3 refused to recognize this.  Unfortunately once your reputation for long-term reliability is lost it takes a long time to get back. 

 The only thing that saved the big 3 or at least staved off this problem for a few more years was the low-gas prices, OJ Simpson making Ford Broncos famous, and a series of bad winters in the north east.  The SUV and Big Trucks ruled the road and the Big 3 were good at making them.  Even during the dark days of the “80’s crappy domestics” the American companies were good at rear wheel drive V8s. 

 In what has become typical of American corporations all emphasis was on short term profitability.  R&D and marketing went into SUVs while the lower profit cars languished.  The Japanese were able to make steady gains within in the car market which was virtually ceded to them by the domestics.  Other then ford, which had a few nice cars in the late 90’s, looking for a domestic car was pretty disappointing.  All of their money or profit was going to marketing SUVs.  These short sighted fools held onto a belief that gas prices will never rise or that the imports will not start making some fine SUVs to compete with the domestic golden goose.

 In late 2006 the weather forecast was in and a perfect storm was coming.  Gas prices were rising, imports were making better SUVs, and a recession was on the horizon.  The big 3 had all of their eggs in one basket and that basket was smashed.  The innovation and quality improvements that they made in their product came too late, the well they poisoned for so long was going to take a lot longer clean up. 

 
My next post will go into what the UAW did to help cause this.