Bailout Watch 192: John McElroy is Insane
Did we miss something? After repeating the inherently suspicious Center for Automotive Research stats on the impact of a Motown meltdown, and sharing the history of the federally-sponsored Chrysler comeback, AutoLine Detroit apologist and Autoblog columnist John McElroy is ready to share the upside of another federal bailout for Detroit. “Most people seem to miss the fact that they are on the verge of a massive turnaround. If the Big Three get a government bailout this time, I see history repeating itself. Most people seem to miss the fact that they are on the verge of a massive turnaround. I’m not trying to be a rah-rah cheerleader here [as if!]. I’m persuaded simply by the facts.” McElroy is laboring under the impression that the eventual savings from the last United Auto Workers’ contract is The One. Less cost, less over-production– less means more! “That means they’ll be able to slash their incentives. Every $1,000 that General Motors cuts from incentives will drop roughly $4 billion to the bottom line. And GM has an average of $3,500 in incentives!” Huzzah! Where do I sign? “What this means is that when the economy finally starts to recover and the car market begins to grow again, GM, Ford and Chrysler will be in an extremely competitive position, one they haven’t been in for more than 40 years. And that’s why those who say giving them a bailout is just throwing good money after bad are dead wrong. The Big Three are not only on the verge of a roaring comeback, I predict that in the next decade they’ll go on to hit record profits.” I wonder if John’s a betting man?
AG: Probably not a coincidence... Detroit took too long to improve. They're not going to come roaring back. At best they'll manage to be profitable at a much lower sales volume. Record profits? That wouldn't be saying much, since it has been decades since these companies had a truly good profit as a percentage of sales. Record profits after adjusting for inflation? Now, that would be something, but highly unlikely to happen.
Reading the comments there suggests that most of the Autoblog readers think he's insane, too, starting from the very first comment.
If they adjust to lower volume and lower market share than the profits will be possible. I do think that car sales in a few years (2012?) will be the highest in history. All the people who bought cars from 2003-2007 (all big sales years) will want new cars. The sales will just be amongst more companies. Droid800- I think Chrysler has the best product to me right now, (Jeep Patriot) some people are going to say Chrysler has good stuff now or coming, others will say Ford or GM. The Fiesta looks intriguing but thats the only one. GM has the nicest cars of the big 3 but most are too expensive. I'll never be able to afford even a Malibu OldandSlow- Caddys should be sold at Saturn dealers. The low pressure sales tactics that are still at most Saturn dealers work well for import luxury makes. How come everyone I see driving a G8 looks like a huge tool? It's always some late 20s/early 30s looking guy yakking away on a cell phone.
I recall something about a sucker being born every minute. Seems Mr. McElroy is one, or trying desperately to recruit a few to a clearly lost cause.