Bailout Watch 343: CAR Says GM's Recovery Plan Sucks

Robert Farago
by Robert Farago
bailout watch 343 car says gm s recovery plan sucks

You remember The Center for Automotive Research (CAR). They’re the Detroit-based automaker and union-funded think tank that progated the “soup lines beckon if you don’t bailout Detroit” study. The mainstream media repeated CAR’s stats– debunked on TTAC by both myself and our Best and Brightest— as gospel. Now that CAR has had its wicked way with $17.4b of your tax money, they’re back from hiatus with fresh apocalyptic visions for policy makers. Only this time, they’re right. “McAlinden, director-economics research for the Center for Automotive Research, predicts auto makers will sell 11.5 million units in 2009, down from 13.2 million last year and 16.2 million in 2007,” Ward’s Dealer Business reports. ‘The U.S. will not see 14 million new-vehicle sales again until 2012 and 16 million in 2013. The downturn will last a long time.'” OK, so… “Whether the two auto makers can meet the loan requirements set by the Bush Admin. remains to be seen. However he does not believe GM can meet the obligations as they are written now, adding, the ‘conditions will be changed so GM can keep them.'” Make no mistake: McAlinden has no faith in GM’s recovery plans.

“McAlinden also argues GM’s restructuring plan submitted to Congress in December does not go far enough, assuming a worst-case scenario of 12.5 million units annually. In addition to dropping the Saab, Hummer, Pontiac and possibly Saturn brands, GM needs to kill Buick. That will get the auto maker down to 20 nameplates by 2012, not the 40 called for in its strategic plan.

“While GM says it will reduce its dealer count from 6,450 to 4,700 by 2012, McAlinden says the auto maker only needs 1,500 dealerships selling 1,500 vehicles per location by 2012, far more than the average 440 vehicles GM dealers are selling today. Additionally, GM only needs to cut its employee ranks to 60,000, rather than the 65,000-75,000 announced in the plan.”

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  • Ronnie Schreiber Ronnie Schreiber on Jan 16, 2009

    CAR now has credibility because they are critical of GM? At the NAIAS I asked both Dave Cole and Kathy Watson of CAR about TTAC's criticism of their funding from industry sources and they said that less than 10% of their funding comes from automakers, the UAW and suppliers. Okay, so maybe I was swayed because Kathy's cute, but just about every major university gets funding from businesses without credibility issues. Apparently the automaker that currently gives the University of Michigan (where Cole was a long time and respected engineering professor) the most money is Toyota. I was at a meeting yesterday in Detroit with the CAR people. Gotta say that the group is not quite as party-line-driven as you’d think. Sean (McAlinden) is usually pretty straight-up on his analysis of the industry and several staff members have been brutal in the past with their comments regarding detroit’s current product. You can say the same about DeLorenzo and McElroy, but that doesn't keep some folks from calling them Detroit cheerleaders and fanboys because they don't want to see their neighbors in soup lines. McElroy got a huge laugh when I asked him how it feels to be called those names in light of how critical he's been of the domestic industry. Saying that CAR is "Detroit based" not only implies that they are linked to the domestic automakers, but it's inaccurate. CAR is based in Ann Arbor. If CAR is based in Detroit, than you could say the same about Toyota's North American research efforts.

  • Tesla deathwatcher Tesla deathwatcher on Jan 16, 2009

    Why aren't people buying cars? It seems to be a worldwide phenomenon. Does this normally happen in a recession? Have you seen any surveys as to the reasons why people, across all makers and across all countries, are not buying as many cars? I have always thought that it was that many normal buyers just cannot get any more credit, now that credit is tighter. If so, that means that sales will be off for a while -- maybe permanently -- because a bubble has burst. If, on the other hand, people are just delaying purchases until the economy goes from crisis to something still bad but at least stable, there will be some pent-up demand, and numbers will start going up again. No one knows for sure, I'm sure, but I wonder if anyone has seen any opinion on that.

  • TheEndlessEnigma In 2022 I put my college (then 21 year old) daughter into a 2022 Mirage SE, this year I put my college age 21 year old son into a 2023 Kia Soul LX. They are both very happy to have and both very happy with their vehicles, both are low cost to run and insure.
  • CEastwood If there are 10 laps or less left after a crash and a red flag only let the first ten cars finish the race . I watched the race from about the halfway point and the crashes caused near the end were caused by drivers who had zero to very little chance to finish in the top five .
  • Alan I blame COVID, the chip shortage, container shortage and the war in Ukraine. This aggression is evident in normal daily driving of late.
  • Alan $10 000 is a bit rich for a vehicle that most likely been flogged all its life, plus it's a VW. Lots of electrical gremlins live in them.
  • Alan Mitsubishi, Hino and Izuzu trucks are quite common in Australia. Another factor that needs to be taken into account are the cheap Chinese trucks and vans that are entering the market in Australia and becoming more popular as reliability improves, with huge warranties. Businesses want the cheapest logistics. Plumbers, concreters, builders buy many of these in their lightest versions, around 2.5 tonne payload. Hino/Toyota could use the cheaper competitor in Mitsubishi as a competitor against the Chinese. You don't see too many of the Japanese/Asian trucks in the rural areas.