Bailout Watch 447: Bailout Backlash Hits ChryCo, GM Sales

Robert Farago
by Robert Farago
bailout watch 447 bailout backlash hits chryco gm sales

Well, you knew it would. But does it really matter? Now that both Chrysler and GM depend entirely on federal tax money for their survival, who cares if they don’t sell anything? OK, back up. America’s zombie automakers need to sell enough vehicles to maintain some sort of credibility as “viable” companies. But then they can just use the federal “loans” to subsidize lower prices and keep moving the metal, as Chrysler has done. Until, of course, they can’t. Because the general public is well and truly fed-up. First, James Brown sang “Living in America” not “Paying Taxes to Support Detroit.” At the same time, the MSM’s “will they/won’t they file for C11” coverage has buyers nervous about American Leyland’s warranties and residuals. And the two failing automakers have decided to go radio silent on the whole issue (don’t want to scare the horses or queer the lobbyists’ pitch). Bottom line: falling sales and lost “consideration.” As documented by a survey of 40,000 car buyers over the last two months by CNW Research [via Automotive News, sub]:

Fewer new car shoppers are considering vehicles from General Motors and Chrysler LLC at a time when consumer attention is focused on their request for further U.S. government aid, according to a survey released today.

The share of car shoppers who say their primary choice would be a vehicle from one of the GM brands dropped by almost 12 percent, while the share for Chrysler dropped by a third, according to the study from CNW Research.

And more federal money will stop this trend how? In fact, Ford is already picking up from the failure of their cross-town rivals.

Ford Motor Co., the only U.S. automaker not relying on emergency aid from the U.S. government, has seen a nearly 12 percent increase in the share of car shoppers who say it would be their first choice.

Other winners . . .

“Hyundai and Kia show staggering increases in future consideration,” CNW said. “While that may be considered a distortion because they are starting with a low base market share, it is worthy of consideration considering how well both brands have been doing during the past rough months.”

Earlier this year, Hyundai rolled out a novel incentive program that allows car buyers to return their vehicles if they lose their jobs.

GM has said it is studying the Hyundai offer and may offer a similar program of its own.

Now THAT would be funny, in a tragic sort of way: GM guaranteeing buyers that the company on taxpayer funded life support will back them up if they go bust. Bailout Nation, eh?

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  • Fiasco Fiasco on Mar 20, 2009
    John Horner : March 20th, 2009 at 1:25 pm “maybe Ford could then put the Cummins diesel in their trucks instead of the PowerJoke.” The Navistar sourced PowerStroke dies the end of this year. Whether an internal Ford product or another engine supplier’s product replaces it is still the subject of much speculation. Interesting to hear. The 7.3 was OK, the 6.0/6.4 not so much. There's a farmer who drives his 95ish Dodge Cummins by twice a day to feed his cows, and the truck runs fine, but the rest of the truck is literally coming apart. Same for another friend's near identical Cummins. Great engine, junk everything else. Dropping the Cummins in the Super Duty would be like the old 70's Reese's peanut butter cup commercials...(ugly nose on the Ford notwithstanding). joeaverage : March 20th, 2009 at 4:01 pm wsn: And there is nothing from GM to match the Focus. So what is the Astra? 3-door and 5-door versions. Last I checked the Focus that we get here in the USA is only 2 and four door sedans. Yuck. If I’m buying small I’ll take a hatchback. MUCH more useful that way… Agreed, but you'll pay a premium for the Astra. Chevy Aveo starts at $12,625 Ford Focus starts at $14,995 VW Rabbit starts at $16,300 Chevy Cobalt starts at $16,330 Vauxhall...err Opel...err.. Saturn Astra starts at $16,495 I did a quick online search of area dealers, but couldn't find an Astra on the lot for under $19,000. I found a Focus marked "invoice" at $15,142, and a Rabbit at $17,414. Aveos can be had for $12,170 and Cobalts $16,860. So while GM does have what is probably a fine product in the Astra, it's hidden at the Saturn dealer where there hasn't been decent product in more than a decade. If they're still doing the "no dicker sticker" bit at the dealers, the poor car doesn't have a chance when you can get the VW for less. And that's without even looking at the Japanese products. What I don't get is with the Cobalt -- on the same platform as the Astra -- still looks like a re-skinned'91 Cavalier. But it does "more" engine for less money. Haven't driven (or really studied) either, because if I was shopping the $15-20k segment, I'd be looking at Mazda3 and Subaru Impreza.

  • Joeaverage Joeaverage on Mar 23, 2009

    We are talking only $1500 difference between the Focus and the Astra. Believe me I'm not going to worry that much about $1500. I'm going to buy what I want. If I am going so far as to spend HUGE money (anything more than $5K is huge money to me) on a depreciating asset then I'm going to buy what makes me happy. Sunroof, cruise, CD player, a/c, alloy wheels, etc. Besides that is a $25 difference per month between the Focus and Astra if the vehicle is financed for 60 months. I did note that you ouldn't find anything approaching the invoice price. I'd guess that if a person showed interest in an Astra that Saturn might "make a deal" just to move SOMETHING off of the lot. I haven't bought a Saturn before so I don't know how firmly they are priced. GM prob ran the numbers and decided that they expected to sell X units and so they'd make more money building them in Europe. If the car was a runaway hit - I don't know how since they keep it a secret - then they could build a production line here or Mexico. As much as I want to reward GM for a product that I wholeheartedly approve of - this coming from a guy that still hasn't seen one in person - I won't be lining up to buy one b/c the timing is all wrong for me personally. Maybe on the used market? Makes me sad b/c finally GM did something right but I don't feel like I can support them here. Want to. Not enough to dive into a car payment though.

  • Charles I had one and loved it . Seated 7 people . Easy to park , great van
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  • Alan I would think Ford would beef up the drive line considering the torque increase, horse power isn't a factor here. I looked at a Harrop supercharger for my vehicle. Harrop offered two stages of performance. The first was a paltry 100hp to the wheels (12 000AUD)and the second was 250hp to the wheels ($20 000 (engine didn't rev harder so torque was significantly increased)). The Stage One had no drive line changes, but the Stage Two had drive line modifications. My vehicle weighs roughly the same as a full size pickup and the 400'ish hp I have is sufficient, I had little use for another 100 let alone 250hp. I couldn't see much difference in the actual supercharger setup other than a ratio change for the drive of the supercharger, so that extra $8 000 went into the drive line.
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