if you could redo the Auto industry structure where would you start.

[Biker16]

I think the union contract agreed to last year, have leveled the playing field against the transplants. I don't think they should be screwed again by a bailout.

 

The retail end of the auto industry has been a problem, because it is so inefficient for soo long, and that The manufacturers have so little control over it. It is time for reform of Dealer franchise laws.

 

There would be a great benefit if US regs were brought in line with EU or ROTW regulations of safety, emissions and economy.

 

In the end The managers must be held accountable for the decisions, and must fall on the sword. The industry must be restructured, by hook or by crook.

[theoldwizard]

I think the union contract agreed to last year, have leveled the playing field against the transplants. I don't think they should be screwed again by a bailout.

I have to disagree. The concept of paying people who are laid off still grates on most of America !

 

The retail end of the auto industry has been a problem, because it is so inefficient for soo long, and that The manufacturers have so little control over it. It is time for reform of Dealer franchise laws.

I agree that there are way too many car dealers. But this isn't an issue of "franchise law", it is an issue of "contract law". The manufacturer signed a contract. They must uphold their end or convince the dealer some how to jointly terminate it.

 

There would be a great benefit if US regs were brought in line with EU or ROTW regulations of safety, emissions and economy.

I agree, but not likely going to happen. Besides EPA and CARB there are now "green state" (mainly in the NE) that may be different from the previous standards.

 

In the end The managers must be held accountable for the decisions, and must fall on the sword. The industry must be restructured, by hook or by crook.

Not likely to happen. The middle level management moves around too quick to ever be remembered whose idea it was when things go bad. (Like who pushed to renew the contract with Navistar that resulted in 6.0L debacle and V6 that never happened !) My only thought is to make most of their bonus payable in stock options that can not be exercised for 5 years. That will force them to think a bit longer term.

Edited November 16, 2008 by theoldwizard

[Edstock]

" if you could redo the Auto industry structure where would you start?"

 

Probably with the Stanley Steamer.

[focus05]

Not likely to happen. The middle level management moves around too quick to ever be remembered whose idea it was when things go bad. (Like who pushed to renew the contract with Navistar that resulted in 6.0L debacle and V6 that never happened !) My only thought is to make most of their bonus payable in stock options that can not be exercised for 5 years. That will force them to think a bit longer term.

 

Ah! But that's what their bonuses typically are. They get stock options, but they can only exercise a percentage of them every year for several years. Mulally made something like $20 million last year. $2 million was his normal salary. $1 million was his bonus. $1 million was other compensation. $16 million was in stock options exerciseable over 5 years, I think.

[J-150]

company owned dealerships.

 

a lot of people complain about the UAW, but its dealers that have big a big issue in driving customers into the arms of the imports.

[Pioneer]

I have to disagree. The concept of paying people who are laid off still grates on most of America !

 

All the hourly would be working if Ford built cars people actually wanted.

[jpd80]

Car makers can downsize plant, personnel and supply orders but not dealerships.

There must be a better way, buying out dealerships or starving them to death is bad for business!

[theoldwizard]

Ah! But that's what their bonuses typically are.

Not the "middle level" management I worked for ! On a good year they might get as much as 50% of their salary as a cash bonus.

 

They get stock options, but they can only exercise a percentage of them every year for several years. Mulally made something like $20 million last year. $2 million was his normal salary. $1 million was his bonus. $1 million was other compensation. $16 million was in stock options exerciseable over 5 years, I think.

Yep, you are correct, for top level management. Those guys make make the final decisions, but it is the Chief Engineers (one notch below VP level) who make the recommendations.

[theoldwizard]

All the hourly would be working if Ford built cars people actually wanted.

In general you are correct. But at this moment in time, it is almost impossible for anyone without pristine credit to get a loan at a reasonable rate.

[theoldwizard]

company owned dealerships.

 

a lot of people complain about the UAW, but its dealers that have big a big issue in driving customers into the arms of the imports.

I don't disagree, but Ford tried that a few years back (in Oklahoma ??) and it did not work. I don't know why, but they sold the dealerships that they had bought back.

[jafo]

e. all of the above.

[Pioneer]

In general you are correct. But at this moment in time, it is almost impossible for anyone without pristine credit to get a loan at a reasonable rate.

 

 

My statement covers the past 5 to 10 years, not just now.

[silvrsvt]

All the hourly would be working if Ford built cars people actually wanted.

 

So whats so different about the imports that people a are buying?

 

The problem is that Ford and the rest of the Big 3 have serious image problems, not product problems.

 

People got screwed one way or another and swore off the Big 3 and when their import has problems, its all about excuses because its an Import.

[theoldwizard]

My statement covers the past 5 to 10 years, not just now.

Be careful. Things went from really good to really bad for Ford in about 10 years.

 

In the late 1990s, Ford had 4 or 5 vehicles on the Top 20 Best Selling Light Vehicles list with F150 on top. Taurus was setting records, Explorer was hot, etc, etc and Ford was within a few percentage points of passing GM for the largest car company in the world.

 

But big auto corporation are like dinosaurs. It takes them a long time for them to react to someone chewing on their tail or the fact that the world in changing around them.

 

Remember, it is human nature to do the "easy thing", which is don't change a thing. Ford eventually came up with a plan but then 3 events happened simultaneously that really put them "behind the 8 ball"

 

• Price of gas more than doubling in less than 6 months
  
• Price of steel going up significantly more than expected
  
• Commercial and consumer credit becoming unobtainable
  

 

If those 3 things had not all happened late last year/early this year, I am confident that the cuts that Ford had already made would have brought them to profitability by the end of 2009. They still might make it, even without government help.

 

GM is a totally different story.

Edited November 16, 2008 by theoldwizard

[papilgee4evaeva]

All the hourly would be working if Ford built cars people actually wanted.

 

So whats so different about the imports that people a are buying?

 

They're not domestics. :shrug:

 

I'd vote, but none of my choices are there.

[J-150]

I don't disagree, but Ford tried that a few years back (in Oklahoma ??) and it did not work. I don't know why, but they sold the dealerships that they had bought back.

 

 

 

part of that is the lack of retail knowledge.

 

you can't have MBA marketing types replace what has typically been an entreprenurial venture.

[Pioneer]

I'd vote, but none of my choices are there.

 

I'm curious as to what your choice is.

[Tico]

So whats so different about the imports that people a are buying?

 

The problem is that Ford and the rest of the Big 3 have serious image problems, not product problems.

 

People got screwed one way or another and swore off the Big 3 and when their import has problems, its all about excuses because its an Import.

 

BINGO! All of the people I work with drive VWs. Toyotas or Hondas. They would be hard pressed to consider a Big 3 car no matter what. It is an image thing. I think nothing short of a complete rebirth of the US auto industry under a new name and new leadership would lure them back. I think Harley Davidson is a good model for how the US auto industry might survive. But it would be much smaller (~ 20 % market share) and include only models that invoked a certain "America Legend" image such as Jeep, Mustang, Silverado, Caravan, Malibu, 2 or 3 good CUVs, some kind of Cadillac, and what else??? What actually sells (minus fleet sales)?!?!!? Make a list of the cars from each of the big 3 that would really be worth keeping if they all merged to one company. Only cars that actually sell should be in the list. How much smaller would this new company, called maybe American Motors, be than the big 3 are now? Maybe half the people and half the capacity? This is what would have to happen for the American Auto industry to profitable and competitive. I think the Union concessions that kick in during 2010 maybe enough if management can whittle down the list of models to only those that are truly viable and the union allows the industry to get rid of excess capactiy.

Edited November 17, 2008 by Tico

[Biker16]

I have to disagree. The concept of paying people who are laid off still grates on most of America

 

 

the problem with your statement is that The new contract basically eliminates the job bank. and allows for lower paid workers.

 

the last UAW contract allows For the domestics to be on a level playing field with the transplants.

 

there is very little innovation in the dealer biz, I don't see and new format dealerships, I.E. smaller more customer focused stores. every dealership is the same. you drive to a suburban location with a huge lot to haggle or tussle with salesman. Why do we sell city cars in the suburbs and not in trendy urban locations where they are marketed to be sold to. there is a resistance to change, that is supported by local and state laws and lawmakers. There is a discontinuity in the retail auto business, it is inflexible, and is ill prepared to adapt to change. The best part of this for the Big 3 is that the competition is just a restricted as they are.

[RichardJensen]

Why no dealerships in urban areas?

 

Geez. I dunno. Maybe because you needs lots of space to carry inventory, and because space costs money in urban areas. Or is the idea that you carry some tiny selection of representative samples at the corner of 57th & Lexington, and then put people on a subway out to Flushing to look at the real inventory?

 

 

====

 

Seriously, though, I don't think there are any practical answers on this poll. Reforming contracts is impossible short of a bankruptcy filing, labor costs are comparable, if not equal (as are work rules), federal emissions and safety regs should not be arbitrarily changed to some other country's standards any more than any other country's regs should be changed to US standards. Besides, you'd have a darn hard time getting the US senate to sign off on a treaty that sacrifices aspects of US sovereignty to a foreign board (or do you think the way the US persistently thumbs its nose at the WTO is exceptional, rather than typical, conduct?)

 

In short:

 

There are no easy answers, and none of us here has the background in this industry to provide any kind of detail on the hard answers.

 

--

 

If there was anything that could be done =over= IMO, I'd go with the '80 Escort. Had Ford globally sourced that, they'd be a lot farther ahead today. Second to that would be the failure to implement the lessons learned by Team Taurus across the board.

 

On another day, I might flip those two around.

 

But, in short, those were the two magnificent mistakes, missed opportunities, etc. Two chances for Ford to seize the brass ring, to 'do it right', and to avoid the mess they find themselves in today.

 

Had the Escort been a true global car, it is likely that 'global' cars would've moved up the food chain.

 

Had Ford implemented the artful balance between innovation and customer research in the '86 Taurus on vehicles such as the '95 Taurus, '94 Mondeo/'96 Contour, etc., things would be radically different.

Edited November 17, 2008 by RichardJensen

[papilgee4evaeva]

I'm curious as to what your choice is.

 

Invent our own protectionist policies so that we don't end up a dumping ground for Southeast Asia like we did.

[old_fairmont_wagon]

Well, in todays scenario, the Auto Makers can not change what they are current doing with any great speed. Short of the Gov't stepping in and giving GM a "get out of civil court free" card to allow them to shutter Pontiac and Buick, and dumping an ass-load of money into Chrysler to allow them to design, develop and produce vehicle actual US consumer would consider buying, there's not much that can be done. In the end, there is a major matter of perception affecting people's desire to purchase domestic automobiles. That perception has to be overcome. The only way for that to happen is an expensive national advertising blitz, payed for by the government, highlighting the quality progress that the domestics have made. This needs to be backed by a car buyers warranty concierge service for all new domestic vehicles purchased. Your car breaks, someone will drive you a comperable loaner from a local dealer, leave you the keys, arrange for your broken vehicle to be towed back to the dealership and services, and then drive it back to you to trade keys again to get the loaner back. This coverage needs to last for 5 years. It needs to be financed by the federal government and carried forward for the next 5 years. At the end of the program, there needs to be a reward system for the automakers. The automaker with the lowest number of concierge service calls per unit sold at retail over the duration of the program gets a 66% share of whatever the prize pot of money is. The #2 maker gets a 33% share. The #3 maker gets nothing.

 

This will reduce the preceived risk of the domestic buyer as compared to an import. IT will cause the imports great financial headaches to match if they don't want to loose marketshare and will wind up employing a lot of concierge drivers at a lot of dealerships. This is, in my mind, the best, most effective means of helping the domestics. It tilts the playing field of public perception. It is not a direct payout to the automakers, they still need to produce compelling vehicles that are reliable. It also reduces loan risk on domestics as there's less of a chance that a major mechanical problem will lead to the vehicle being abandoned.

 

Thoughts?

[mettech]

Invent our own protectionist policies so that we don't end up a dumping ground for Southeast Asia like we did.

 

We are not a dumping ground.

 

The consumer buys what they want.

 

If the consumer wants a BMW or a Honda and they don't want to buy a GM product, why is that wrong?

[papilgee4evaeva]

We are not a dumping ground.

 

The consumer buys what they want.

 

If the consumer wants a BMW or a Honda and they don't want to buy a GM product, why is that wrong?

 

That's now. I'm talking about when Japanese companies first began exporting their extra inventory here as much as they wanted... which pretty much gave them the foothold that they so strongly have now.

 

... all while not allowing us to do the same.

[RichardJensen]

The automaker with the lowest number of concierge service calls per unit sold at retail over the duration of the program gets a 66% share of whatever the prize pot of money is. The #2 maker gets a 33% share. The #3 maker gets nothing

Blake: We're adding a little something to this month's sales contest. As you all know, first prize is a Cadillac Eldorado. Anybody want to see second prize?

[Holds up prize]

Blake: Second prize is a set of steak knives. Third prize is you're fired.

 

And enjoy this SNL parody of Alec's expletive laden speech.... including a moment when Alec gets a bit too far into character.

 

http://video.aol.com/partner/hulu/saturday...UX1WUfR77rvhdnN