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The Big Three Needs a Fire Sale

November 16, 2008

auto_salesIn the past, car sales and increasing prices have been sustainable for one reason: credit. This is no longer the case, even assuming that an American that needs a car can afford to buy one. With the declining economy, buying a car using the standard terms of business is dicey for most. The Big Three and other automobiles vendors find themselves priced out of the market. What to do? Have a fire sale.

The country has millions of extra new cars serving absolutely no purpose with millions of Americans in real need. While some new car dealers have special deals, for the most part, you would think you were buying a car during the height of an economic boom. The Big Three have stuck to their guns in keeping prices up and find themselves in the middle of a catastrophe with only the prospect of more bad news.

growing old

growing old

With the new year quickly approaching, millions of new cars sitting on lots will become outdated per the current thinking of the market. Consumers will think so too because we’ve been trained to think that way. The very thought tool designed to make more money in an enlightened age of commerce has come back to bite the automobile industry at a time that the industry can ill afford that kind of fanciful thinking.

The Big Three may believe that they are in an untenable situation and must answer for all the expenses that they have put into each vehicle made even when looking business oblivion in the face. They apparently didn’t feel that way when they declined to get truthfully involved in real traveling economics. Quality has been a real concern with Chrysler products. Instead, the nation has had years of fuel economy games based on dubious government mandates. The Big Three have felt content to leave things alone hoping the world wouldn’t change. The world has changed overnight and now, the economy along with it.

What American automakers need right now is cash. American automakers are sitting on large stocks of cars that in reality are losing value, certainly unaffordable by today’s standards. Instead of actually trying to sell them, the automobile industry keeps hoping for a miracle to sustain them. The attitude in the industry is that a hand out or hand up is needed. Is it possible for them to get off their large rear ends and swing some unbeatable deals?

fancy concept buggy whips

fancy concept buggy whips

If American automakers were to cut their prices in half, even if they thought they were losing money, this liquidation would not only spur the economy, but provide some needed capital toward the ensuing cash crunch. Even better, offer the deal as an eye-popping rebate if you need a gimmick. This would not solve all of their problems, but this would be a start in the right direction. Prices around the nation might fall, but this would be part of a much needed business correction that has gone unchecked for years. It might spawn a boomlet in a badly limping economy. No, we can’t have that. The Big Three must hang onto old ways.

Will it be doom, a bailout or some creative thinking? Oh, I forgot, the Big Three, notably GM and Chrysler have forgotten how to think in a way that makes sense.  I see plenty of Fords in car lots as well. They don’t need concept cars, they need to get serious. It sounds to me that the Big Three have gone the way of the horse drawn carriage and the buggy whip. It’s a shame that Congress has to tell the Big Three that they must restructure “to ensure their long-term economic viability.” Isn’t that the goal of effective business anyway?

Are the Big Three too big to fail? Hardly, they failed years ago through bad decisions that now have come home to roost. Now Nancy Pelosi wants to bail them out using our grand new $750 billion bailout slush fund of cash appointed by Congress. Have no doubt. They will be back for more. Can America continue to insulate Corporate America and Multinationals from their bad decisions regardless of the possible impact on jobs in the economy? That is the $25 billion question of fear. ~ E. Manning

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