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Things are tough all over

Sam Fox has a Long Island auto dealership which sells Cadillacs, Saabs and Hummers. Let me rephrase that – those are the brands his dealership is authorized to sell. He’s not selling many vehicles these days. You don’t have to try to imagine his frustration because he has let it be known. Mr. Fox has written an op-ed which appears in today’s edition of the New York Post.

His outrage is over the manner in which the media has covered Detroit’s current problems. Mr Fox makes some good points. The press is always saying that the problem is that people don’t want to buy the cars that American automakers produce. The truth is that many do. As the dealer points out, General Motors has sold one-fourth of the cars American consumers have purchased over the past several years. Add Ford and Chrysler to the mix, and Detroit accounts for almost half of the new cars sold domestically. While that mix is way down from where it once was (GM used to have a 65% share of the American car market), a lot of Americans still like the American automotive product, even if its final assembly point is somewhere in Canada or Mexico.

That should be no surprise. Some of the models the Big 3 are making are the best cars they have ever built. As Mr. Fox says, The Cadillac CTS is a world-class luxury sport sedan. Ford’s Fusion is a match for the Toyota Camry and Honda Accord, and it has better handling than either. The top performing vehicles in recent crash tests were not the products of Mercedes Benz or Toyota, but those of Ford and Volvo (which is owned by Ford). The Big 3 has made great gains in the quality of the cars it builds.

Yet the media gushes over Toyotas and Hondas while they continue to perpetuate the myth that the Detroit product is an inferior one to those made by the Japanese, or made by Americans in American plants for Japanese companies. Mr. Fox singles out New York Times columnist Thomas Friedman, “who referred to GM as terrorists for marketing a campaign that provided gas relief and praising ‘green’ Toyota.”

It is true that Toyota has a green reputation, largely media-driven as Fox argues, because of a single model – the Prius, which is a hybrid that gets very good fuel mileage and has low emissions. But Toyota, eager to cash in on the SUV craze which persisted in the U.S. market for several years before gasoline went to $4.00 a gallon, had several models with V8 engines which, like their American counterparts, were gas guzzlers. Acres and acres of lots and fields in towns across this country are now full of Tundras, Lexus trucks and Landcruisers. Nissan also wanted to get in on the action, and it has the same problem with its unsold Titan full-sized pickups and Armada SUVs.

One difference between Toyota and GM is that when the bottom fell out of the SUV and large truck market, it had several fuel-efficient small models it could rely on to keep traffic coming in to its dealerships. None of the models carried by Mr. Fox’s dealership are what consumers interested in a fuel mileage champ would consider even taking a look at, let alone a test drive in. And that just illustrates another Detroit problem. It has too many dealerships, and some of them are too specialized in the models that they offer. I doubt many Hummers are moving off of the Fox lot these days, Saab has always been a low-volume product, and Cadillac is a brand that many consumers simply cannot afford. If Mr. Fox were also a Chevrolet dealer, he would at least have a few models to offer customers looking for smaller and less expensive vehicles. The scarcity of very fuel-efficient small cars in the model lineups offered by the Big 3 is not entirely Detroit’s fault. Ford, for example, has a model which travels 65 miles on a gallon, but it’s for Europe, not America. High U.S. taxes on diesel fuel, currency exchange rates and government emission regulations (especially in California) are keeping the efficient little car from our shores. Yes, Reagan was right. Government is the problem, not the solution. Big 3 bailout advocates please take notes.

Mr. Fox admits that GM has made it’s mistakes, but he thinks its unfair for the media to act as a PR firm for Toyota. I can understand his anger. As a political animal and a conservative, I’m angry that the media acted as an Obama PR firm during the recent presidential campaign. And it does so in the same hypocritical manner that it shills for Toyota. The media is not anti-GM, Mr. Fox, it is pro-UAW. And this hypocrisy is evident in the fact that the workers in the southern states who build Toyotas, the same ones that Thomas Friedman loves so much, are making less than half the hourly wage of the workers who assemble GM cars in Michigan plants. Those automakers in the south don’t have to fork over the generous employee benefits that northern autoworkers enjoy, either. Yet the same reporters and columnists who drive their Toyota hybrids and rave about them in the press have long defended the UAW and the big paychecks their members have been taking home for decades. They don’t put their money where their opinions are, opting to buy models made in the southern states or overseas.

Mr. Fox finds his business trapped between a rock and a hard place, and he’s frustrated and angered by the unfairness of it all. It’s not fair. The national media rarely reports that sales for all automakers, even the sainted Toyota, have also fallen off. But if the Fox dealership had added an additional line, perhaps Hundai or Kia, it would be selling at least some cars. That’s the personal responsibility angle of it. Republicans are also frustrated and angered by the unfairness of the way the media reported the campaigns. Perhaps if the Republicans in Washington D.C. had acted more responsibly, especially with the taxpayers’ money, the GOP “brand” would have a better reputation. Money is the gasoline of government, and perhaps if John McCain had been more fuel-efficient and opposed the big financial bailout, he would have done better. Perhaps if a solid conservative candidate had been at the top of the ticket, many of the millions of Republicans who stayed home during the recent election would have found some motivation to get out and vote. Perhaps more Senate Republicans are now beginning to show the courage of the House RSC members who opposed the financial bailout.

We cannot change that which is in the past. We can only take steps to avoid repeating those mistakes in the future. Conservative Republicans are arguing for more differentiation. The GOP cannot sell itself to voters unless its ideas are not only distinctly different from those of its major competitor, the Democrat Party, but also superior to it. Fiscal conservatives and social conservatives will have to work together to make that happen – a merger of sorts. Think of the various GOP factions as the Baby Bells, divisions of a giant telephone company which became individual companies and are now re-merging. Perhaps Mr. Fox can bargain with the owner of, say, a Hyundai dealership and effect a merger which will be beneficial to both partners. The Hyundai dealer will get a brand of luxury cars which it did not have to offer, and Mr. Fox will have something to offer the value-conscious consumer.

Things are tough all over, Mr. Fox, but I wish you well. I lost my job last summer and have been forced to take early retirement. Now my expenses greatly exceed my revenues. I’m cutting costs and looking for ways to increase revenues, but if something doesn’t change very soon, I’m SOL, as those who use the word “text” as a verb say. It isn’t fair, but we have to do what we can to rise above the obstacles that we face. Some of them are of our own doing, and some are not our fault. We have to deal with both. My prayer is a familiar one – God give us grace to accept with serenity the things that cannot be changed, courage to change the things that should be changed, and the wisdom to distinguish the one from the other.

- JP

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COMMENTS

  • http://www.scottbomb.com scottbomb

    I offer my own anecdotal story. I’ve owned foreign and domestic cars, all used. I’ve never bought a new car and probably never will (by choice). I’ve owned Ford, DM, Dodge, Toyota, and Honda. My most recent cars have been Hondas and I can no longer see myself buying a domestic car again.

    In the 70s and 80s, Honda and Toyota built a reputation on reliable cars that got good mileage. In my opinion, the domestics of yesteryear were junk compared to the Japanese cars. Detroit might make a better quality car today, but I’m still somewhat jaded by bad experiences with American-made cars. Even fairly recently, my sister bought a Ford Focus and it was a lemon. I’ve never known anyone who got a lemon from a Japanese maker. Toyotas and Hondas seem to run forever. They also enjoy a higher resale value. From what I’ve seen, they also beat German car makers like Mercedes and BMW when it comes to reliability and resale value.

    My most recent purchase, 2 mos. ago, was an ’04 Civic EX. I had such a good experience with my ’95 Civic that I won’t drive anything else. I told the salesman I would never buy a hybrid and that I hope Honda continues to make hybrid-free cars. My reasons are purely technical: 1 – hybrids create LOTS of radio frequency interference and as a ham radio operator who operates mobile, that’s something I can definately live without. 2 – The battery! That sucker will eventually have to be replaced and at that point, a new battery will probably cost more than the car is worth. In other words, an otherwise perfectly running car is considered totaled at about 100k miles. NO THANKS.

    While we’re on the subject of cars, I will say those so-called “Smart” cars are a joke. I can’t help but laugh when I see one of those roller skates on the road, They look ridiculous and are probably not much safer than a motorcycle. No backseat, no trunk. Mileage? My Honda gets 30+ in the city, same as the “Smart”. On the highway, I get about 7 mpg less than the “Smart”. All other things considered, I can live with that regardless of gas prices.

    • Rottimer

      He’s had the car for over 6 years, not sure what the mileage is on it, but I’m pretty sure it’s over 100k. He’s never had a problem with the battery.

      • zuiko

        That is pretty much a fact of life. So far I believe nobody has had to pay for a battery pack for any of these cars. The manufacturers have just been eating the cost because they don’t want to see news stories about how someone had to pay $5,000 to replace the batteries in their hybrid. At some point that will have to end. Some of the bigger battery packs go for more than 5 grand, just for the part. I can’t imagine how much the LiIon batteries for the Volt will go for… it will probably be $20k+.

  • Old_Crow

    never again (or at least not for a long time). I haven’t bought a new car since my early 20′s do not plan to do so in the future. It will take many years before I even consider buying a vehicle made by the big 3 again – the quality is poor, dealer customer service stinks, overpriced parts, etc, etc.

    Even in this downturn, I cannot get decent service from my local GM dealer – I’m lucky if they return my calls. The entire culture of the Big 3 and their dealerships has got to change.

  • SteveLA

    “Last year GM sold 9.3 million vehicles. Last year Toyota sold 9.3 million vehicles. GM lost $34 billion. Toyota MADE $17 billion.

    What differentiates GM’s situation from Toyota’s?

    3 letters:

    U A W.”

    About sums it up for me, and any bailout that preserves the UAW is a mistake.

    • Rottimer

      You can blame the UAW for Detroit’s higher costs, but you can’t blame the UAW for Detroit’s idiotic business decisions. That the CEO, COO, CFO and Vice Presidents will all keep cushy jobs, will all recieve millions in retirement packages, while all those union workers lose their jobs makes little sense. The companies would will still go under.

      The UAW needs to make concessions. They need to allow workers to be laid off, w/o pay. But management needs to make concessions of their own. Someone is responsible for their perpetual loss of market share and that person or those persons need to be let go as well.

      • zuiko

        Not sure why people feel the need to rip on executive pay all the time. As a shareholder I certainly don’t want them to hand the President’s office over to the lowest bidder. That is a position that can make or break a business. It does me no good to get 50% lower returns on my investment because they cheaped out on the management and saved me 0.00000000000000000001% on executive compensation. As a shareholder, I’m willing to pay whatever it takes to get decent management.

        Now you can make the claim that management is bad right now (though that has nothing to do with their compensation), but I don’t think superman could turn any of these businesses around at this point, so it is hard for me to heap too much blame upon current management, who came into a lousy business with their hands tied by union contracts.

        • Rottimer

          They may be making turn arounds now, but the fact is, people have lost a lot more than 50% on their investments while supporting ridiculous executive pay. Executive pay should be more closely tied to performance. And for those that will say that they receive a lot of compensation in stock, the truth is they receive that compensation in stock options. Options don’t cut it, because they still make money on declining stock value.

          • zuiko

            You don’t think they should be paid well, and you think they deserve blame for all their predecessors have done before them (it’s not as if these guys were even around when the domestic automakers started making mistakes). You think you are going to get anyone applying for that job?

            As for receiving stock as compensation, paying in restricted stock grants is worse than paying in options… options do become worthless. Stock is always worth something… well at least outside of bankruptcy, anyway. And if you got the stock for free it’s all gravy anyway.

  • larueladue

    I owned a ’93 Ford F-150, and put over 200,000 miles on it, with almost no major work (air conditioner, covered by warranty). I have also put 188,000 miles on a ’99 Ford Windstar, with only one tuneup at 100,000 (still driving it). But, I have also had good luck with foreign vehicles, as I put over 290,000 miles on a Mazda B2000. The only disappointment I had was an ’04 Chevrolet Silverado: it has decked out inside, electric everything, Bose stereo, etc., and the computer that controlled the seats kept going haywire, and would randomly push the driver’s seat all the way forward and up… Once or twice with that while driving, and my wife demanded that we trade it in for a Honda…

    • http://hillbillypolitics.com Steph C

      we’re driving an 03 malibu that gets great mileage considering it’s a 6 cyl, … 30 mpg in the city… and no major problems. Plus, I feel safer in it than other cars I’ve driven over the years. Next vehicle will be a truck. That’s some ways off but it’ll have to be a bigger size than a popcan for me and the grandsons plus room to haul stuff. Since it will be moving only once or twice a week, gas mileage won’t be that concerning. I work from home and don’t get out much.

      • larueladue

        and I have nothing but good to say about that vehicle. It is ugly (we call it “The Cube”) but I have never had a more sure-footed vehicle in snow and ice. It has the “real-time 4-wheel drive” and it is amazing what you can negotiate. Gets okay mileage too (about 24-28 mpg). And you can put a lot of stuff inside it… They are deceptive large inside…

        However, our next vehicle will be a used Ford truck: just cannot live without one. (This is the first time since 1982 that I have been without a pcickup!) Too many dogs, horses, trailers, etc…

    • zuiko

      And I keep vehicles for a very long time. I still drive a 1995 Lincoln with 200k miles on it every day. The only issues I’ve had have been with small cars where they seem to cheap out on parts to make something at a price people are willing to pay for a small car (since they can’t do anything about the labor costs), and any GM products I have owned. No problems with the Fords, though.

    • janis

      None of them have had any major problems, and that includes my husband’s oldest truck, a ’92 Ford Ranger with well over 250,000 miles on it.

      • Jack_Savage

        with the fewest issues financially…

        • http://www.ssce.net/Web-Articles/Web-articles-indexed-authors.html#authors-l JLenardDetroit

          with Legacy Benefits…. my Parents are going through all those (GM) changes now (while other family members went through them before with Ford)… the “cost savings” they expect will take time to be realized from both a real and accounting/books stand-point

        • zuiko

          When the credit markets are closed, the guy who comes in with the most cash wins. I think their relative strength has more to do with that than anything else. Of course for them it is also just a matter of time. They just got a little more cash to burn before they run out.

  • bclarkj

    I drive a company car and have been for nearly 20 years. I’ve had about 15 different new cars through this time and all have been domestic cars from one of the Big 3. EVERY single one has had unacceptable quality issues from minor to serious (3 transmissions failed before 30,000 miles on 3 different cars of which 2 were Fords, a/c crapping out before 30,000 miles on a couple, electrical systems going bad, not starting, wrong size spare tire provided, windshield washer pump gone bad, and so on and so on).

    I personally have owned 1 Chrysler Mini-Van (transmission started slipping before 80,000 miles), 1 97 Saturn (strange engine power problems), 1 2003 Saturn Vue (transmission design problem – completely tanked at 80,000 miles), One Saturn Ion (power windows work intermittently, car randomly refuses to start but Saturn can’t find the problem – we bought this because they were the only dealer that would give us anything for the Vue probably because how angry I was about it). I own a 2008 Honda Element that replaced a 2005 Element that I traded up because I loved so much. Also have had a Toyota Tercel (1988).

    Guess which ones DIDN’T have the quality problems? Yep, you got it, the Japanese units.

    I think I have the experience in quantity to believe this is beyond simple coincidence. Domestic cars have poor quality standards. How shameful that Ford is proud of touting “First in “initial” quality” for their trucks. How about long term quality?? What a joke.

    No bailout. Learn to be efficient. Learn what quality is. I’m tired of supporting failure. Our next car(s) will NOT be from the Big 3.

    • Jack_Savage

      Company cars for the past 15 years, all domestic, all had problems from annoying to severe. Before that personal cars that were domestic and all had problems from severe to extremely severe.

      Personal cars after I could afford to buy them: Toyota Celica, Mitsubishi Galant, Acura Integra, Honda Odyssey. Any problems we have had were very minor and handled at no charge, sometimes even well after warranty expired.

      Cold day in hell before I shelll out money for a Big 3 vehicle.

      • http://impudent.blognation.us/blog kyle8

        Saturn. Like you I had a hell of a time with domestic cars. Until I bought my first Saturn. I have had three of them now, and all were excellent.

  • http://www.ssce.net/Web-Articles/Web-articles-indexed-authors.html#authors-l JLenardDetroit

    For one, at about $40,000….. OUCH!

    Second, with the EV1 (basically was like the first Saturns but Electric) that GM sold before…. only a few years later they bought them all back and sent them to a “special” junk-yard….

    Rather than just handing GM Billions, give them $30,000 subsidy for each VOLT sold so people can buy them for $15,000…. NO, I’m not for the subsidy idea, but we all know that Democrats are going to do crap to support the GREENness of the vehicles they will insist the Big-3 make (whether or not a market exists or not). Helping the CAR BUYER (and indirectly then the Manufacturer) will at least help create a market demand (of some size).

    All those EV1′s could’ve been retro-fitted with new battery technology, if they hadn’t destroyed them all… which is exactly why they wanted them destroyed.

    • bclarkj

      I don’t want the government subsidizing ANY purchases of ANY thing. That’s why our economy is so screwed up in the first place. Farmers getting paid for not growing, ladies getting paid to have babies, etc. FREE MARKET PLEASE. The manufacturers will give us what we want, not what the government thinks we should have!!

      The government should stand back and just make sure that laws are followed. They need to stay out of the way. Yeah, I know democrats won’t do anything about this, but we can’t stop fighting.

      NO BAILOUTS! NO SUBSIDIES! Build freakin’ quality cars and people will buy them. Honda has won me over! GM, Chrysler and Ford could to, but I’ll have to hear it from others because they’ve struck out with me on the quality trust issue.

      • Rottimer

        What about military expenditures? I’m pretty sure that you don’t want an entirely free market for Patriot missiles or F-35′s. What if China, which has a ton of cash and to whom we owe a ton more wanted to purchase them and were willing to pay more than the U.S. was?

        Just saying, free markets, although great, don’t solve each and every problem.

        • bclarkj

          Military is the ONE area the government is constitutionally permitted to be involved in and manage how they see fit. Some people think that whatever we want them involved in, we just vote on it. That’s not what our constitution allows. Shows how far we’ve come (or how far we’ve tanked with our education in civics and government).

          Government has no business in commerce other than making sure laws are followed.

        • zuiko

          That’s not a subsidy. It’s government procurement. The government has to buy that stuff… how else would you propose they get it? Raid the factory in the dark of night and take it? They aren’t offering $100m tax credits to people who buy patriot missile systems and install them at their homes. I don’t see how it is comparable to any subsidy program.

      • http://www.ssce.net/Web-Articles/Web-articles-indexed-authors.html#authors-l JLenardDetroit

        I was just saying… we know darn well that Democrats ARE GOING TO SUBSIDIZE, in the name of GREEN (forcing them to build the stuff whether market for it or not or the technology is really ready for the road)…. So I would just like it to directly help the Purchaser!! It is the LEAST OFFENSIVE… but still offensive!

        If I’m going to be SHOT, I’d like to pick the spot they are going to shoot me… The Foot is better than the Head ;-) Best, of course, if we could wrestle the gun away from them all-together… but that is not going to happen via the ballot-box for awhile… Too many IDIOTS (IMO) in this country have given the SOCIALISTS… er… sorry… “Progressives” almost absolute unfettered Power for the next 2 years.

        And again…. The TARP funds are going to be spent by somebody… BETTER IT BE BUSH DIRECTING/SPENDING THOSE FUNDS THAN LEAVING ANY OF IT FOR OBAMA TO FUNNEL TO DEMOCRAT CHOICES (ACORN, unions, black hole Green projects, etc…) More on that thought here: RS: Bush should spend every penny of TARP monies immediately… here is why!.

    • NightTwister

      Obama will bankrupts the coal industry and electric energy costs will increase tenfold. Electricity is the last source I’d want my car to be powered with.

    • zuiko

      The $2-$3k subsidies we offer now are far too much. The subsidy should be more in the neighborhood of $0. If electric cars are not competitive for whatever reason, we shouldn’t be building them at all. We shouldn’t be throwing taxpayer money at the problem to make them competitive. The same goes for solar panels and everything else we throw taxpayer subsidies at.

      As far as the EV1s go… they did not want the support costs of keeping that fleet out there. It would cost them a fortune to continue the infrastructure required to support a completely unique vehicle in the hands of a few hundred people. That is a big time money losing proposition. I think GM has enough problems with losing money without adding to them by supporting a white elephant from the 90s.

      They crush everything they don’t want to support or be liable for. Those fancy customized vehicles they build for demos with all the aftermarket modifications? They get crushed. They have them built up to show off the vehicle and what can be done with it, but they don’t want the liability that comes with selling it to anybody.

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