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The Big Three Are Not Alone

November 30, 2008 - by Donny Shaw

Tomorrow is the deadline for GM, Chrysler and Ford to submit their revised plans to Congress explaining how, exactly, a $25 billion bailout is going to help them be financially viable going forward. We’ll be reporting on that as information is made available.

In the meantime, here’s some news out of Japan that should give the companies a boost going into their next round of negotiations with Congress:

> Toyota Motor Corp. and Nissan Motor Co. led the biggest drop Japan’s auto sales in 34 years as the country’s recession cut wages.
>
>Sales of cars, trucks and buses, excluding minicars, fell 27 percent to 215,783 vehicles in November, the Tokyo-based Japan Automobile Dealers Association said in a statement today. Toyota Motor Corp., Japan’s largest automaker, sold 106,342 vehicles excluding the Lexus brand, down 28 percent. Sales at Nissan Motor Co., the country’s third-biggest, fell 30 percent to 30,134.
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>[…]
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>Honda’s sales dropped 22 percent to 29,448 vehicles last month. Mazda Motor Corp.’s fell 33 percent to 9,699 vehicles.

The point here is that auto sales are falling significantly throughout the entire market. The decline among these stronger, foreign brands are comparable to what the Detroit companies are expected to report this week (GM -28%, Ford -33%, Chrysler -42%), and the numbers should help convince Congress that the Big Three’s troubles are a result of the financial crisis, not poor management. If they can make that case, it should be a lot easier for skeptical lawmakers, who are concerned that the companies lack plans for improvement, to approve $25 billion to tide them over until the economy picks up.

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Comments

  • Moderated Comment

  • zane 12/02/2008 8:43am

    However, unlike the so-called Big-3, Toyota, Honda, and Nissan are not teetering on the edge of insolvency. Bad management has not necessarily resulted in the downturn in US automaker sales, but it has resulted in these companies being unable to survive a downturn without public support, whereas Toyota at least has substantial cash reserves which will hopefully be sufficient to see it through the recession. Should that prove not to be the case, is it not possible that we simply have a global surplus of automotive production capacity, that ultimately needs to be trimmed? And if that’s the case, shouldn’t we try to trim away the companies that did the poorest job of managing themselves for long term economic sustainability?

  • Anonymous 12/04/2008 6:44am

    I think Congress should not bailout the Big 3 car industries. Last summer, I went to a GM dealership to buy a new vehicle. The vehicle I was looking at was $42,000. I offered $35,000 and the dealership would not budge on the price. If the dealerships would be less greedy and work with the american public maybe their quarterly earning statement would show profit and they would not need to be bailed out. The american public, those of us who vote, those of us who have to pay taxes to back these loan, should have a say in what happens in this situation. Today, I would never buy from Ford, GM, or Crysler. I would buy a foreign vehicle before I would support the corporate greed of the American automakers. Let the american people speak. I say let the Big 3 get out of their own situation just like the little people have to. We, the little guys, would like a loan for millions of dollars so we can live comfortably and the government offers us nothing. The government only takes our money and then tells us we owe more in taxes at the end of the year. Let the Big 3 file bankruptsy, either way I dont not think the american people are going to support the Big 3 no matter what happens. I no longer have faith in any big corporation. Yes, people will lose their jobs but again, put the blame where it belongs. On the greedy CEO’s. Let the CEO’s live like a person who lives on a minimun wage salary and maybe then they will see it differently.

  • pennygreen 05/08/2009 11:42pm

    I think Congress should not bailout the Big 3 car industries. http://www.vxcb.com

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