Darwin’s survival law applies to business too!
Without a plan to make the U.S. auto industry competitive, no amount of money will make the Big Three profitable. Reuters reported that General Motors Chief Executive Rick Wagoner said “bankruptcies would have a devastating impact on the domestic economy, many times larger than the aid automakers seek.” Perhaps he is correct in the short term but the management of all three Detroit auto makers have no vision for the future. Everything they have introduced in their vehicles has been reactive to foreign competition.
They have built low quality gas guzzling cars and trucks that are everywhere. Approximately 50% of the cars sold are still built by the American owned manufacturers. A review of Consumers Reports indicates that the quality of their vehicles lags far behind the imports. This is especially true when Detroit’s vehicles are compared to Honda, Nissan, and Toyota. Those three Japanese manufacturers have made major inroads in U.S. sales despite their higher prices because their vehicles are economical to operate, have higher quality and provide longer life.
I know this from personal experience. I drive every car I have owned until the cost to repair it is very high. No Big Three car I have ever owned lasted more than 100,000 miles. I sold a Ford Fairmont (to a Ford lover) at 54,000 miles when it was literally falling apart. All six of the Japanese imports have lasted at least 135,000 miles. Currently our family still owns a 1990 Honda Accord with about 200,000 on the odometer and it still travels 60 miles a day.
The Big Three need to consider bankruptcy re-organization that includes new management. The U.S. government is not in the business of investment in private enterprise.
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