gm

MSNBC just reported that part of the GM restructure includes a deal with EBay so that people can buy cars online. Who in their right mind would make such a major purchase without the human interaction of a sales rep and dealership to return the vehicle to if there is a problem, let alone being able to test drive your desired vehicle? This part of the plan sounds like a major failure already.

Bloomberg has an article quoting a bunch of different senators and their opposition to the closing of Chrysler and GM dealers. While there is justification to this concern, there is also a need to ask why there are so many dealerships.

Let me explain this. Here in Cincinnati it used to be you had certain areas that had dealerships. If you wanted a new car or to get dealership service then you had to venture out to one of these areas. Of course they were never more than thirty minutes away. In the last twenty years that has changed, and now auto dealerships are as common as Wal-Marts.

Why?

Should buying a car really be as convenient as buying a gallon of milk? Of course not. There is only one reason you really need a dealership more often and that is for service. That’s where we really need more intuitive thinking. That’s where the calls for a new business model really should be heard.

Instead of having these huge dealer lots with big show rooms and tons of new cars just sitting there, why not just open up manufacturer service centers, or even contract it out? Service is the most common need for a dealership, and also its the point when proximity is more of a necessity for the consumer.

What the auto makers can do is develop a strict certification program. There are also requirements, like the use of genuine manufacturer parts. Then Jim’s auto shop down the street can spend a little money and time, then become a certified service center. They also can provide warranty and recall work, in which the manufacturer would pay them for the service. The program should be strict, but not a deterrent to enter it.

It looks like GM employees are going to get that perk that is usually limited to those in the teaching profession:

General Motors Corp. is planning to temporarily close most of its U.S. factories for up to nine weeks this summer because of slumping sales and growing inventories of unsold vehicles, three people briefed on the plan said Wednesday. Analysts say the company could be seeing sales decline because of talk about a potential bankruptcy.

The exact dates of the closures are not known, but the people said they will occur around the normal two-week shutdown in July when changes are made from one model year to the next. None of the people wanted to be identified because workers have not yet been told of the shutdowns.

Of course its not really a perk, but rather a sign of our troubling economy. I am wondering though how the auto industry would look today if the credit markets flowed better. If people can’t get loans then they can’t buy cars.

Looks like the well is dry for GM and Chrysler:

The White House says neither GM nor Chrysler submitted acceptable plans to receive more bailout money, setting the stage for a crisis in Detroit and putting in motion what could be the final two months of two American auto giants.

The Obama administration, however, has decided not to require the automakers to immediately repay government loan money they previously received, since that would force both companies into Chapter 11 bankruptcy.

I really want to hear some explanations on these decisions. We could be looking at the end of a major American era, one that is responsible for America’s position as a global leader today. It’s also not going to help the job numbers in the foreseeable future.

Still, I can’t stop and wonder how much of the auto problems are still the side effect of the much larger illness of frozen credit markets. If that’s the case, then why have we dumped so much more money into the banks and seen no cure yet?

It also makes me wonder about the decision for the administration to force Rick Wagner out as CEO of GM. There appears to be a major double standard here. We force out the CEO of GM, yet our tax dollars go to bonuses of bank execs that helped put GM, Chrysler and the whole nation in this mess. I got a feeling a bunch of Democrats on the hill will be asking the same questions today.

If you missed Morning Joe, Mort Zuckerman was on and had a very grim outlook for our financial future. The Freddie and Fannie bailout, while necessary, will cost tax payers millions. Detroit is worse off. He is predicting GM and some other manufacturers like Chrysler to merge, and maybe a foreign automaker to buy out Ford. He actually said if things aren't done right we could be heading towards another depression and in the end all this will cost American taxpayers upwards of half a trillion dollars.

That's OK though, Americans see a "pit bull with lipstick" that they like, so our economy no longer matters.