U. S. Autos Hasbeens?

This is a very disturbing trend. And it doesn’t just apply to America.

History is a funny thing. It repeats itself in obvious ways and cycles, but no one ever seems to notice. For instance, the American Auto Manufacturers are at the same place they were a hundred years ago.

Today, both Ford and General Motors stocks were reduced to Junk Status. HERE is the link.

What does this mean? It means that the cars and trucks that Ford and GM sell are not very good products, for the most part. GM has been having some good sales months, but only because they are selling everything at a huge discount with their “Employee Discounts” that any buyer can get. They keep extending this offer, and odds are that it may become a permanent incentive. Ford has followed suite and their sales are up too. So has Dalmer/Chrysler. But their stocks are essentially worthless, which points to the real value of their products.

The fact is, on the world market, only a very few Auto Manufactuers are doing well because of their advanced, quality products, namely Toyota and Nissan of Japan, and Hyundai of Korea.

Even the Europeans are not doing so well. Both Mercedes and Volkswagen now sell cheap (same sticker price) products, but both their reliability and resale values have fallen below everyone else’s these past five years. Who would have thought that Mercedes would sell junk cars? And Dalmer has not helped Chrysler at all, since their reliablility and resale value has fallen just as far. (A cursory review of Consumer’s Report will bear this out.)

In far flung Japan, home of the most advanced technology on the planet, there are automobile manufacturers in danger too. Most noteably Mitusbishi Motors, which have verged on the brink of bankrupcy for a decade now. Notice that their cars are also heavily discounted and there is no interest required on their auto loans. They make nice cars, but the company is seriously mismanaged.

(Oh I know every auto manufacturer has their star products, else there would be no ‘car of the year’ awards. But for the most part, the rest of their products are not world-class, and therefore, not competitive.)

So? What does this all mean to you and me?

It means that for auto makers in the near future, there are going to be mergers between the profitable companies and companies that are going down the tubes, barring an astonishing turn-around.

It means that some new company will emerge to fill the void left by those that are gone – perhaps a Chinese auto manufacturer.

It also means that for this country, the largest segment of manufacturing will go missing here, except for foreign production plants here. One-fifth of the workers in this country work for car manufacturers or subsidiaries. What will happen to them once there is no more Ford or GM, or if these companies are only a shadow of their former selves?

What can be done about this? Do Ford or GM even acknowledge that there is a problem? Can they see that their products are of little value compared to their competitors? Is there brain power or leadership available here to turn this around?

We haven’t even brought in the bigger problem with oil and its rise to $100 a barrel soon.

My story is to pay off your existing credit loans and live within your means. That way, whatever is coming, you will likely be able to survive it.

Regards,
Roger Born
“Sorry. No Refunds.”