Cars: Domestic Carmakers at a Cross Roads

Automotive Guide Domestic Carmakers at a Cross Roads

By: Lance Winslow

Automotive Guide

US automakers are having a rough go of it. Many believe this is because of fuel prices. Most of the cars on the sales lots are SUVs, which are high profit items for manufacturers and dealers, but not desired by consumers presently. People want inexpensive cars to operate, ones, which use less fuel. This current paradigm is not too dissimilar to the last major down turn in US automaker problems when Japanese automakers seized the advantage by mass producing less expensive and more economical vehicles.

Ford has cut its next fiscal year earnings and is advising investors it is tightening its belts to offset the slow US vehicle sales. The last twelve months have seen a big decrease in sales for Ford, General Motors and Chrysler. Chrysler has not been as bad off as Ford and GM. Ford is cutting off bonuses and cutting its work force by huge numbers in the 20,000 range. Both Ford and GM have had their credit ratings cut to junk status and some wonder if this is also a sign of them reneging on their under funded pension obligations?

Meanwhile both companies are losing market share to Asian Auto Manufacturers. Ford and GM have tried many things to boost sales, such as 8-year auto loans, cash back incentives, zero-zero financing and even the most recent Sprint Marketing ploy of friends and family vehicle discounts which are on the same level with employee vehicle purchase discounts.

It maybe a while before we see robust auto sales again for Ford or GM and this may usher in a new age of hybrids and fuel cells from company spin off corporations. Then letting the larger company shell be burdened by under funded pension debt until they finally fold under debt and renege on those pension promises. It is a huge dilemma indeed. Watch for additional legislation which will allow auto makers to renege on their under funded pensions in the next few years. Think on this.

Lance Winslow - Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs/

Automotive Guide Tag : Ford   Gm   Employees

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