Showing posts with label Detroit. Show all posts
Showing posts with label Detroit. Show all posts

Friday, July 19, 2013

This oughta teach 'em

Detroit is declaring bankruptcy.  A whole bunch of banks, and other money places loaned Detroit billions of dollars over the years to meet operating expenses.  Now they ought to loose all their money, just to make a point.
  The point?  It is irresponsible to waste precious capital lending to dead beats who won't be able pay it back.  It was perfectly clear to anyone with an IQ above room temperature, that Detroit was in a death spiral and would never be able to repay the humungous loans it took out.  The banks should not have made those loans.  Since they were stuck on stupid, and made dumbass loans, they oughta hurt for it.
   Capitalism works if capital is used constructively, to finance new factories, new products, and business operations.  If precious capital is pissed away on see-thru office buildings, Ninja mortgages,  Solyndra, mortgage backed securities, dirivatives, and credit default swaps, ethanol, and electric cars, we all get poorer.
  Let's hope the loan officers responsible for lending to Detroit get fired.

Saturday, October 20, 2007

Putting a Little Pizzazz in the Family Sedan (WSJ)

The article leads off with an attractive picture of a bright red '08 Chevy Malibu.
"The everyday family sedan is undergoing a transformation from stodgy to stylish as drivers begin to demand more from their basic transportation than a nondescript appliance on wheels. "
"Industry research indicates that consumers care more about styling than they used to, whether they are buying an expensive luxury vehicle or a bread and butter sedan."
Actually, real car people know that styling is, and always has been, extremely important to all car buyers. When Detroit suits say "consumers care more about styling than they used to" it tells you why the Detroit big three are being driven out of business. The suits running them know nothing about selling cars.
Before the Katrina gasoline price shock, the big three had retreated to the niche market of big pickups and SUV's. Three dollars a gallon killed that market. The suits didn't understand that the real automobile market is for small-to-medium size four passenger sedans. Drive Rt128 and just look at what folk drive during rush hour. Mostly four passenger sedans with a just a sprinkling of pickups and SUV's. Big companies like GM cannot survive on market niches, they have to serve the mass high volume market to generate enough cash flow to keep themselves afloat. The pickup and SUV market niche isn't big enough to support a GM. Let alone a Ford and a Chrysler.

Styling sells, and what's better, good styling comes free. It costs the same to stamp sheet metal into stylish shapes as it does to stamp it into boring and dowdy shapes. You want to make money on Chevy Cobalt and Impala? Give them good exciting styling. A well styled car sells better, and sells for more money than a plain-to-ugly one.

The Detroit big three have a lot of other problems, but the lack of well styled cars is a big one, and one that real car guys might be able to fix. Chevy's problem is, out of the six sedans and six SUV's on their website, the only one I'd care to own is Corvette. Corvette is a great car, but it's a niche market, there aren't enough guys with Corvette money to support the GM behemoth. Used to be, Impala was an exciting car that everyone wanted to own. GM has to make Impala, Cobalt, Malibu, and Aveo into desirable cars or Toyota and Honda are gonna turn the General into roadkill.

GM needs to focus on restyling the bread and butter cars and stop wasting money redesigning pickups and SUVs.