GM and Chrysler Face the Music
I just don’t get it. For many years now I’ve often wondered how our North American car companies were able to sell so many cars. You see I’m not a car person. Oh I have some cars, however all they represent to me it is a means of getting from A to B. Needless to say through the years, I’ve come to appreciate that not everybody thinks about cars the way I do. For many of you a car is an extension of your personality.
So it is very difficult for me to understand totally why both the Canadian government and the American government are reaching out to save the North American car industry. Oh I understand, the economics behind doing it. It’s completely obvious; with the automotive industry being the largest industry in Ontario and one of the largest in the United States one of the cheapest stimulus plans that government can enact would be to keep these automotive companies going.
Last Monday, we found out that both the Canadian and American governments are not willing to bail out these auto companies without conditions. The Canadian and Ontario governments are going to grant loans to General Motors and Chrysler Canada of up to $4 billion depending on their restructuring plans. The American government is going to do the same type of thing giving Chrysler 30 days to get their restructuring together and GM 60 days. However unfortunately for many in the auto industry, the American government did hold out the spectre of bankruptcy.
Simply put it wasn’t a good day last Monday. Any time anything big happens like this in the news media, you can expect our stock markets to go down. That is exactly what happened. For many of us who are hoping that the problems of the financial meltdown were over the specter of two big American car companies going into bankruptcy reminded us that we are still in a once in a 70 year financial meltdown. President Barack Obama always promised none of this would be easy and when it comes to our car companies in North America he sure is right.
Does that give you a lot of confidence to go out and purchase another vehicle? Do you feel like going out tomorrow to your nearest Chrysler or GM dealer and purchase one of those vehicles? I don’t think so. In fact I’m sure it is the other way. Of course our government officials thought about that. The American government is guaranteeing the warranties on both Chrysler and GM vehicles going forward. However something tells me that none of this is very good.
My experience with North American vehicles has been very poor. In fact I suppose I am their very worst nightmare with regard to being a customer. I bought my last American car 25 years ago. It lasted only 156,000 km. It was costing me so much money I knew I had to get rid of it. At the time I felt I should buy a Honda Accord because they had such a good reputation and I didn’t care what the car look liked. All I wanted was a reliable vehicle and it seemed to me at the time that the Japanese vehicles were built better than our American cars.
It’s a long story now. That Honda Accord lasted 450,000 km. After that I bought a Honda Odyssey, which is now 14 years old and has 480,000 km on it. That is not to say that there are no problems with Honda vehicles. However I have always said that I will never buy another American car and regrettably I still feel that way. To me they were building vehicles with built in planned obsolescence. I left them in my rearview mirror a long time ago.
It never bothered me that some people might say that I was not supporting my neighbors by not buying a North American vehicle. Of course the reason was that those same neighbors were eating food imported to Canada from far-off shores. In other words with Canada having a policy of importing cheap food and me being a farmer I did not see any hypocrisy in me buying a foreign vehicle. That holds true today as well with all the cheap food imports from places like China and India.
Still, not everybody feels the way that I do. Many of my friends own and want to own North American vehicles. It’s pretty clear that letting this industry go will have far-reaching financial effects throughout our North American economy. The problem is of course nobody knows if the actions from the Canadian and American government will work. With India set to export the Tata Nano ($2500) to North America their problems might only be starting.
You might ask will Ford benefit from this? They have not asked for any government bailout. However I’m sure their sales figures had been disappointing too. I hope both companies Chrysler and GM get their restructuring plans together because if they don’t our economic landscape looking forward gets just that much gloomier.