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Consumers More Intelligent Than Automakers Think

“Little Three” Detroit automakers seem to be consumed with fear that people would not purchase a new car from an automobile manufacturer that was or has gone bankrupt and that the fear of bankruptcy is scaring buyers away. I think this just shows how out of touch that Detroit is with the American buyer.

It is not the thought of a car marker going bankrupt that is keeping people away from showrooms. Hey Detroit, maybe it is:

  • The fear of job loss.
  • Economic doom and gloom.
  • Low gas mileage cars for sale.
  • Can’t get financing to buy them.
  • Lack of innovation.
  • Realization that the cars that come from Detroit are full of cheap plastic.
  • Years of not being treated like a valuable customer when a problem with the car occurs.

And Detroit, before you get all high and mighty with yourself, look around, other car maker sales are down as well.

Just yesterday I was sitting with my cousin who was born and bread in Detroit, who always buys Detroit made cars and even he was saying he had no sympathy for Detroit car companies.

“I’ve always bought Detroit cars but not anymore, the current car I’ve got I’ve had to go after them under lemon laws to try to get my check engine light fixed. Instead of fixing it they’ve given me such grief and run around I can’t believe it. And a friend of mine had an engine go on his Toyota shortly after the warranty ran out and the Toyota dealer replaced it, no problem.”

I’m not sure how giving the carmakers a bailout is going to even address those issues and Detroit, that’s the problem.

If you want to make sure that people will still flock to you if you go bankrupt, which you probably should to restructure your legacy obligations, then simply create a third-party trust fund to pay into for warranty service liabilities. That would go a very long way to ease purchase worries that you think people might have.

And would your bankruptcy potentially impact the retirees that count on you for full medical care, it probably would but the underlying issue here is that it is a promise that should never have been made to employees, at all. Promising employees any sort of lifelong benefit is irresponsible unless you already have the money set aside to meet that obligation. If not, then those promises were nothing more than empty promises.

When I bought a new car last year, I looked at domestic cars and foreign cars, which are also made in America, and I bought a Honda. You know what, Honda could go bankrupt today and I just have ten times more confidence that they would make provisions to treat their customers with grace and consideration. I’m not sure that you guys in Detroit deserve that kind of respect and loyalty from the people that have purchased your cars and trucks over the past decade.

Big Three Bankruptcy

You know Detroit, you can continue to spend tens of millions in lobbying Washington and trying to paint a picture about how bailout money will hurt your workers but let’s be real here. Your financial dilemma did not just happen, it has been brewing for years.

If anyone has let down your workers and retirees, it is only you. Failed and arrogant management has continued practices and ways of doing business that have lead to legacy obligations and commitments that simply can not be afforded in this economic winter. That is not the fault of the tax payer.

I think taxpayers would be more willing and supportive of your case if you actually had a plan about how to money would be used to restructure your businesses and lead us forward with quality products into a new age. But what am I to think when I hear you say that in this economic climate that you are going to have to cut way back on research and development. What!

It is exactly research and development that needs to be ramped up to lead us where we want to go in safe, fuel efficient cars and trucks.

Hey Detroit, Lead, Follow, or Get Out of the Way. Sound familiar?

Photo by Derek Farr

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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