The slow, agonizing death of Detroit

The sad story, nicely summed up:

...The Detroit Three have repeatedly squandered opportunities since the Japanese export surge of the 1970s, followed by the Japanese North American investment surge in the ’80s, in competing head-to-head in the mainstream car market.

Instead, their innovation was to create the minivan, upscale pickup truck and SUV markets (protected by a 25-per-cent tariff in the U.S.) while suffering ongoing attrition to the import brands in the passenger car market.

In the U.S., the Detroit Three market-share in passenger cars continued down the slippery slope, from about 80 per cent in the 1970s, to 40 per cent in 2007, and less again in the overall market plunge of 2008. With the recent collapse of the gas-guzzler markets they dominated, the Detroit Three are now forced to come late to the mainstream car market.

Despite the Detroit Three’s claim that they have the right business plans and need only temporary assistance, the evidence based on a 30-year history is not there. The restructuring plans focus on cost reduction, a necessary but insufficient condition for success. Where they are not credible is in their current and prospective product offerings — what consumers will actually buy. Their most recent models include nostalgic remakes of 1970s performance cars. General Motors’ “game-changing” electric Volt will command a $40,000 price tag, a real buy in tough times [emphasis added]...

Andrei Sulzenko headed the automotive sector in the federal ministry of Industry in the 1980s and has followed it actively since then.

As for their cars today...Meanwhile, the cliff gets ever closer:

Chrysler, Ford idle factories, GM delays new plant

[...]

Attempting to cut costs, GM was halting construction of a plant tied to one of its most important projects, the Volt [emphasis added]...

GM denies merger talks with Chrysler

How long can all this go on? The governments in Ottawa and Toronto must be squirming painfully on the tenterhooks; some really scary stuff:

Bush ‘Worried’ About ‘Disorderly’ Auto Bankruptcy

[...]

White House spokeswoman Dana Perino said earlier today that the administration is “very close” to deciding on a bailout plan for the U.S. auto industry and managed bankruptcy is one option.

“The president is not going to allow a disorderly collapse of the companies. That is not an option,” Perino told reporters at a briefing.

Asked if managed bankruptcy is an option, Perino said “it’s in the spectrum.”

“There’s an orderly way to do bankruptcies that provides more of a soft landing,” Perino said. “That would be one of the options. I’m not saying that’s necessarily what would be announced.”

“We’re very close” to a decision, although there will be no announcement today [Dec. 18], she said. The administration is “taking a few days to get information from the companies,” she said...

All the bad news is tagged Carpocalypse Now.

Mark C.

Posted by markc at December 18, 2008 06:35 PM