Kyle’s Corner (FYI) Automotive musical chairs – what happens when the music stops?

February 10, 10:44 AMAutomotive ExaminerKyle Busch

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I knew something was up when about three years ago
a longstanding local dealership (New Motors) that sold
Kias, Subarus, Volkswagens, Volvos, and BMWs suddenly
lost Volvo to a Ford dealership! In the back of my mind
I thought, “If Ford goes under, what about Volvo?”

We all know that GM and Ford are in financial difficulty. The
U.S. slowdown is not doing any favors for domestic car sales.
Thus, the cash-strapped manufacturers who have been a staple
for American workers are trying to rid themselves of Saab and
Volvo respectively.

The ironic part is that Saabs and Volvos are quite likely better
vehicles than many of the main offerings from GM and Ford!

Ford has already sold off the units of Jaguar and Landrover
to Tata located in India, and GM would also like to rid itself
of Hummer and other divisions.

In theory, solid brands should be sold when they will fetch
a high price. Selling in distress will likely mean that GM and
Ford will get less and possibly much less than Saab and Volvo
are worth! Why didn’t GM and Ford put more attention into
Saab and Volvo when times were good? After all, GM purchased
one-half of Saab in 1990 and the remainder thereafter, and Ford
acquired Volvo in 1999. Both GM and Ford had sufficient
time to make Saab and Volvo work!

Concerning the situation, Automotive News reports, “Saab
and Volvo have been poorly served by their American owners.
At its peak in 1987, two years before GM took control, Saab
sold nearly 50,000 cars in the United States. Last year it sold
32,711. Twenty years ago, in terms of the profit-to-revenue ratio,
Volvo was the most profitable auto manufacturer in the world.
Now, like Saab, it's losing money.”

There is talk that the Swedish government might offer bailout
money to Saab and Volvo. After all, Swedish autoworker
jobs are on the line.

Moreover, the German government might provide money
to VW and Daimler Benz to help “level the bailout playing
field.” Other governments would then likely follow in
coming to the aid of their auto industries and their workers.

The question is, when the music stops in this automotive
bailout game of musical chairs, which manufacturers will
be left without chairs?

If numerous auto manufacturers get government and
taxpayer assistance, will the big three end up any
better off?

The big three must make big changes by manufacturing
vehicles that drivers want to buy above all others in the
market. This means that they need to come up with
completely new vehicles not just ones that are marginally
better. It might mean paying autoworkers directly to come
up with viable vehicles that consumer cannot afford to
do without!

What do you want from a future vehicle? The big three
must ask this question and get your answer in a big way!

Kyle Busch is the author of “Drive the Best for the Price…” He
welcomes your comments or car questions at his auto web site: www.DriveTheBestBook.com.
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