Gas went where it did because the people in control wanted it to go there. It is not because of any particular cause. It is almost amusing to hear the network anchor explain why this did that and caused this result. Price wars between dealers help the OEM sell more cars not fewer. All dealers pay the same per unit. Fewer dealers, fewer sales and fewer places to place inventory. It is up to the manufacturer to control inventory and production. When they have to provide incentives, it is because of a change in the economy or other factors. I have said it before, the Obama administration has an agenda and telling you that fewer dealers makes the OEM healthier is a TOTAL pile of BS. While the health of the OEM and the products that they make can certainly effect the dealer, the health of a particular dealership has zippo, nada to do with the health of the OEM. As for the fundamentally unprepared statement...., exactly what are you referring to? Was it the credit crisis, wall street fraud, $4.00 gasoline? Were you predicting gas to go from $1.50 to $4.00 in a few months? Of course not and when there is that type of wealth transfer out of this country something has to get hurt. It's not just a Detroit thing, Toyota has lost billions of dollars this year. As for the fact that they haven't ask for government money....they are subsidized greatly by the Govt. of Japan and its socialized policies that Obama loves so much.

 

Honestly I just posted to get other perspectives because as you point out, with huge companies and a huge government, it's really tough to know the facts. I don't pretend to know them. I don't disagree with you, I'm just trying to understand more.

I thought gas going over $4.00 had a lot to do with redemptions in funds of all types. Those redemptions pull cash out of investments. Any given fund will have x cash and y in stocks. Once the x cash is redeemed, fund managers have to sell. If they are selling at a loss in a broad market down turn to pay for redemptions beyond their cash, they will look for opportunity elsewhere. My understanding is that with stocks tanking many temporarily flooded commodities which is why gold and oil spiked. I thought the commodity market truly controlled the price of oil at any give point. In addition, I blame the hedge funds because the principle is simple. If they have 10 million in their fund to invest, a 1% overnight gain represents 100k minus taxes in gain. Therefore, once stocks couldn't provide this they unloaded into commodities. Anyway, I don't claim to be an expert, this is just what I pieced together.

What I meant by fundamentally unprepared was that Chrysler was hit twice as hard due to debt they carried in the boom years and the fact that the gas bubble hit harder on trucks which represented the lions share of their profit. To me it's kind of a moot point, because Chrysler wasn't even really Chrysler at this point right? It was Daimler and then it was part of a private equity experiment?

That's why I say, we can blame the government for a lot of things by creating the system. But then American folks are pretty smart and start figuring ways to use the system to their advantage. I'm assuming there is some shared responsibility due in this situation.

Just for background my last 6 vehicles were a Pacifica, Town and Country and four Rams. So you could say all my vehicle love went to Dodge, Chrysler....including the 09 Ram I bought last week.

I'm still not understanding how producing more cars than the market can bear doesn't hurt the OEM. It seems to me like they have a sales forecast at corporate. The dealers are their customers. If they produce too many vehicles, and dealers need kickbacks to move the inventory then the OEM margin is reduced and their targets aren't met right? Then lots of bad things can happen to not only the OEM, but also the dealer network, right? I'm not even getting into the impact around the factory aspect of the business which usually depends on some very tight forecasts to run effectively and profitably.

 

John,
It is good to ask questions. That is how you will learn every day of your life. Only people that don't give a dang stop asking questions. Your concept of market volumn is sound, but you must understand that it is controlled by the OEMs rate of production. There is a fine balancing act because the faster you make the cars, the larger the margin and the faster you recoop or exceed your fixed costs of operation. There are also discounts through volumn with your suppliers. Auto dealers place their orders in a dynamic que because they can place orders anytime. Many other types of motorsport dealers like watercraft, motorcycles, etc only order 1 time per year. This allows the factory to gear up based on orders placed many months before the season. Just remember, manufacturing rates and capacity is controlled by the factory not the dealers.

 

Thanks Bill, I forgot about the point where you pass the fixed costs and get into the gravy. Your perspective and information is appreciated.

 

I have noticed a definite anti-Dodge attitude develop since Dodge closed our nearby dealerships. I'm talking about the groups of farmers, ranchers, and contractors that go to the local cafe every morning for breakfast. There is a slew of Dodge trucks in the parking lot every morning now, but there may not be in a few years. Keep in mind that all Dodge dealers within 500 miles have been closed. We now have to drive 250 miles in any direction to get to the nearest Dodge dealership. A lot of these farmers, ranchers, and contractors had friends and family that worked at these Dodge dealerships, and they're angry with Dodge. There is a unanimous opinion amongst these people that they will not be buying another Dodge. So yah, there are a lot of people that are "getting out of Dodge".

 

I love my Dodge but like I said before after the way they are using this Bankruptsey to get out of contracts, dissmiss all previous lawsuits, etc and say it is a once in a liftime oppertunity to do this makes me concerned about how i would be treated if they could find a loophole with my waranty

 

Some of you guys that think decreasing the number of dealers will help the OEM bottom line still think that way? Dodge trucks will lose thousands of sales due to too few dealers too far away. It would have cost Dodge nothing to leave those dealers alone. Obama and his clan have a plan and they are running the show now from a position of total ignorance. Not going along cost Wagner his job. I hope to hear from him in a great interview soon about the Govt thugs. Don't forget, all of the GM shareholders will have worthless stock on Monday or Tuesday next week. They will issue new stock to the people they want to take care of.

 

Interesting article on CNNMoney regarding GM.

Quoting the last paragraph

"And finally, make sure you do your homework. Consumer Reports recommends eight GM cars out of the 41 GM models that were tested. But compare that with Chrysler recommendations (zero). Ford, in case you were wondering, has 16 recommended vehicles out of 23. "

Link: http://money.cnn.com/2009/05/29/pf/s...ney_topstories

 

I know that many people swear by Consumer Reports, but I don't. I subscribed for many years and got tired of advice that was IMO poor or even wrong. They never tested the upper end high quality items that I shopped for and for cars, their info was either flawed or intentionally schewed. They always spoke poorly of Dodge trucks when compared to Ford and Chevy. I am on my third Dodge Ram (95, 02, 09) and they beat the stuffings out of the others. My wife always has a Tahoe or Yukon and they have been MUCH more trouble than my Mopars. My 02 was the best vehicle I have ever owned, but it is covered in black dots all over the CR Guide. My 02 only went in for service 1 time in the 135K miles that I put on it. It was for the side mirror recall! I did replace the TPS myself for $30 at the 130K mile mark.

 

Today on the News the leader of the CAW Ken Lewenza said the money the government lent Chrysler in Canada was just that a loan and he intends to see it get paid back. When the minivan saved Chryslers but years ago we paid them back way before the due date.
I don't know why if we are not bankrupt in Canada don't the plants in Canada run, I heard they are running real short on minivans and considering firing it up soon. Realizing was not a good move to shut down plants while in bankruptcy, although orders are still being taken. I hope the suppliers that they rely on are still around...I don't know if they can afford it they have been one of the worse hit over the years, always gets down to the supplier in the end, the rear end.