Romney says Big 3 should just go bankrupt

[FoMoJo]

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research ? on new energy sources, fuel-economy technology, materials science and the like ? that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

This makes sense to me. 

There is something to the perception that grabbing short-term profits will, ultimately, lead to a collapse while preparing for long-term product solutions will stabliize the industry.  From what we've seen, it's the short-term profit grabbing over the last 30 years that has led to the collapse of the domestic auto industry.  It's only in the last 10 years that the corporate hot-shots have seen the chasm that they were lurching towards and only in the last 5 years have they been willing to turn towards investing in the future.  It may be too late.

[SVT666]

Hmmmm...I wonder what will happen to those new CAFE standards what with the automakers being broke and unable to spent money on R&D.

[FoMoJo]

Hmmmm...I wonder what will happen to those new CAFE standards what with the automakers being broke and unable to spent money on R&D.

That's what the other $25 billion is for. 

[Vinsanity]

The biggest problem with Chapter 11 that everyone seems to forget is that the majority of the buying public will steer clear of any Ford or GM dealer lot because they will think GM and Ford are dead or dying.  Perception is reality.

Unfortunately the buying public appears not to know that Ch.11 means that a company continues it's business operation while restructuring.

[SVT666]

Unfortunately the buying public appears not to know that Ch.11 means that a company continues it's business operation while restructuring.

You got it.

[280Z Turbo]

Yup. It wouldn't matter if they restructured and built the best cars on the planet at a reduced cost. This situation will keep people away, and added to the decades old perception of building crap (even if mostly undeserved for teh last 5-10 years) AND a credit crunch making it harder to buy ANY car, and it's simply a fact that there won't be enough buyers for their products to keep them afloat even if they do everything right vis a vis a bailout and restructuring.

There's already tons of people that won't buy a domestic because they had an old Corsica that lost its paint, or a Chrysler minivan that went through 3 transmissions, or a Ford Aerostar that rusted out in a couple of years.

I'll bet that 95% of the people driving Camries and Accords would be just as happy with the new Malibu if they gave it a chance, but they never will.

[Galaxy]

The biggest problem with Chapter 11 that everyone seems to forget is that the majority of the buying public will steer clear of any Ford or GM dealer lot because they will think GM and Ford are dead or dying.  Perception is reality.

The big problem with Chapter 11 is that the bankruptcy judge can throw out existing contracts including any warranties.

[traumadog]

With or without Chapter 11, all of the domestics will HAVE to get much smaller in North America.  The question is, where's the breaking point between size and profitability.  And with Waxman recently installed in the Senate Energy and Commerce Committee, I'll wonder what stipulations to that $25 Billion will have (e.g. his home-state demand of 50 mpg CAFE average by 2020).

[FordSVT]

The big problem with Chapter 11 is that the bankruptcy judge can throw out existing contracts including any warranties.

I'd say the last thing a bankruptcy judge is going to do is void consumer warranties. They legally could, but if you're going to do that you might as well just shut them all down now and sell them off as scrap. Chapter 11 would be a hard enough public relations hill to climb without millions of their customers getting the shaft as well. There is not even a 1% chance that this will happen as long as the companies remain operating.

[Vinsanity]

I know I don't speak for the average consumer, but I'd rather buy a car from a company that was restructuring under Ch.11 than from a company that got a $25b loan with no clear direction on how it's going to save itself.

[hotrodalex]

I know I don't speak for the average consumer, but I'd rather buy a car from a company that was restructuring under Ch.11 than from a company that got a $25b loan with no clear direction on how it's going to save itself.

I agree. There's a better chance that the company will improve with Ch. 11 than a huge loan.

[Tave]

I agree. There's a better chance that the company will improve with Ch. 11 than a huge loan.

I think there's little chance the companies will improve in any case. Maybe all the publicity will tickle the patriotic bone in many Americans, but I don't see why people would buy the products after restructuring or a loan when they didn't buy the products before the companies were saddled with either of those negative circumstances.

[hotrodalex]

I think there's little chance the companies will improve in any case. Maybe all the publicity will tickle the patriotic bone in many Americans, but I don't see why people would buy the products after restructuring or a loan when they didn't buy the products before the companies were saddled with either of those negative circumstances.

Because they like the car?

[Tave]

Because they like the car?

They've been fielding competitive products for some time now.

[FordSVT]

^But it's only been the past year or two that anyone's acknowledged it. It will take several years of magazines and consumer reports and the like driving it into the public consciousness.

If they can just get people to put cars like the Malibu and Fusion and new Fiesta on the test drive list alongside the Civic and Camry and Accord, it will go a long way. Right now, people aren't even taking that step, good car or not. They play it safe.

Mind you, this isn't ALL people, the automotive market is gigantic, and about half the public didn't buy a Honda, a Toyota, a Ford or a GM last year.

[Gotta-Qik-C7]

There's already tons of people that won't buy a domestic because they had an old Corsica that lost its paint, or a Chrysler minivan that went through 3 transmissions, or a Ford Aerostar that rusted out in a couple of years.

I'll bet that 95% of the people driving Camries and Accords would be just as happy with the new Malibu if they gave it a chance, but they never will.

Very true. A lady friend of mine,who own a Scion XB, swears that she won't buy another American car! Ever! All the trouble she went through with her last American car (Ford Focus) and all the ones before it have left a bitter taste in her mouth. Even after explaining to her how the Big 3 are producing better cars than they were back then she still won't have anything to do with American cars. 

[hounddog]

The big problem with Chapter 11 is that the bankruptcy judge can throw out existing contracts including any warranties.

Yes and no.

While he may have the authority, which I think is debatable, the resulting zero consumer confidence base would make the Chapter 11 proceedings null and void before they could even begin.

It would erode any opportunity for restructuring, and would damage the remaining American manufacturers beyond repair.  It would be political suicide, and there might even be some type of civil or criminal ramifications to such a negative action.