Are you tired of grown men flying on private jets to ask for bailout Jello? Yeah, I am, too. So, what should happen? That’s pretty easy to answer: Someone’s packing shop and going home. Allow two of the three automakers to fail, file bankruptcy and restructure (which isn’t likely). Ford is the healthiest of all three automakers. It has $29 Billion in cash and credit — Enough to last the automaker through most of 2009.
Recently, I created a scenario like this and I must admit that it’s very possible. If congress does not provide the $25 Billion (and they shouldn’t), General Motors and Chrysler will collapse by year end. Because they will run out of money, a restructuring for either company would be impossible.
Enter Ford
Ford is really the wild-card in the industry’s crisis. It appears the company will have the last laugh, you know? Here’s an opportunity for Ford to become the #1 automaker — In fact, the only automaker. Yep, they would work out a deal to acquire GM and Chrysler on several conditions: They would have to sell 3 brands and 10 plants.
Through the guidance of Alan Mulally (no one should underestimate this man — I believe this is his moment to shine), he’ll make the tough choices on which brands to keep and sell. He’ll choose the ‘best-of-market’ as much as possible and keep on a lackluster brand or two for refining later. I’ve already suggested to Ford that they sell Volvo to Honda or even BMW. It’s a premium brand that deserves a premium home. The company should have never bought Volvo. Never. I’m still surprised the Ford family even allowed Jacques Nasser to go on a car binge like he did.
In case you’re wondering, the brands and plants sold off by Ford will most likely end up in various hands. The most comforting news is that the affected brands will still live on — But only under a different company. Yes, boys and girls, that means Ford will not be the only game in town. There will be at least 3 startup auto companies in 2009. They’ll be nimble, innovative, creative and forward thinking. They will immediately re-tool their factories and modernize manufacturing processes for the best efficiency possible.
What will the startup automakers mean for Ford? Fierce competition! The startup automakers might be small, but they’re also ran by a new breed of thought leaders and visionaries who aren’t afraid to push the envelope. They will certainly tap dance very well with Ford, and in some cases, out dance them on technology. However, with the hands of Mulally at the helm, we’ll be quite proud of the ‘new Ford.’
Let’s make sure Congress does not give the automakers a handout. Let the industry figure out their turnaround and make their survival possible. Just keep in mind that the scenario above is the likely outcome. You read it here first.
Dude – wake up. You are totally clueless on the auto industry.
The big three have 50% of the sales, no consumers actually do value their products.
Hybrids? They have them. And anyhow, they aren’t the answer or problem. Toyota spent more on the big Tunda truck than Prius. Honda pulled the Accord Hybrid. Hybrids are only 2.5% of the market. Not exactly the problem.
Get a clue. If you can read, you have no excuse.
Ahndymac,
I’m not surprised by the automakers’ ‘destruction of capital’ over the past few decades. There’s been a lot of misteps over the years. Now, its clean up time. Detroit has seen automakers fail and merge before.
I think General Motors and Chrysler are on their way out just like Packard and others from the past. It’s just business.
Hey – total agreement over here, did you see the post about automakers capital destruction? If they’d just spent all the money on acquiring other auto company shares, they’d be MUCH better off.
http://www.willwilkinson.net/flybottle/2008/11/17/breathtaking-capital-destruction/
Can’t believe the government is even thinking of throwing more money down this well. Do you want a bankruptcy now, or in 6 months? Seems to be ther offer.