Every time Nissan sells a car it averages a profit of almost two grand. Every time General Motors sells a car it loses more than a grand.
Nevertheless GM has been cutting prices. That has goosed sales and goosed losses at the same time, but the company says it’s enlarging market share. Mention market share to these guys and the lips start smacking and the saliva flows. The company is market sharing itself straight into bankruptcy. That’s why GM’s bonds are rated as junk, fit only for purchase by wild cat speculators.
Its reliance on a lineup of gas swilling SUVs and pickup trucks foretells a loss of market share even if they try to give the damn things away. Who wants all those horses under the hood when hay was going in the direction of $3.50 a gallon even befor the Russian witch Katrina paid her visit to New Orleans?
If fumbling, fuddy-duddy, time encrusted management weren’t enough of a handicap, GM’s and Ford’s pension and health benefit costs for their retirees are killing them. The estimate is that GM has two or more people in rocking chairs for every person on the production line.
These obligations date from when unions were strong and foreign car sales were weak. Now foreign cars are made in the US by non-union workers whose employees have no pensions to look forward to. Even if GM and Ford were to design cars somebody might want to buy at list price, the dead weight of those old union contracts would gradually drag them under
So the once invincible United Automobile Workers will be forced to cough up the benefits won by this generation’s grandparents. It’s cuts to save the company, cuts to save the jobs, and then cuts again until GM and Ford go the way of the big airlines anyhow.
The fall of the union should bring joy to Republican hearts. But the end of American-owned automobile manufacture may not be such cheery news, even though the Germans and the Japanese will probably build better Humvees than American companies can.
Still there is good news for GM. Its car sales dropped like a stone in August. Keep it up, fellas. You’ll break even yet.