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Honda, Toyota could fail if Big 3 fail

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posted on Dec, 13 2008 @ 03:45 AM
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DETROIT (Reuters) - If a chain is only as strong as its weakest link, Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) and Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) have a problem in the U.S. market directly tied to Detroit's financial crisis.
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Fifty-eight percent of General Motors Corp's (GM.N: Quote, Profile, Research, Stock Buzz) suppliers and 65 percent of Ford Motor Co's (F.N: Quote, Profile, Research, Stock Buzz) suppliers also supply Asian manufacturers. By comparison, 37 percent of GM's suppliers have ties to European automakers.
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"Honda and Toyota themselves have started to say if these American automakers start to fail, and fail quickly, it will take out the supply base they all depend on," said David Kudla, chief executive of Mainstay Capital Management.

www.reuters.com...

Wow, it just keeps getting deeper. I predicted the Dow would drop to 5920 and gas would be $1.59/gal months ago. These are the beginning 2 years of the depression.

What would you do if you couldn't buy a new car, or couldn't go to a dealership?

Can you imagine the ripple effect occurring throughout the US as companies do not receive funding to correct for the US failure to regulate the mortgage businesses?

Is there enough money in the US to mitigate the damages?

Can we really afford to let the Big 3 automakers fail?



posted on Dec, 13 2008 @ 03:53 AM
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Can we really afford to let the Big 3 automakers fail?


Well imo the foreign auto makers just build a better car I have an 08 hyundai and I love it and I have never met another foreign car owner that didn't like theirs either so really if the shoe fit.... oh nevermind you get the idea.



posted on Dec, 13 2008 @ 04:35 AM
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If Honda and Toyota fail.... they'll just do it in a more efficient manner than the Big 3.

Their failure is also guaranteed to get better gas mileage as well



posted on Dec, 13 2008 @ 06:27 AM
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THE Japanese will be hurt if the big three go under but they have built cars in Japan for decades and could import from there until the suppliers worked things out. My Hondas (Acura TSX) was built in Japan, the other (Pilot) was built in Canada.

After WWII The big three chose to remain profit driven instead of quality driven as the Japanese car companies did.
Engineers are rewarded by cost saving design changes vs. quality or productivity enhancement designs.

The big three had the opportunity and kicked out the guy Deming who told them that this loss of quality and loss of subsequent business was inevitable. He was kicked out because he said that the profit driven system wouldn't last and that they had to change their way of management to adopt his system.
Management refused and Deming was let go...and where did he end up ?

In Japan...and the rest is history.

The Americans build quality vehicles but the Deming approach of constant product improvement adopted by the Japanese has proven its effectiveness in winning back customers time and time again.

I own a 1975 Honda CB550 Motorcycle and two Honda cars (Pilot and Acura TSX)that are all well built,reliable,economical AND fun to drive IMA !

I also own a 1998 Jeep Cherokee and the contrasts in build quality, fit and finish are really noticeable in contrast with the Hondas I own. The Jeep is reliable due to it being derived from WWII era Jeep drivetrain which shines offroad/in deep snow but it's also noisy and fuel inefficient as a result.



posted on Dec, 13 2008 @ 06:41 AM
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All the car makers can't fail and disappear, people will still buy cars.

Toyota will not go under, and if one or two of the big 3 go down, Toyota will probably increase output due to demand, if anything.



posted on Dec, 13 2008 @ 12:01 PM
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screw the big 3, theyre in this for their own reasons, its their own fault, and too bad for all the others that collapse afterwards

if they invested better in new technology and didnt suppress so many incredible thinkers they wouldnt be in this situation

they deserve to fail so they wont have the power to oppress anymore and we will finally be able to bring out the technologies needed to move forward

for years there have been electric cars and new energy technologies but they were ignorant and ignored them, the U.S.A is a machine and no failures are going to wipe out the U.S.A or china or japan or any other big automakers, because all that will happen is the new technology will take their place

maybe there will be a few years of hardship

but too damn bad, shouldve happened long ago

the only reason anyones even considering this dumb bailout is because we already approved an even dumber one


and all bailing out these morons is going to do is prolong the ineveitable

gas at less then 2 bucks, great thats how it should be, who cares if it goes back up or drops to the bottom, the quicker we end our dependance on oil we can move this civilization to a better path


many people are terrified right now because they think that its the end of everything,

what they are forgetting is at every end there is a new beginning



so let em fail and lets get this party started



posted on Dec, 13 2008 @ 03:48 PM
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Good. I want to see them all go down. We should've been off petrol-driven cars for decades and using free energy alternatives such as the aircar. I'm tired of this world the way it is. There is too much injustice in this world. I don't want everything to 'continue as normal', it just makes me feel sad for the world.

On a side note, Holden in Australia are owned by GM, so when GM goes down, Holden goes down too. They are a h-u-u-u-g-e brand here Down Under.

But I don't care. It's time for a massive paradigm shift. Regardless if it turns out for better or worse, I can't go on in this world the way it is.

[edit on 13-12-2008 by RiotComing]



posted on Dec, 13 2008 @ 03:51 PM
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If they do let the automakers fail they also failed the citizens of the United States. Who do they blame for no jobs when they spend 800Billion on CEOs of banks but can't spare 17Billion of it to save American workers, and the American Car Industry. For god sakes this is where the auto industry began, is it really going to be where it fails as well?

Obama will never let that happen in my opinion. He plans lots of funding for electric cars, which will be handed to GM. Do not fear the fall of the autos, it would be a disaster that even politicians would feel. They wont let it happen.

Toyota and Honda do indeed have a large number of their vehicles produced in America, however if they are forced to move production I don't believe it will cause them to fail. They will be the last man standing.



posted on Dec, 13 2008 @ 07:11 PM
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reply to post by Jim Scott
 

The very principles of market economy draw a different sketch, though. The demise of the Big (Trouble) 3 would not itself affect the demand for cars in the USA, and the foreign automakers would get happily busy to meet the demand. The world production of automobiles should remain the same, but it would not happen overnight. The interim period could be really hard for the automotive parts manufacturers.

Another problem is how big the domino effect would be in case the automotive triumvirate passes away, because there are many domestic companies out there that depend on doing business with Detroit. They in turn have their own suppliers. The domino effect may decrease temporarily consumer purchasing power, which is already down, and that may last for some time. So foreign market-hungry Toyota and Honda have every reason to watch the bailout news closely.

The Japanese Emperor should send us an economic stimulus check to keep the US consumer and the Toyota execs happy.



posted on Dec, 13 2008 @ 07:22 PM
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Let them ALL fail. Many jobs will be lost yes, but that means there's so much more potential for all of the new auto companies coming out with MUCH BETTER technology. I forget what it's called the x-competition or something similar, but many new car companies are about to bring out electric cars to the masses. If the big 3 fail, that means these will be mainstream sooner. The companies will get huge and the unemployed can find new jobs


I can't believe nobody else is thinking along these lines. Sure there will be a year of downtime, but it'll be well worth it! Is there something I'm missing here?!



posted on Dec, 13 2008 @ 07:34 PM
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What people doesn't understand is . . . that one of the reasons of failed sales of car is due no only to a saturation in the markets in the US by foreign car under the propaganda that "they are better" but also and most lately due to the economy freeze on credit and loans.

Even if the big three goes down the other car makers will also face the tightening pockets of the American consumer.

As Americans keep losing their jobs, face foreclosure and hardships so the economy will be feeling the pinch.

We are a nation of consumers, our economy for the last decades has become nothing but a nation of consumerism with no industrial base left and people living in debt, credit card and loans.

Now many are defaulting and so the economy can not survive if consumers can not spend.

Banks are also at fault as they got bail out with tax payer money instead of perpetuating the consumers debt they have frozen the credit because the large amount of people defaulting.

So at the end it will not be only the car makers, US or foreigns that will be affected but everything that survives on consumer spending.



posted on Dec, 14 2008 @ 10:35 AM
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i hope this doesnt come off as trolling but im being surprised this isnt much more focus on this thread, many have made great statements here, but im surprised there isnt more support for or against such a important situation

makes me wonder if the propaganda machine of the big 3 is working and gaining support


or if people honestly just dont give a damn anymore because they know no matter what the people say the government is going to do exactly what they want and we just have to live with it


now even though this bailout failed

the government is still saying they will find a way to get the auto industry help

what im curious of and need to do more reading and research on, is how they plan on doing that without a bailout, what are the governments other alternatives to keep these morons(automakers) in power



posted on Dec, 14 2008 @ 10:51 AM
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I'm interested to know if there is a way out at all for car manufacturers.

Car manufacturers and new car dealers were already having a tough time selling new cars. Their ticket to business was to sell cars on monthly repayments (loans). With the 'credit crunch' the banks won't give out these loans so easily so it will hit the big 3 and their dealers REALLY hard (enough to sink the ship). In fact, I can't see how they can oeprate business anymore. Especially with people becoming jobless, more protective of the money they have saved I find it highly possible the the chances of people walking into a dealer and paying $30-40,000 out right have become slim at best.

Even if you give the big 3 a cash injection it will not solve the problem. The only thing it will give is a big bonus to everyone before the ship sinks.

Furthermore, cars being powered by alternative energies such as water, hydrogen, electricity etc. have been INTENTIONALLY surpressed by the big 3 for decades. That helps oil companies, supports war in other countries etc. So I have absolutely no sympathy for them.


Their ONLY way forward for these monsters is to produce a car that runs off water or electricity with speed and acceleration comparable or excelling petrol alternatives (no hydrogen - unless it is made on-board - because they will charge a fortune at fuelling stations for it).

This is the ONLY way customers will come back to buy new cars in this time and age that would be sufficient for the big 3 to continue with their 'business'.

[edit on 14-12-2008 by Jinni]



posted on Dec, 14 2008 @ 01:09 PM
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Originally posted by Dramey
i hope this doesnt come off as trolling but im being surprised this isnt much more focus on this thread, many have made great statements here, but im surprised there isnt more support for or against such a important situation

makes me wonder if the propaganda machine of the big 3 is working and gaining support


or if people honestly just dont give a damn anymore because they know no matter what the people say the government is going to do exactly what they want and we just have to live with it


I think it's a combination of knowing the gov't will do exactly what they want and just sheer exhaustion. As much as I think the economy is an urgent issue and needs to be discussed, sometimes I'm just tired of it. Sometimes I just want to go back to not knowing. It's exhausting, mentally, to think about how much money is involved here and what it's going to mean to my child, to my child's children, to their children.


Originally posted by Jinni
I'm interested to know if there is a way out at all for car manufacturers.

Even if you give the big 3 a cash injection it will not solve the problem. The only thing it will give is a big bonus to everyone before the ship sinks.


I personally do not see a way out for the car manufacturers, not in any way that will allow them to continue operation as they've been for the past decade. The demand isn't there.

I see three possible outcomes:
1. File Ch 11, restructure, and get out from under some of their debt along with massively cutting the workforce so they can meet the nearly 40% drop in US demand. Deal with the CDS unwind.
2. File Ch 7, let the healthier companies absorb the carcass of the dead companies. Deal with the CDS unwind.
3. Give them the $15B and wait 3 months for them to come back for more, and then for more again, building us a larger, hungrier AIG. Deal with the CDS unwind.



posted on Dec, 14 2008 @ 02:03 PM
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I disagree with the post.

If one or more of the "BIG THREE" fails, then, guess what, cars will still be purchased.

If two or three of the big 3 fail, cars will still be sold.

As for the suppliers, it will put them in a bind, but only just so much.

Allow me to explain, if cars are sold, they must be built and there must be parts suppliers,

I am sure the suppliers can survive on, weather the cars sold are big 3, or another company.

What I mean is if GM does not sell 3 million cars, then toyota/ford/honda will build and sell those cars/trucks.

The cars and trucks that are sold will need parts suppliers......................

You get the point.



posted on Dec, 14 2008 @ 03:37 PM
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Originally posted by mrmonsoon
I disagree with the post.

If one or more of the "BIG THREE" fails, then, guess what, cars will still be purchased.

If two or three of the big 3 fail, cars will still be sold.

As for the suppliers, it will put them in a bind, but only just so much.

Allow me to explain, if cars are sold, they must be built and there must be parts suppliers,

I am sure the suppliers can survive on, weather the cars sold are big 3, or another company.

What I mean is if GM does not sell 3 million cars, then toyota/ford/honda will build and sell those cars/trucks.

The cars and trucks that are sold will need parts suppliers......................

You get the point.


I wouldn't bother buying a 'new' car. They are engineered to NOT be as lasting as they once used to be.

Mainly the quality of the parts are designed so they have VERY limited lifespans.

This is part of their business plan and your theory supports it: main business from after-sales support.

That's why I hear and see so many people with new cars paying ludicrous shell loads of money every year during service.



posted on Dec, 14 2008 @ 04:10 PM
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reply to post by Dramey
 


There are many incentives for the US Government to keep the domestic car makers in business. One of them is this:
www.usatoday.com...


The Commerce Department reported Friday that the trade deficit, the gap between imports and exports, jumped 9.3%, to $63.1 billion. The imbalance was much larger than the $60 billion that had been expected.


Now imagine that the USA is no longer manufacturing cars. But the transportation infrastructure update was build for cars and trucks doing the traveling and hauling. That means Americans really depend on car transportation and would have to buy their cars from elsewhere. The trade figures would be staggering. In 2006 there were 16,559,970 new passenger vehicles sold in the USA for an average price of $28,000. With the domestic automakers gone, about $464 billion a year would go overseas to the bank account of foreign companies. Since the Big 3 supply 60% of cars sold in the USA, the trade deficit would increase from $63,1 billion to $ 341.5 billion with its consequences.

So there are many aftershocks to deal with, if the Big 3 fall with a ground-shattering thud.

When the USA entered WWII, the automotive industry re-tooled in a short time to support the war. Some national security experts wouldn't like to see the US industrial infrastructure getting weaker. Throwing hamburgers & fries at the enemy won't win WWIII.


[edit on 12/14/2008 by stander]



posted on Dec, 14 2008 @ 07:42 PM
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we can not bail every compagny
it will only had dept to our deficite



posted on Dec, 14 2008 @ 08:09 PM
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We already know that in 2009 for sure, auto sales will be drastically reduced. Demand will be less, GM will be out of the picture, and consumers will compensate by purchasing from other auto manufacturers. Toyota for example may have anticipated a sharp decline in sales, but if GM fails, then the Toyota sales may in fact increase.

Keep in mind that someone will start again with the GM assets. Hopefully someone who can produce quality autos that meet consumer needs, and not be hamstrung by the UAW. Not just four or five of the same piece of **it with different bumpers and grills, sold under different name badges.

The two most successful autos ever sold were the Model T and the Volkswagon Bug. Cheap, reliable, functional, economical, simple, basic transportation. In their day, they were everywhere. Oh, the profit margin wasn't as much as say an H2 Hummer, but those cars were the bread and butter of those companies.

You would think - that someone besides me figured that out. And I'm not even in the business.

If GM, and Ford produced a great small car with those characteristics, they wouldn't be in this bind.

I don't worry about Toyota or Honda. They're currentlyu successful because of a good business model, good product mix, high quality, economical, and good resale value.

When you give folks what they want, you have no problems.



posted on Dec, 14 2008 @ 08:43 PM
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reply to post by stander
 


A big-3 bankruptcy would not at all stop production of US-made cars. Sure some plants would shut down but have no doubt that the profitable ones will remain in business.




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