Chrysler LLC, awaiting word on a federal bailout, said Wednesday it will idle all of its 30 plants for at least a month in an effort to bring output closer in line with plunging demand for new cars and trucks.
The privately held carmaker said it will shut its assembly lines at the end of Friday's shift and keep them closed through at least Jan. 19, extending a holiday shutdown that was already put in place.
Separately, Ford Motor Co. announced that it will shut down most of its North American assembly plants for an extra week in January, according to the Associated Press.
It's no secret that the Big Three are hurting, but the situation is getting particularly bad in Detroit, which hasn't received any help from Congress or a firm commitment of aid from the Bush administration.
Treasury Secretary Henry Paulson has happily doled out billions to the greedy pigs at AIG, but seems reluctant to provide General Motors and Chrysler loans for a fraction of that amount. (Ford has said it only wants a line of credit from the feds as a backup if things really go south).
Every day, more bad news seems to be arriving about the state of the economy. Companies are downsizing, cutting back, or going out of business.
Detroit's problem is that automobiles are major purchases, and not many Americans are in the market for a car or truck right now. Even people who want a new car may not be able to get one because banks are reluctant to provide financing except to those people who already have really good credit.
Consequently, GM and Chrysler have started singing the praises of credit unions, which are in great financial shape and still have money to lend. This was posted on Chrysler LLC's blog
December 17, 2008 9:15 AM
No Credit Crunch at Credit Unions - Auto Loans Available
Mike Ellis - Editorial Director - Online Media
Tough time to get an auto loan?
Not at credit unions. They’ve avoided the subprime mortgage meltdown and other risky investments that have crippled many segments of the financial services industry, said David Adams, President and Chief Executive Officer of the Michigan Credit Union League.
“One of the critical things affecting auto sales, as you all know, is the lack of affordable financing, especially for people who have a few blemishes on their credit scores,” Adams said. “Credit unions are in a position to lend this money because their structure as not for profit cooperatives,” he added.
Credit unions are in a position to lend. And to sweeten the deal, Chrysler has joined the “Invest in America” credit union loan partnership, which offers affordable financing and additional credit union cash discounts of from $500 to $1,000 on most Chrysler, Jeep or Dodge vehicles. The new discount is in addition to most existing cash discounts.
Regular readers of the NPI Advocate know we've been touting the virtues of credit unions all season long, since before Washington Mutual collapsed. Especially in these tough economic times, it makes no sense to stick with a bank. Credit unions have better rates, lower fees, and superior customer service. And through the Shared Branching network, they match the convenience of banks.
A partnership with credit unions isn't going to save GM or Chrysler, though - they're in serious trouble.
Without help, they'll probably have to go into bankruptcy, which would have a devastating ripple effect on our economy. People cheering for the demise of GM and Chrysler need cold water splashed on their faces. The failure of either company would have a domino effect. Suppliers might be forced into bankruptcy, and the businesses that depend on those suppliers likewise crippled, and so on.
At this point, any money provided by the Bush administration to GM and Chrysler is likely just to be temporary, short term assistance.
Something more substantial will be needed as a followup, and that aid package should have stringent conditions set to shake up Detroit's rusted culture, to stop nonsense like General Motors' 2009 Cadillac Escalade Hybrid. The Wall Street Journal's Jeff Sabatini sums up our reaction
Not in my lifetime has a car company come up with anything as absurd as the 2009 Cadillac Escalade Hybrid, the latest example of hybrid greenwashing.
The two-wheel-drive model's 20-mpg combined fuel-economy rating may be 5 miles per gallon better than the regular Escalade's, but it's still tied for the worst mileage of any hybrid vehicle rated by the Environmental Protection Agency. The beefier four-wheel-drive hybrid weighs so much — well over 3 tons — that it is exempt from government mileage testing. Imagine that, a hybrid in the same category as Hummers.
Like every other Escalade, the hybrid model reeks of excess rather than thrift, from the company that recently apologized for disappointing consumers and ignoring their needs.
Earth to General Motors - building a hybrid
version of a giant luxury SUV was a stupid, boneheaded idea and a waste of resources.
Hybrids are supposed to be more efficient
than most cars on the market. The Escalade "hybrid" gets an abysmal twenty one miles to the gallon on the highway, and twenty in the city.
Whoever was responsible for the decision to create this car (ahem, Mr. Wagoner?) needs to be fired from General Motors, because the company is going to collapse if the people in charge think the future is cars like the 2009 Cadillac Escalade, no matter how many loans the federal government provides.
We've all heard about the Volt, which sounds promising, but until that car has been brought to market, GM needs to axe output of luxury vehicles and start producing affordable, fuel efficient cars. R&D money needs to go into development of more electric cars
, not mistakes like the Escalade hybrid, which makes no economic sense in addition to being an environmental disaster.
The Escalade's list price is $71,685. Think about how astronomically high that is for a second. Few families can afford such a car with the economy the way it is. Even affluent Americans are scaling back and tightening their spending.
The 2009 Toyota Prius has a MSRP of $22,000, by contrast. That's less than a third of the Escalade's price. Why should a family that needs a car for everyday driving get an Esacalade versus a Prius?
The unpredictable cost of fuel and higher cost of ownership don't justify getting a luxury SUV for those trips to school and the dentist - to say nothing of the detrimental impact to our environment.
The Big Three's pain may be largely self-inflicted, as evidenced by the 2009 Escalade, but it would irresponsible for us to do nothing while Chrysler, General Motors, and maybe even Ford go into bankruptcy.
We, the people of the United States, through our federal government, must save Detroit from itself. If we don't, the economic calamity that will result from the collapse of the American automobile industry will have far-reaching consequences that could make the recession we're in now look like paradise.