A Big Idea

I read everything automotive I get my hands on everyday. You know that.

Well there's not a lot of great news coming out of Detroit these days. To no ones surprise, trucks are no longer hot sellers. Trucks have large profits on them and small cars do not.

Let me back up a second there. It costs more to develop/build a small car then it does to build a car big. This is in proportion to the price and size of the vehicle mind you, and the target market. But stay with me here. If you need a transmission and you have 30 inches to make it, that's simple. When you need to take that transmission down to 22 inches, then things get expensive with engineering and development. Same with the brake booster, etc. It cost more money to engineer things into smaller packages. It's also easier to install them when you have plenty of room to move around. It's like putting furniture in your house. The bigger the room, the easier to fit the furniture.

All the parts of a truck are in a car, for the most part. But there is more real estate to work with. Granted the vehicle is bigger and there is more materials involved. But really a Ford Focus and Ford F-150 aren't that far apart in raw material costs considering the MSRP differences. Building the F-150 is much easier too. Meanwhile Ford may make up to $20,000 profit in a well equipped pick up and $500.00 on a well equipped Focus. Now you see why we have such a problem.

Making up the difference in selling more of the Focus is not going to make you money. But please go out and buy the Focus in the record numbers that it is now selling in.

Ford and GM can sell all the small cars they want but still not make it here. And no one really buys their small cars anyway. Their best small cars are tucked away in other countries and with the weak dollar, you can't bring them in here and make money. The are very competitive in other places, but not here.

So the big idea. Is it time for Ford and GM to say goodbye to the US market? Spin off the foreign brands and issue stock for them? Let the North American operations go into bankruptcy? Sell off the truck lines to Caterpillar et all? (the non-commercial market is abandoning trucks like a house on fire). Assets if any for sale in bankruptcy court to divide amongst the creditors. A company could be set up to manage parts and warranty. It's not that un-real to imagine.

There would still be a GM and a Ford. (Chrysler is going to die and it's distribution channel sold to the Chinese sometime soon, I swear) But no more Ford and no more GM in America. Maybe their foreign brands could come back at another time, or not. When you think this is crazy, IBM of all power house companies abandoned the personal computer market. General Electric is no longer going to make appliances. Imagine that news back in 1950.

Corporate HQ would leave the US for both companies and set up shop somewhere else. Collectively, would we really miss them? I can't wait for United, American and Delta to finally fold up shop so I can stop reading how their business model is broken and they can't make it work. The same with GM and Ford, the media hates them. I do mean hate.

It would truly be the end of the middle class if it were to happen. The middle class was largely brought about by unions and the industrial age. People who labored for decent wages on a daily basis. The non-unionized service sector emerged in this country and their lower wage tier priced them out of union-made goods. They dislike unions because of the high wages and crazy work rules that they don't enjoy.

As we make our decent back to a two-class society, maybe it's time to wave goodbye to two of the few remaining icons that brought us the third class.