Automobiles 26 Jan 2007 08:44 am
Ford (F) lost money with a style never seen in the company’s history. Henry Ford must be exasperated in the afterlife. They reported losing $12.7 billion in 2006. My first question: Where did it all go? My second question: How do you lose that much money? That answer is easy. When your profits rely on gas guzzling cars and trucks when gas prices shoot up along with high labor costs and a floundering premium car brand group you too can lose that much money.
CEO Alan Mulally hopes the car company will see a profit finally by 2009. He’s closing down plants and paying off workers to cut costs. More importantly Ford needs to make cars people want to drive. The Edge is a good start, and getting a Mini Cooper-like Fiesta here would work. Now, they have to get their act together on hybrids. Oil prices may have gone down recently but India and China crave energy. That strategic economic situation means future oil increases. Don’t think Toyota and Honda aren’t planning for that.
[Crash pic via cielo on Flickr.]
Automobiles 05 Jan 2007 11:21 pm
GM (GM) is working on a pretty cool-looking Camaro. The concept sports beefy bulges that echo Ford’s Mustang and Dodge’s Charger and sharp, angular lines. It looks good and would probably be a it. Too bad the Camaro coupe won’t be out until 2009 with the convertible to follow a year later. That’s one of GM’s many problems. When they have a good idea it takes them forever to turn it into something you want to run to the nearest dealer and buy. By the time 2009 rolls around muscle cars might be out of fashion. I doubt it but with gas prices fluctuating and tastes changing faster than ever GM could lose out even with a sweet-looking ride.
Big companies aren’t the source of job stability like they were when our parents were growing up. It seems every few weeks another company announces layoffs. One of the worst is the U.S. automobile industry. Reuters reports, “DaimlerChrysler could lay off up to 16 percent of the workers in its North American truck operations next year due to an expected downturn in demand.” The auto industry is in the middle of deep structural change resulting from global competition as well as changing demand from higher gas prices and promises to labor companies can no longer afford to keep.
Restructuring isn’t only for the auto industry. DuPont announced they’ll cut 1500 jobs. The savings will go into the seed division where it’s fighting Monsanto. Who knew there’s more to the company than “Better Living Through Chemistry” and sponsoring Jeff Gordon’s race car.
Gladwell believes it is obviously evidence of “unconscious racism” whereas Sailer argues that it is much more likely that car salesmen have learned over time that they can get more money on average out of blacks and women and therefore are discriminating against them as suckers, not out of bias.
Joyner then quotes economist Robert Stonebraker with a possible explanation:
While dealers and/or salespeople may know little or nothing about a particular customer, they know quite a bit about statistical differences among races and genders. They know that women and African-Americans typically enter the showroom with less information and less proclivity to bargain. Although white males often salivate at the chance to lock horns with car dealers in a bargaining struggle, females and African-Americans may be unaware that bargaining is even possible. Ayres and Siegelman cite a Consumer Federation of America survey that discovered that many female respondents, and more than one-half of African-American respondents, believed that sticker prices were non-negotiable.3
Armed with such knowledge, salespeople will rationally adopt a more stubborn stance while bargaining with female and African-American customers. Their stern posture may not be the result of bigotry, but the results are the same. Women and non-whites pay more.
I’m very hesitant to go to car dealers. The extent of my knowledge of them entails how to drive it (automatic only), where to put the gas, and where to put the oil. That’s it. So I’d be very cautious going to a dealer without someone knowledgeable at my side. That’s, of course, after I spent oodles of time researching cars. I don’t want to haggle so my last purchase was through someone who could get me a car from an auction. eBay would be a possibility as long as I could get the car checked out a mechanic before taking it. I like the idea of bidding up to my price ceiling instead of trying to force a dealer to come down. I am interested in places like CarMax where haggling isn’t involved. All I want is to buy the car not turn into a game where in the back of my mind I think I’m getting fleeced.