Mr. GM goes to Washington

Mr. Wagoner, the CEO of General Motors apparently said that GM's woes were largely due to the credit crisis and Wall Street, last week during congressional hearings. And here we were, thinking that GM's woes were caused by the production of cars that did not sell, and SUV's that are no longer the market darlings of yore. Silly us.

'Nuff said.

Sayonara Mazda.

Ford announced yesterday that it was selling most of its stake in Mazda. This is a shame for a number of reasons.
First and foremost, because Ford has invested heavily in turning Mazda around from a losing automotive also-ran, to a stunning success. Mazda now has a competitive array of attractive vehicles and owns the segment of Asian "sporty" vehicles.
Second, the timing is bad. The shares are worth less than they were last year, for instance. Sadly, this is a good way for Ford to raise much needed cash, and is a smart move right now. It also reinforces the view that Ford is a far more visionary company than GM. Having this ace in the hole may be the difference between perishing and surviving, even is it is being sold cheaply.
Thirdly, Mazda has arguably benefited from the Ford stake in it's business, far more than Ford ever did. Ford vehicles serve as basis for several Mazda vehicles: the Tribute is a Ford Escape, The Mazda pickup is based on the Ford Ranger and the snazzy CX-9 is based on a Volvo platform, as is the hugely successful Mazda 3.
The question that comes to my mind, however, is how come Ford made such a huge success with Mazda, but failed to learn form this exercise? Perhaps it was because Mazda is not a family enterprise, and the experts were allowed to run it - and save it. Ford has shown signs that it is willing to remove the family from every day running of the business but the question is, is it too little too late? Time will tell, but this blogger is still confident that Ford is in the best shape of the not-so-big three to weather this storm.

Talking of Speeding

So, just for once, let's ruminate on one of the unintended consequences of driving, the speeding ticket. Like millions I have had my share of these (2 to be exact), and the police have always treated me with respect. In one case, I was doubtful that the policeman even had his radar detector on, and in the other case, I was caught fair and square. In both cases, I paid the fine and swore at myself.
In the US, all but two states allow the driver to use the radar detector. This is a tacit admission that the speeding game is a game of cat and mouse. Most police officers will allow some leeway with the speed limit but some will not. Some roads that are long, straight and downhill have ridiculous limits like 25MPH, while in some areas narrow roads with houses on either side are regularly posted at 45 or even 55MPH. The rules are posted, and are clear, but the logic and the application of the rules is obscure. Perhaps deliberately so, to our benefit.
Years ago, the police in Britain had an unwritten, and today, politically incorrect, rule. If you were speeding in a sports car capable of that speed, and you looked like a mature, sober adult, they would not want to stop you. If you were in a delivery van going at 75 wearing a leather jacket and were no older than 19, you were a goner. Of course, the bureaucracy got wind of this, and now the UK is one of the most ridiculously repressive driving regimes in the world. Your speed is monitored by camera, radar and even stopwatch between highway toll booths - if you make it to the next one in less time than they determine to be legal, you get a fine. In short, the British police have gone from discerning individuals to revenue collectors. Even Jesus was not keen on those guys.
So it is a game. The rules are clear, but you may take precautions against getting scored upon. The radar detector levels the playing field a little. Every situation is different but to some extent, our system recognizes that. The rules are clear, but unlike Britain, our rules are guidelines for good and safe driving behaviour. They can be enforced rigorously or in a lax manner. The problem is, we never know which. As any good psychologist will tell you, this is a recipe for behavioural success.

Are We Really So Capitalist?

This week saw the sad spectacle of Automotive CEOs trudging sheepishly up the steps of the Capitol to ask for money to save themselves. I recall a similar scene in 1980 when Chrysler did the same. Now they are all there.

In retrospect, Chrysler then was different. Lee Iaccoca had big ideas and was hugely successful with a new and popular car lineup and later, the debut of the minivan. That things have gone so awry for Chrysler is a round condemnation of the management post-Lee.

Of the others, let's start with Ford. As I have stated in the past, I think of the not-so-big three, they have the best chance to survive. They are strong abroad, and are moving quickly to shake up their product line in the US to make it appealing in a $4 a gallon/recessionary world. Gas prices are down temporarily but they will go back up, and in a recession, people that do buy cars are going to be looking for economy, safety and flair. Ford offers all three in droves.

GM is another story. In a typically dysfunctional move, they announced that they are cutting back drastically in new model development. Perhaps they think their current lineup has been so very successful that they can afford to take a rest. They are going down the road of no return, winding down the shop, disconnecting the utilities, well, you get the picture.

Chrysler, if I were a betting man, could maybe recover with another bailout. They have some attractive new trucks, they have finally realized that quality and comfort matter, and they have always had a pretty good design shop (since 1980 anyway). They own Jeep, which despite having diluted its brand with the introduction of "soft roaders" could survive as a smaller brand.

However, they too have precious little in the pipeline and need an injection of cash, pronto.

But the real question, the 600 pound gorilla in the room, is should we bail out companies that have been so mismanaged? The argument that Detroit is too important to let die, is a fallacy. In a market economy someone will still need to make and sell cars to and in the US. There will be huge pain in the short term, but maybe the economy needs a reshaping. America will have to prove again that it can make cars and supply quality parts to do so. But to keep bailing out companies that insist on failing is to waste money on a truly titanic scale.