You cannot produce any product with ever-increasing quality and durability, and make sales gains year upon year forever.  Not unless your customer pool is increasing almost exponentially.  Therein lies the dilemma of each and every automobile manufacturer, domestic AND imported in the U.S. market today.  They’ve all but manufactured themselves out of business.  Their cars are already piling up on our shores, as well as in the middle of our country (buy a beach front parking space NOW if you can!).  My humble prediction is that if the Detroit 3 go under, so do Toyandissan as well, within the next year after the first domestic company files (unless President-elect Obama rides in and fixes the Waggoner).

Why will they have to file? Whether it’s jingoistic backlash (laughable), an employee reVOLT (i.e. massive strikes and T-workers finally hopping into bed with that ‘dirty’ UAW), or other unforeseen complications, it is going to happen.  Or did we forget the memo that was leaked from Toyota that basically stated “We need to drop our American workers’ wages down to a more palatable rate, say $8.25 per hour.” You don’t talk about cutting wages by $300M unless that is exactly what you want to do.  Toyota has wisely looked at executive compensation cuts to make up some of this budget target, but it still will not save them unless they can start selling cars, immediate like.

When everyone and their brother-in-law started buying these brand new cars, it had the effect of creating a staggering glut of perfectly serviceable used cars that even now hang out in dealer lots, visit the auctions without selling, and even languish in private sellers’ hands, sitting for weeks or months (hey, AutoTrader ads will run until it sells!) until they eventually lower the price or accept a lowball offer that meets the eviscerated resale values.

There are so many new and used cars and trucks out there that if every auto manufacturer were to shut down tomorrow, they could easily be maintained for decades, if not centuries. Especially with all the newly freed up parts manufacturing capacity we are going to have. For proof of this, you need only look to Havana, Cuba, where old Detroit iron has soldiered on for decades without the support of the manufacturer (which may be similar to what we’re going to see in this country if any or all of Our Boys go Chapter 7).

The most glaring place where all the automobile companies went wrong is in the selling of far too many trucks to way too many people who were willing to beg too darned much from the banks to get them.  All financing follies aside, Trucks, and by extension SUVs survive much longer than cars in most uses.  Even when they are driven harder, longer, and rougher than mere passenger cars, they are much more durable, and will soldier on that much longer (if they are just properly maintained). So what happens when you give them to soccer moms who don’t abuse them or even use them for actual heavy duty work ?  They will last practically forever, except those that rust out, or get the old insurance roast, and meanwhile no one except the hard-core workmen will need more trucks.  But why buy new when there are so many lightly-used, pristine, potential work-horses available out there? You can buy a new truck for $30,000+ or you can buy 3 2008 F-250 repos for about $33,000 (one example multiplied by three, @ $10,500 ea. plus a reasonable $500 ea. purchasing fee for New Car Consultant Stephen Lang ).

It’s like the story (my goo-search turned up nothing) of the company that made a better light bulb (CFLs?) and priced them the same as a regular incandescent, then promptly went out of business(or so the story goes) because people weren’t buying any replacement light bulbs.  Well, people are no longer buying replacement cars, either because they don’t need them, or because they can’t get them financed, or both.
You hear anecdotes about people running a Camry for 80,000 miles without an oil change, and Top Gear can’t kill the Toyota Hi-Lux, you’re creating an entire race of ‘zombie cars’ that refuse to die.

While I appreciate the increasing quality, and durability in products, and I’m also a big fan of reasonable prices, I recognize the sheer orgy of volume sales is done.  This recession/depression is assuredly not what any of us wants, and while it damages everyone, be it Honda, Toyota, or Ford, (and the rest), this entire market was due for a correction, just as the oil futures bubble burst, so has the new car sales bubble.  No matter how many sales get traded amongst the car companies, the market is now shrinking and this is a Less Than Zero Sum Game.

I think it is agreed by all parties that this prodigious number of suppliers/products/brands/dealers in the arms, or on the backs, or at the heels of their Unions, and frequently of their Boards, is in the present deplorable state of the kingdom a very great additional grievance; and, therefore, whoever could find out a fair, cheap, and easy method of making these children sound, useful members of the commonwealth, would deserve so well of the public as to have his statue set up for a preserver of the nation.

But my intention is very far from being confined to provide only for the children of professed beggars; it is of a much greater extent, and shall take in the whole number of manufacturers at a certain domesticity who are born of parents in effect as to divert pension obligations and then demand our charity in the streets.

As to my own part, having turned my thoughts for many years upon this important subject, and maturely weighed the several schemes of other projectors, I have always found them grossly mistaken in the computation. It is true, a company just glommed to the government teat may be supported by her milk for a solar year, with little other nourishment; at most not above the value of 9B., which the Government may certainly get, or the value in scraps, by her lawful occupation of taxation; and it is exactly at one hundred years old that I propose to provide for them in such a manner as instead of being a charge upon their parents or the parish, or wanting bailouts and raiment for the rest of their lives, they shall on the contrary contribute to the feeding, and partly to the clothing, of many hundreds of thousands.

There is likewise another great advantage in my scheme, that it will prevent those badge engineered Crossovers, and that horrid practice of owners murdering their bastard SUVs for the Insurance payouts, alas! too frequent among us! sacrificing the poor innocent babes I doubt more to avoid the expense than the shame, which would move tears and pity in the most savage and inhuman breast.

The number of dollars in this first bailout being usually reckoned twenty-five billion, of these I calculate there may be about two hundred thousand executive jobs that may be saved; from which number I subtract thirty thousand who are classified to be mainly redundant, although I apprehend there cannot be so many, under the present distresses of the kingdom; but this being granted, there will remain an hundred and seventy thousand executives. I again subtract fifty thousand for those enterprises who miscarry, or whose stocks die by accident or disease within the year. There only remains one hundred and twenty thousand executives of poor management annually supported. The question therefore is, how this number shall be reared and provided for, which, as I have already said, under the present situation of affairs, is utterly impossible by all the methods hitherto proposed. For we can neither employ them in handicraft or agriculture; we neither build houses (I mean anymore in this country) nor cultivate land: they can very seldom pick up a livelihood by stealing, till they arrive at a position in an energy corporation or Investement Banking firm, except where they are of towardly parts, although I confess they learn the rudiments much earlier, during which time, they can however be properly looked upon only as probationers, as I have been informed by a principal gentleman in the county of Oakland, who protested to me that they never knew above one or two instances under the age of one hundred, even in a part of the kingdom so renowned for the quickest proficiency in that art.

I am assured by our merchants, that a car or a SUV before one years old is no salable commodity until incentives are added; and even when they come to this age they will not yield under a two thousand dollar loss, or more; which cannot turn to account either to the company or kingdom, the charge of wages and health insurances having been at least that much of a detraction of value.

I shall now therefore humbly propose my own thoughts, which I hope will not be liable to the least objection.

I have been assured by a very knowing former Englander of my acquaintance in Rhode Island, that a young healthy automaker well nursed is at a hundred years old a most delicious, tantalizing, and saleable commodity, whether stewed, roasted, bankrupted, or bailed; and I make no doubt that it will equally serve in attracting Chinese investment dollars.

Secondly, The poorer suppliers will have nothing valuable of their own, and can be liquidated, which by law may be made liable to distress and help to pay their landlord’s rent, their contracts thrown out and tooling already seized, and money a thing unknown.

Thirdly, Whereas the maintenance of an hundred thousand retirees, cannot be computed at less than fully funded VEBA, the UAW’s stock will be thereby be increased using the profit of any newly introduced designs to the driveways and garages of all gentlemen of fortune in the kingdom who have any refinement in taste. And the money will circulate among ourselves, the goods being entirely of our own manufacture.

Fourthly, The constant sales, beside the gain of many billions for bailout, the manufacturers, by the sale of their brands to the Chinese, will be rid of the charge of maintaining them after the first year.

Fifthly, This solution would likewise bring great investment in design of new products; where the Chinese will certainly be so prudent as to procure the best receipts for dressing it to perfection, and consequently have their dealerships frequented by all the fine gentlemen, who justly value themselves upon their knowledge in good driving: and a skillful salesman, who understands how to oblige his customers, will contrive to make it as expensive as they please.

Sixthly, This would now be a great inducement to install speed cameras everywhere, which all wise nations have either been encouraged by shortfalls in revenues or enforced by laws and penalties in the guise of safety. It is all for the children, after all, provided in some sort by the Australian company RedFlex, to their annual taking of drivers’ moneys out of the country. We should see an honest emulation along every freeway, which of them could bring the most revenue from the market? Men would become as proud of their violations, and having the means to pay them as they are now of their tackle, past conquests, and witticisms;  nor would they offer to pickax or incinerate them (as is too frequent a practice in Europe) for fear of a miscarriage of justice.

Many other advantages might be enumerated with these plans. For instance, the addition of some thousands of cheaply made Chinese-American automobiles, the propagation of cut rate quality, and improvement in the art of upside-down financing, so much tragedy has been witnessed among us by the great destruction of our economy.  Not a tear will be shed when these new, cheap automobiles meet their end; they which are no way comparable in taste or magnificence to a well-grown, fat, classic American sedan, which driven whole hog will make a considerable single digit mileage whilst gulping the petrol as in the lord mayor’s feast or any other public parade. But this and many others I omit, being studious of brevity.

Supposing that one thousand families in each major city, would be constant customers for these new automobiles, besides others who might have them at merry meetings, say autocrossing and rentals and the like, I compute that Detroit would take off annually to about twenty thousand new sales; and the rest of the kingdom (where probably they will be sold somewhat cheaper) the remaining units sell in the eighty millions.

Therefore I repeat, let no man talk to me of these and the like expedients, ’till he hath at least some glympse of hope, that there will ever be some hearty and sincere attempt to put them into practice.

But, as to my self, having been wearied out for many years with offering vain, idle, visionary thoughts, and at length utterly despairing of success, I fortunately fell upon this proposal, which, as it is wholly new, so it hath something solid and real, of great expence and much trouble, full in our own power, and hubris whereby we can incur no danger in disobliging America. For this kind of commodity will excellently bear exportation, and manufacture of automobiles no longer being vital to our survival as a nation, to admit a long continuance in sale of these companies, although perhaps I could name a country, which would be glad to eat up our whole nation without pause.

After all, I am not so violently bent upon my own opinion as to reject any offer proposed by wise men, which shall be found equally innocent, cheap, easy, and effectual. But before something of that kind shall be advanced in contradiction to my scheme, and offering a better, I desire the author or authors will be pleased maturely to consider two points. First, as things now stand, how will they be able to find salary for an hundred thousand useless mouths and backs. And secondly, there being a round million of excess cars new in stock throughout this kingdom, whose whole subsistence put into a common stock would leave them in debt two trillion of pounds sterling, adding those who are beggars by profession to the bulk of suppliers, manufacturers, and laborers, with their wives and children depending on them: I desire those politicians who dislike my overture, and may perhaps be so bold as to attempt an answer, that they will first ask the taxpayers, whether they would not at this day think it a great happiness to have been sold for the benefit of a wicked few, in the manner I prescribe, and thereby have avoided such a perpetual scene of misfortunes as they have since gone through by the oppression of the big three, the impossibility of paying rent without money or trade, the want of common sense, with neither house nor clothes to cover them from the inclemencies of the weather, and the most inevitable prospect of financing the like or greater miseries foisted upon by these automobile manufacturers for ever.

I profess, in the sincerity of my heart, that I have not the least personal interest in endeavoring to promote this necessary work, having no other motive than the public good of my country, by advancing our trade, providing for workers, relieving the poor, and giving many billions to the rich. I have no affiliation by which I can propose to get a single penny out of this;  as I do not work for, own or mismanage an auto manufacturer.  To you all I bid a good day, and God bless.

The End

Many Apologies, and all credit to Jonathan Swift, who wrote the original A Modest Proposal which I adapted.