separating the crash from good gas mileage: (1) for GM and company the crisis started sometime last year, after the home ATM system vanished and the home building boom ended. that would be when defaults and inventory started climbing.

(2) american car makers build many high efficiency cars throughout the world. they used to build them here. they own shares in companies that still build them here. if they wanted to build them here, no ten-year high-tech conversion plan was necessary.

(3) the escape hybrid and the volt are easy to paint as greenwash. they have all the hallmarks.

something outside the boundaries of normal financial planning: yes. but companies as big as these, in the finance business themselves, big scale loan originators in the credit derivatives scenario, they have more to do to explain their actions and their problems than singing the recessionary blues. unlike mpst participants in the real economy they knew the backroom dirt and IMO they went with it because it let them avoid the inevitable squeeze. their risk was “distributed.”

But people bought SUVs rather than other types of vehicles offered because they wanted SUVs. GM would have been quite happy to sell/finance minivans or station wagons or sports cars if that’s what people wanted.

And please separate Detroit’s moves to more efficient models from the current financial crash. They started working toward more efficient models years ago. The crash is a scant few months old.

Ford started selling their hybrid Escape in 2004. That means that development must have started not long after 2000. Chevy has been actively working on the Volt for several years.

GM isn’t selling product. No one is. Not selling product while having a huge overhead that must be met means that there’s no money to fund loans.

Look at all the businesses that are closing. The list of retailers is immense. Old names are going away. Were all those companies terrible at business or have we run up against something outside the boundaries of normal financial planning?

Normally during recessions corporations borrow money to get them through. It’s part of their financial plan.

This time there is no money to borrow. First time since the late 1920s. Things financial were supposed to be different than then….

which would be a direct result of overselling their customers in both the showroom and the credit market. KABLOOIE.

there’s a “blockquote” missing at the end of the story? which part’s the quote?

As best as I can tell these are companies that are in transition from providers of large vehicles (which

…were a debt-financed national splurge, like mcmansions, and shopping malls in the desert, before them…

) to more efficient vehicles (where the market

…has been in more sensibly-run economies for decades…

).

in other words, the SUV demand was driven by policy. cheap, unlimited credit policy. the US car companies got beat because they were really in the loan business and they were selling vehicles with that in mind, in a speculative credit market, to a group of people who think “down payment” and “cost” are the same thing.

now the bubble’s popped in their faces and no surprise at all, they’re the worst off of any automotive manufacturers on the planet and on top of their inventory grief their past is haunting them, as loan defaults.

in other words, fine, there was a market, but it wasn’t a sustainable market in the financial sense and their overcommitment to it shows they stink at business.

A few years back (it takes a few years to bring new vehicles to market) both companies started putting more emphasis on efficient models.

Chevy has seven 2009 models that deliver greater than 30 mpg performance. Their Impala delivers roughly the same mileage as the slightly smaller and lighter Camry. They have the PHEV Volt coming to market in 2010.

Ford has had the Escape hybrid SUV on the market since 2004. They are bringing some of their efficient European cars to the US market.

As best as I can tell these are companies that are in transition from providers of large vehicles (which the American market wanted) to more efficient vehicles (where the market is headed).

(BTW, I don’t drive Detroit. Haven’t since the mid-1960s. Except for my firewood pickup, used Toyotas were too expensive for what I needed .)

Rewarding failure is always a danger with government bailouts (and with politics the way it is, most government programs).

In its latest weekly roundup of news on efficient cars, X PRIZE Cars blog

xprizecars.com/2008/11/axp-news-nov-19-2008.php

has a link to an article “Pressure to Bailout Big Three Grows, But What About Startups?” by Gas 2.0 with some suggestions to level the “bailout playing field” between startups and the Big 3 while also generally encouraging electric vehicles:

1. Low-interest loan guarantees (so startups get access to capital too)
2. Fair application of tax credits (for EVs not favoring GM)
3. Government assistance for purchase financing
4. Immediate efforts to begin construction of a nationwide charging network