I have seen numerous people claim that car industry is doing great -- it has made profit and has repaid most of the bailout.
Is that true? I have a hard time finding evidence pro or con, mostly because I don't know where to look. Thanks...
They're continuing to make overpriced products like the Volt. They had to discontinue it which resulted in more than 1k jobs lost. GM is still in deep debt, if I'm not mistaken. They would probably go bankrupt if there was a moderate contraction of credit.
What was so stupid about the bailout, even from a liberal's perspective, is that it didn't save every job at pre-bailout GM and the ones who remained got pay cuts. It was never to save the workers, it was to increase the power of the government.
Used cars industry is growing rapidly and more buyers are turning towards used cars rather than new cars. This is because Japanese used cars are well-maintained and good graded as compare to the used cars exported by other countries. href="http://www.sbtjapan.com/ks-toyota-corolla-for-sale">Toyota Corolla For Sale | href="http://www.sbtjapan.com/ks-honda-cr-v-for-sale">Honda CR-V For Sale |href="http://www.sbtjapan.com/ks-used-nissan-march"> Nissan March
Why should we buy expensive cars when there is a better option, buy cars from Japan, because Japanese used cars are high quality, durable, stylish and affordable at the same time?
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Hope mikehussy has helped you out, OP.
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It's doing just fine, the bailouts worked very well.
spambot and troll aside I think Kakugo might have a good answer
The top 10 car markets in the world as per 2011 were the folllowing (not in order as I am quoting from memory):
Italy, Russia, Brazil, France, UK, Germany, Japan, India, USA and China.
Of these Italy, France, UK and Japan all saw dips in sales, double digit in the case of Italy and Japan. The only market which saw a double digit increase was Russia. USA performed well (and despite high fuel prices "gas guzzling" SUV's and trucks still acount for a very sizeable market share, more on this later). Among the three markets indicated as the future of car market only Brazil performed as expected (7% increase). China was well below predictions with a measly 3% increase while India was around 5%, a good result given the rapidly accelerating inflation (again more on this later) but well below expectations.
2012 is expected to be a "bloodbath" as car sales are concerned. First quarter figures show a massive dip in sales on all European markets (including a jawdropping -25% in Italy) and emerging markets are slowing down much faster than expected. The Japanese government, in its best tradition, has started to provide hefty incentives for new car sales. However the Japanese market is a "captive market" (meaning the bulk of the sales is from domestic manufacturers) and these incentives are unlikely to improve worldwide figures.
To return on the issue of emerging markets it must be remembered most expansion plans were concocted in the ultra-optimistic pre-2008 climate, which promised infinite growth and turned into a sour reality. Brazil's growth is slowing from about 10% in 2011 to a (projected) 2%, which doesn't take into account the rapidly increasing cost of living. Foreign capital is actually starting to leave the country and this doesn't bode well for foreign manufacturers (like BMW and FIAT) which invested heavily on the Brazilian market in the past five years (due to trade restrictions you have to build the cars down there instead where you want: it means these manufacturers had to build new factories in Brazil or expand the existing ones). India is experiencing a worrying increase in inflation this year: it's projected to be about 10% but foodstuff will be between 15 and 20%. It means official inflation will most likely outpace official growth figures. How is this affecting cars? Let's just say this: in 2010 VolksWagen (VW) started negotiating with Suzuki to purchase the Japanese manufacturer's Indian car operations. In late 2011 the deal was called off due to serious worries about the future of the Indian market. Which leaves China. Everybody knows they are bracing for a crash landing of their overheated economy but car sales had started to slow down before there was even a whiff of this. The big problem is China has a very serious "refining and distribution bottleneck", meaning it just cannot process as much fuel as it'd like, let alone distribute it evenly across the country. In the industrial regions fuel is freely available (though it's usual poor quality) but internal regions often experience fuel shortages. Hardly the most encouraging conditions for buying a brand new car.
Which leaves the US. Despite all attempts, Americans still love big cars. Big cars (especially SUV's and trucks) generate excellent profits:a luxury car can be sold at a premium while SUV's and trucks are cheap to manufacture. BMW's excellent results in the past decade come from two main sources: their motorcycle division and their deep penetration in the US market, where last year it overtook Mercedes-Benz as the premium seller of luxury cars. Their Georgia factory is churning out cars like crazy. Buying and owning a big car in the US, despite all, is still cheap, much much cheaper than in Europe or Japan. A BMW 5-series saloon or an Audi A6 are actually cheaper to buy in the US than in Germany, where they are built. Due to the massive difference in fuel prices running them is even cheaper. Americans may (rightly) complain about inflation and prices but compared to Europe and due to a combination of these factors and relatively high wages (due to the Americans' legendary productivity) they can still buy big cars and run them without fear of going broke. That's why their car market is still going well.
"It's doing just fine, the bailouts worked very well."
You left out one tiny little detail of this brilliant analysis. The government (taxpayers) owns nearly 500 million shares of GM, or roughly 30% of the company. The IPO price was $33 per share. Today, GM trades at $20.67 per share. We bought for 16.5 billion, and that is now worth 10.3 billion.