China Auto Industry World largest

The lesson for the rest of the world is that it is possible to build out a fully functional manufacturing industry at a fifty percent growth rate per year.  China is not special.  It is called following the dots.

The USA today is suffering from a loss of direction and a loss of confidence.  This was brought on be the wrecking of the financial system by reckless credit expansion brought on by initially creditable brokers pretending to be bankers.  This was the recipe for disaster prevented by Glass Steagell from 1933 through 1998.  The result will always be the same for the exact same reasons.

After all, if you find yourself in that cats bird seat, you peel off an armful of loot into your possession and quickly exit while promoting the next pig in line.  Three promotions later, the place is run by folks who truly believe they are geniuses and cannot see the oncoming wreck.

If our so called brain trust can quite playing politics for a day or two, we can emulate China today and be twice as rich in the next decade.

I have already posted on how to revamp the mortgage business through changes in the foreclosure law able to quickly eliminate the overhang.  The other step is to immediately provide guarantees for a full press energy build out that will eliminate all oil imports outside of North America in a decade.  I did not say cash.  It is all internally financeable.  It just needs to be a national priority in the same way China has made high speed rail a priority.  Electric cars work for us and they can be now sped to market as battery capability rises.

That is the real lesson isn’t it?  We are failing to provide institutional leadership and that is why we are in a mess.

War is no longer economic but supporting industry does no matter how egregious the management is at times.

China becomes world's biggest auto maker

http://www.china.org.cn/business/2010-01/11/content_19215511.htm

Official figures Monday confirmed China had overtaken the United States to become the world's top auto maker and market in 2009 boosted by government stimulus measures.

The China Association of Automobile Manufacturers (CAAM) announced annual sales rose 46.15 percent year on year to 13.64 million units. Output increased 48.3 percent to 13.79 million units.

Passenger car sales were up 52.93 percent to 10.33 million units, and production was 10.38 million units, up 54.11 percent year on year.

The brisk sales in China is in contrast with the United States where 10.43 million units were sold last year, 2.8 million units less than in 2008, as the global financial crisis kept U.S. consumers out of the showroom.

The three top-selling brands last year were Shanghai Volkswagen, FAW Volkswagen and Shanghai General Motors -- all joint venture brands between Chinese auto makers and the German or U.S. counterparts.

"China's market still enjoyed abundant potential, as living standards improved and the average auto ownership remained low," Dong Yang, CAAM deputy chairman told Xinhua.

The industry would continue to see rapid growth in the next decade as it had become a pillar of the national economy, he said.

To boost the sluggish auto market in 2008 and spur the use of clean and fuel-efficient cars, the government announced in January last year that it would halve the purchase tax to 5 percent on vehicles with a displacement of less than 1.6 liters.

Rural consumers got up to 5,000 yuan (735 U.S. dollars) in government subsidies for vehicles with a displacement under 1.3 liters.

The annual revenue from auto purchase tax was expected to surpass 110 billion yuan, a rise of 10 billion yuan year on year, as more units were sold, analyst said.

Besides policy incentives, the underlying reason behind the sales boom was that the consumption structure was improved while housing and traveling costs increased, said Yao Jingyuan, chief economist with the National Bureau of Statistics.

"It would profoundly impact the Chinese auto market," he said.

Brisk sales in China also allowed the world's leading auto makers report double-digit growth in China last year despite bleak pictures in other parts of the world.

Against the backdrop of 15-percent slump worldwide, Ford reported a 44-percent sales rise to 440,619 units in China in 2009.

General Motors (GM)'s sales rose 66.9 percent to a record high of 1.82 million units in China. The German auto maker Volkswagen AG sold 1.4 million units in China, up 36.7 percent from a year earlier.

Since the sales in 2009 would overdraw demands for this year and next, and with the less aggressive tax incentives for 2010, sales expansion was expected to slow remarkably this year, said Huang Yonghe, analyst with the China Automotive Technology and Research Center.

Dong Yang estimated the auto sales growth would retreat to 10 percent to reach 15 million units in 2010.

"Despite China's top position in sales, there are still distance to go before it becomes a real auto giant, as it does not own the state-of-the-art technologies nor world-famous brands," said Dong Yang.

As part of its "going global" strategy, Geely, China's largest privately-owned car maker, is close to finalizing a deal to buy Volvo to acquire the new energy technology and access the world auto market.

The Beijing Automotive Industry Holding purchased some assets of GM's Saab in December. The Sichuan Tengzhong Heavy Industrial also has agreed to take over Hummer brand.

Acquiring foreign brands could help accelerate China's pace of technological innovation, but it could not be a shortcut to the global stage, said Han Lei, deputy director of the Society of Automotive Engineering of China.

"We can not simply copy foreign brand's technology and management expertise, but use them as a basis to develop our own model," he said.

The unprecedented boom also boosted producer's morale for further expansion.

"The Chinese auto makers added the capacity by 30 percent to 20million units in 2009, leaving their bitter memories of job cuts and shuttered business far behind," said Wei Wenqing, vice manager of the Dongfeng Citroen Motor Corporation.

Fuel-efficient cars have already shown some signs of overheating, as the demand for auto with displacement less than 1.6 liters was about 3 million units before 2011, less than half of the capacity of 7 million units, said Jia Xinguang, auto industry analyst.

"Since this market is largely affected by government policies, uncertainty and risks remain," he said.

Bill Ford Rallies the Automobile Industry

It is clear reading this article with Bill Ford, that the Ford Motor company is likely to make it through this period of transition very successfully. The industry has been trending toward a plug and play manufacturing model for the past decade. Ford has wholeheartedly embraced it to not just make better cars but to maximize flexibility for the real transition coming down the pike.

The best thing that the USA and North America can do today to assert its stature in the world is to exit the global oil business as briskly as possible. The rest of the world can have all they want, but we are out of here Jack.

North America has access to unimaginable internal reserves provided we reduce our own consumption by two thirds over the next decade. Those reserves are best used for everything except transportation. By doing that, we free ourselves from having our conspicuous consumption impacting agriculture in Africa.

The promise made by EEStor is going to be met by either EEStor of a competitor inside the next five years. Immediately we will be driving electric cars with a three hundred mile range. Bill Ford is telling us that his organization is ready for it and can make the switch of the same dime. It is going to be the most abrupt technology switch in human history

Of course this overnight success took decades of focused work in the laboratory to pull of but the objective has never been in doubt.

And as Bill makes clear, there may be other winners out there also that need to be supported.

After saying all that, the North American was long overdue for a formal restructuring that forced global cost structures on the internal industry. You must be able to compete head to head in your own country and the UAW made the deals for jobs with these competitors and thus broke their own labour monopoly. They have now the pleasure of dealing with the natural result of such practices.

April 21, 2009

Bill Ford: Prepare for Auto Industry Transformation

The Ford scion believes it's a "cool time" to be part of the auto industry, despite ailing U.S. automakers

By Colin Sullivan

DANA POINT, Calif. -- Ford Motor Co.'s executive chairman offered a rare glimpse yesterday into the U.S. auto industry's corporate direction and culture, painting a bright picture for the sector even though Chrysler LLC and General Motors Corp. are flirting with bankruptcy.

Bill Ford, the great-grandson of Henry Ford, said the U.S. auto industry is facing an unprecedented financial crisis that has shaken its foundation. But, he said, the turn toward insolvency should mean opportunity for an "insular industry" that has long been mired in stale thinking.

"We haven't had a lot of revolutions, but boy, are we now," Ford said during an extensive interview here. "It's a really cool time to be part of this industry."

Executives at Chrysler and General Motors who are now taking marching orders from the White House might take exception to that statement, but Ford described the shakeup and government bailouts as essential for an industry that is more than a century old and has often been stuck in a rigid mindset. The old guard, Ford said, is no longer "fighting" the change to new technologies because it has no other choice.

At Ford Motor Co., for example, executives have decided to bring their global platform of vehicles, including smaller models that do well in Europe, to the North American market. Ford described the move as risky, given the recent dip in the price of gasoline, but he said the company is committed to efficiency over the long haul and the belief that a downsizing of the U.S. car market is inevitable when gas prices rebound.

"Nobody wanted change, really, within the industry," said Ford, describing a boardroom atmosphere that was hostile to talk of climate change, energy efficiency and environmental protection. "But I am so energized by what's going on now, I think it's fantastic."

The comments from Ford, who served as the company's CEO from 2001 to 2006, come amid signs that a bankruptcy at GM or Chrysler could disrupt operations for the entire U.S. industry and its supply chain.

Ford Motor Co. officials fear a bankruptcy filing could mean deeper concessions from unions and bondholders for Chrysler and GM, and leave the companies in better competitive shape.

Ford reiterated some of those concerns and said bankruptcy may not be the best option for the sector, especially as it leaves the future of hundreds of thousands of jobs in the hands of a single bankruptcy judge.

"One keeps reading about 'quick and easy' bankruptcies," he said. "I have a hard time believing it will be easy."

Call for stability

Ford was the only U.S. automaker of Detroit's Big Three to reject bailout funds from Congress. And many have credited Bill Ford for preparing the company while he was CEO faster than either Chrysler and GM for constrained oil supplies and the dawn of a carbon-constrained economy.

Ford, who sat for an interview during a forum hosted by Fortune magazine, said his priority from day one as CEO was to diversify the company's fleet to account for "whichever way the infrastructure breaks" over the next few decades. That meant developing cars powered by biodiesel, electricity, natural gas and oil all at the same time, even though predicting a victor among these options is still difficult.

"These are very, very quickly shifting technologies," Ford said. "It isn't clear to us now that ultimately there's going to be one winning technology."

Ford explained that the decision to slim down to a single global platform of vehicles – instead of varying platforms for North America, Asia and Europe – gives the automaker the flexibility to ramp up to, say, electric cars if consumers start pushing the market in that direction.

He called the strategy "a plug-and-play operation" that allows Ford Motor Co. to not bet on a single technology.

Still, Ford admitted the lack of stability in gas prices is a major problem. Indeed, consumers who had been rushing to buy smaller cars when gas was more than $4 a gallon have lately returned to purchasing bigger models, an issue Ford says should be addressed by government policy.

Ford said he would support a gas tax or a price on carbon to add some stability to the market that could send better signals to the auto manufacturers. Gyrations on the fuel side, he added

"The worst thing for us is instability, and, unfortunately, that's what we've been dealing with," Ford said.

"We have no idea whether we're planning the right vehicle or not."

Shifting dependencies?

To address the highs and lows of fuel prices, Ford would like to see a gas tax or a cap-and-trade system that establishes a hard price on carbon. He also wants the Obama administration to convene a summit of automakers, nongovernmental organizations and lawmakers to establish a "glide path" for vehicle technology.

A glide path would mirror the European model, which brought players together years ago to effectively select "clean diesel" as the vehicle of the near future, at least until hydrogen-powered or electric plug-in vehicles develop. Incentives from governments to enact the glide path made purchasing decisions easier for consumers, Ford said.

Ford said he is averse to picking winners and losers, but when the alternative is industrial collapse, he thinks the European model is a viable option.

"It worked," Ford said. "We've really lacked that in this country."

On batteries for electric cars, Ford conceded that Asian manufacturers are ahead in terms of building the actual batteries, even if U.S. companies are positioned to develop components and design cars to integrate the batteries. He sees the emerging market as a problem if Americans trade oil dependency for battery dependency.

"As a country, we're not well served to trade that one dependency for another," he said.

More broadly, Ford expects a "messy" fight on Capitol Hill over climate change and the future of his industry. But he also believes the political will is there to shape a federal law within the next year or so.

"We can't go on with cheap gasoline forever," Ford said. "It's just not a path that his country wants to go down."

Reprinted from Greenwire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500

Breaking up Financial Behemoths

I am seeing a rising future consensus opinion on the need to force an end to gigantism in the corporate world. It is stated very simply. If it is too big to fail, then it is too big and must enter upon a planned dismemberment. There needs to be legislation and a court ordered process. Trust busting legislation shows the way quite well and we have had the recent example of AT&T to inspect.

GM is the obvious current example that certainly calls for this type of treatment, and while we are at it, it needs to be applied to a couple of the other global manufacturing behemoths.

More importantly the financial behemoths that are all been bailed out need the same treatment. Does anyone think that AIG and Fanny Mae and Freddie Mac and their ilk actually successfully managed their capital exposure? The truth is that they all jumped onto a race to the bottom that was incentivized with bonuses and they could not get off or correct it and maintain their illusionary profit performance. There was obviously no way to correct it without getting fired.

They have all been smashed and it is now an excellent time to spin out the successful sub units that can still stand alone. And perhaps we can return to the good old days in which cross investment was banned. It never made sense ever to have brokers be in the same office as a lender. The conflict is always fatal and the incentive to grab is overpowering.

There is also always a lawyer to package any scheme.

Who will not borrow money in the hopes that sometime later he can liquidate it all and walk away rich. A banker has to know better than that.

Today our primary source of available leverage, the housing market, is completely under water. It is a good bet that no one who acquired real estate in the past ten years is able to liquidate and is trapped with paying off the property in the hopes of seeing daylight.

I think that one of the best stimulus methods that could be applied to the US economy and the global economy is to order a breakup of all the obvious behemoths, as soon as possible. A ten fold increase in banking competition will revitalize the lending market for the newly emergent independent manufacturers.

The so called efficiencies of management redundancies have turned into a mirage. The errors incurred have destroyed the entire capital base of the financial industry and many others besides. GMAC has great business if it can get money to lend on good terms. A little more difficult when the several biggest lenders have shrunk hugely. A little easier if supported by an army of small lenders and operated as several smaller GMACs.

One way to promote corporate breakup is to create a credit formula that actually penalizes dangerous sizing. That would remove the strongest incentive pushing corporate gigantism. The events of the past quarter would actually support such a formula by the credit rating agencies. I am stilled startled to wake up and realize that triple A firms abruptly failed. It should never happen.

Don Weil on the Auto Industry

Yes, the politicians are talking themselves into bailing out the big three when what the big three desperately need is a trip through chapter 11.

In fact, it is probable that these companies can be nicely reorganized and even refinanced as a group of separated companies worth much more than the original entities.

At the end of the day, I believe there is great merit in GM splitting into seven separate companies. They are there in practice and are burdened by an actual lack of internal competition. GM is set up to do just that.

The driving force behind gigantism in industry came from the huge need for capital to carry huge inventories literally from mine face to end buyer. This has abated thanks to modern industrial practice. It makes total sense for a stand alone auto company to design a model line and run a nimble assembly line using parts suppliers who are now already well established.

Multiple auto companies would spread the financial risk which surely is a benefit to the nation. We are getting this through the back door as foreign automakers continue to set up shop here.

Four Big Lies about the Big Three Automakers

Monday, December 8, 2008 3:58 PM
By: Dan Weil

With Congressional Democrats and the Bush administration agreeing in principle over the weekend to drop a few billion on General Motors and Chrysler, all signs point to a government-backed auto industry bailout. But could the crisis in Detroit be the product of myth, spin and outright lies?

As the nation inches closer to an unprecedented investment in private industry, Newsmax has examined the falsehoods being spread to promote the deal. Indeed, the exact amount of money to be doled out isn’t clear yet. GM and Chrysler executives testified before Congress last week that they need $14 billion to survive until March 31.

Whatever the total, a number of financial experts say it would be money better left unspent until the Big Three and their supporters agree to level with the American taxpayers. Until the car makers can offer convincing proof that they will be able to produce cars at a reasonable price that customers will want to buy, here are four of the biggest whoppers they are relying on to get a massive infusion of American tax dollars:

1. Detroit’s wages really aren’t out of synch with those of auto workers in other countries.

It has been well established that total compensation for U.S. auto workers, including pensions and benefits, comes in around $70 per hour. That compares to $45 per hour for Japanese workers.

But some auto industry supporters have distorted the argument. They use the American workers’ hourly wage without benefits – about $30 an hour – and compare that number to the $45 hourly total compensation for Japanese workers. Then they claim that U.S. auto makers are actually more labor efficient than their Japanese counterparts.

Obviously that’s not comparing apples to apples. If you are looking at apples versus apples, a new auto plant in India offers hourly pay of only $19.

And it’s not just line workers who are overpaid. Ford’s chief executive Alan Mulally earned $22 million in total compensation last year – a year that helped push the company toward oblivion. Asked last month if he thought he deserved a pay cut, Mulally said, “I think I’m all right where I am.”

Top executives at Bear Stearns, AIG, Lehman Brothers and Merrill Lynch probably felt the same way right before their companies went under.

2. The auto industry is unique and therefore must be bailed out.

It’s true that auto companies, including suppliers etc., account for about 3 percent of economic output and employ at least one million people. But those numbers aren’t dependent on the financial status of the Big Three.

If the companies go into bankruptcy and come out stronger, the industry will employ about the same amount of people. If not, foreign auto makers will produce more cars in the U.S. and pick up many of these workers.

Plenty other uniquely American industries are taking it on the chin, and no one is calling for a bailout of those sectors. Take newspapers for example. One could argue they are far more important for the functioning of our democracy than the Big Three auto companies.

Newspapers are firing workers right and left and shifting more of their operations to the Internet. And they will have to continue doing so until they can put out a news product cheaply enough and well enough so that readers will pay to read it, and advertisers will pay to appear in it.

That’s called adjusting to a changed market place, something the Big Three have largely failed to do since first facing foreign competition in the 1970s.

3. Bankruptcy for the Big Three will mean the end of the U.S. auto industry.

That is simply poppycock. A prepackaged bankruptcy could actually leave the major auto makers in better shape than they were prior to the financial crisis. Since the mid-1990s, the Big Three made most of their money on gas guzzling SUVs and trucks. That simply won’t cut it anymore. Bankruptcy will force the auto makers to quicken their shift to smaller cars.

Plenty of companies have emerged stronger from bankruptcy. Nearly all the major airlines have gone through that process and came out stronger than when they entered. Some industry apologists have argued that American consumers won’t buy any cars from the Big Three if they are in bankruptcy because of concern that warranties won’t be honored.

But as long as the companies offer quality autos at reasonable prices and make it clear that warranties will remain in place no matter what happens to the companies themselves, American drivers will want the cars.

Meanwhile, bankruptcy would give the Big Three an opportunity to rework their labor contracts, cutting compensation, and to jettison incompetent executives.

4. A limited aid package now will insure the industry’s long-term future.

The amount of money being bandied about, $15 billion to $25 billion, is chump change. GM and Chrysler are bleeding $2 billion in cash per month. So the high end of the bailout range keeps them in business for about a year. Then what? Without major changes in their business model, they’ll simply be coming back to Washington with their hands out again.

The Big Three have had so many opportunities to change their practices since the first oil crisis of the early 1970s, yet they have been reluctant to budge. GM still has eight brands of cars, even though critics have pointed out for years that’s probably about seven too many.

As recently as last month, GM CEO Rick Wagoner had the gall to tell Congress: “What exposes us to failure now is not our product lineup, or our business plan, or our long-term strategy.”

Until Wagoner and others at the Big Three come to realize those are exactly the factors that have put the industry on the brink of failure, there is no hope for improvement. And it’s not a bailout that’s going to make auto companies implement the adjustments they need to survive.

And remember, this current "bailout" bears no resemblance to the rescue of Chrysler in 1980. In 1980, Congress passed, and President Carter signed, a law giving a U.S. government guarantee of a private $1.5 billion loan to Chrysler. Not one dollar of taxpayer funds was ever used in the deal. It's also important to remember that import tariffs sheltered Chrysler and the Big Three from Japanese competition in the 1980s. And unlike today, Chrysler also had a clear plan to make a comeback and the loan was relatively small.

All of the automakers should follow Chrysler's 1980s success story: create a viable business plan for the future and get private sources to fund it.

© 2008 Newsmax. All rights reserved.

Financial Size Regulation

In my article on the establishment of a universal health care system, I emphasized the importance of distributing oversight and management down to the State level. Upon reflection, I realized that this must be also done for a number of quasi government agencies directed to implement national policies.

The most visible today are Fanny Mae and Freddy Mac. They are, as national instruments, far to big to fail. As State instruments, they could and be swiftly reconstituted as viable enterprises. And the temptation to deploy resources into the international securities market both as a buyer and seller abates. Do you really think that this could have happened had that been implemented in the first place?

Surely AIG deserves the same fate for the same reasons. Besides, the underwriters are past masters at syndicating the larger deals needing that scale of support. It is time they earned their fees.

The big lesson for us all, is that the ease of capital availability to larger enterprises will always bring the temptation to grow an organization by simple acquisition. This eventually creates organizational sizes that in the event of failure are dangerous to the national interest. We have that now with GM, hobbled for years with the strangle hold of their non competitive union contracts. It is finally broken. Its collapse will massively damage the US economy. Its trip through chapter 11 will resolve the contract problem.

Other companies do come to mind. GE is an extraordinarily well managed company that simply does not need to be under the same corporate roof. Six hundred plus divisions are all operating on a stand alone basis. I guarantee you that if we spun out every one of those divisions, the resulting market value would be far higher that the present. Particularly for it to be a primary asset in Warren Buffet’s portfolio.

Mergers and Acquisitions are the plaything of money managers and is driven by fat fees rather than any net gain. In fact, there is more typically a net loss. They make good sense when a strong mature company is able to provide capital access for a rapidly expanding business. The best example of that was Wendy’s acquisition of Tim Hortons. Ten years on a solid capital diet and Tim Hortons surpassed MacDonalds in Canada and began a sound expansion program in the USA. It did so well, in fact that investors forced Wendy’s to disgorge Tim hortons.

A principal of national; oversight must become the distribution and wise breakup of assets large enough to damage the national interest on failure. In fact, I would go so far as to mandate sharply lower credit availability in such an instance. The risk is clear, so regulate it accordingly.

The big five investment banks needed less leverage several years ago because of their size rather than more. That would have leveled the playing field and preserved them from participating from a dash to the bottom. And if they did not like that, then break up.

Chapter 11 Solution for USA Auto Industry

A question now needs to be asked about the current state of the global economy. The banking system has been stabilized because it had to be. The magic of reserve banking is that if your reserves expand you are allowed to expand your loan portfolio by the appropriate multiple. This all works because the banks have a monopoly on deposit management and it is all tightly regulated or at least used to be in order to prevent the type of crisis we just got hit with. It is the natural nature of competition that forces the imposition of regulation on this particular business. After all if you lend recklessly for a short while, your earning performance will give you bragging rights among your peers.

Unfortunately the reverse magic happens when confidence fails. The limited cash evaporates and the loan contracts can never be sold for immediate liquidity. In these circumstances, governments must step in and provide liquidity. Once confidence returns, the multiples will reexpand and the banks will repay the bail out loans. And everyone will wonder what it was all about.

The best assurance that an investor can have is to hear bankers complaining about their rules.

That begs the next question. What about the auto industry? Their lease portfolio is good and likely needs a mere assist there to get access to cheap money. After all they are not deposit taking institutions.

The manufacturing situation is a vastly different story. This industry has moved heaven and earth to accommodate the cost structures imposed by their employee unions and the grossly distorted medical insurance system. They have shifted as much manufacturing off site as possible and they demanned as much as possible. The bottom line is that they are premium prices for labor in a market were their competitors are not and that includes their newly built North American competitors. It must be fixed and fixed now.

The simplest solution is not to write large governments checks unless it is to provide bridge financing while the industry passes through chapter 11. That puts all union contracts and debt obligations and other such contracts into the proverbial cocked hat for a complete restructuring and puts all stakeholders on the same side working together to stave of sudden death.

And done properly, there is no reason to destroy the shareholders or the debt holders since the industry will be immediately profitable, though needing time to rebuild reserves and reduce debt.

The point that I am making is that the woes of the auto industry stem from its structural problems, not visibly shared by their competitors. Re structuring now will end the charade that they can compete against competitors on the world stage where their cost structures do not apply.

Starting immediately, the US auto industry needs to manufacture small electric auto carts as fast as possible. Their range may be only forty miles, but everywhere except the USA and Europe, this will not matter much, and we will get over it.

The real emergency is that the USA must begin reducing oil consumption very aggressively and our personal transportation is essentially obsolete. Very likely you will receive a fuel ration that will let you drive the old SUV 5,000 miles per year. And second cars will become hanger queens. An electric auto cart solves the problem by providing urban transportation. And surprise, surprise, you will discover that occasional long haul travel will generally not exceed that 5000 miles for the majority.

100 miles per gallon

The only short term fix available to us in the face of that $500 fill up is to convert to a automotive system that gets 100 miles to the gallon as a minimum. a huge effort is now underway to achieve just that. I am even getting feedback off the street that is even more optimistic.

A three to four times improvement in mileage in the face of a three to four times improvement in fuel prices is consumer neutral in terms of economic impact. And our current supplies are then easily extended for decades since we can then shift over to an ethanol blend over the next two decades. The ethanol can be produced as a derivative of algae production so that agriculture is not disrupted.

This is an apparently viable strategy and certainly the least disruptive. If however, we get a rapid shift to the high end in price, then I expect that we will see a forced conversion of the global automotive fleet over a very short time period. First downsizing to better mileage vehicles followed by a slow increase as general efficiency rises. Amazingly enough, that suggests that the automotive industry will enter boom times as everyone shortens their trade in cycle. I never though that I would be saying that about the most mature industry we have.

Buy Gm?