Do you own a fleet of automobiles for business? Otherwise, the math gets hinky.

The math isn't really "hinky" Rick. I know of people who have had 30 vehicles in 30 yrs (always had to have the latest)

I have probably had the same # over the years (all used, all US)(A couple of those vehicles got totalled in accidents)and was perfectly happy with all but 2, most I got with somewhere between 50 and 150K on them and then put another 150 to 250K on them. I have blown 3 transmissions (I have a habit of abusing my trucks) replaced them and got many more years out of each, and blown 2 engines, replaced those and got many more years out of them.(one I still see from time to time, I figure it has close to 500K on it)

I have owned a dozen new Ford products in the last thirty years,each with zero unscheduled maintenance in the first hundred thousand miles.

Do you own a fleet of automobiles for business? Otherwise, the math gets hinky. Also, I'd be glad to know the models & years to compare with Consumer Reports.

http://krugman.blogs.nytimes.com/2008/12/08/me-misreported/

1. An industry with geographical roots.
2. Managements that won't give up on making a full portfolio of products, not pairing back to what they do best.
3. Chronic and significant overcapacity.
4. Hidebound management attitude and union intransigence. And so on.

The steel industry suffered all the same maladies. What were the major reasons behind permanenet and positive change?? First, shape produts (as opposed to steel sheet) gradually moved over to minimills. Using scrap metal for raw material, they were not tied to the coal and iron ore of the upper midwest. So they were able to located in non-union evironments (with new management teams as well). The rest is history. The major integrateds were forced to downsize into sheet for auto and appliance, and only the most exotic of shapes.

And what finally caused the chronic overcapacity issue to be resolved? Two people with guts and vision, Wilbur Ross and The Mittal Group, who finally bought up and consolidated the global industry.

A healthy industry emerged, but it took decades for this difficult transformation to occur.

What would be the similar catalyst causing a painful but necessary restructuring of the auto industry? Knowing how difficult it was for steel to finally get it right, I can only imagine the answer is bankrupcy.

One reason I think bailing out the US auto makers is a mistake is because I am not sure they can restructure or even want to restructure in a way to become profitable and even then will anyone want what they are selling?

BTW I think that a good explanation of Tata Motors's purchase of Jaguar and Land Rover operations was that they felt it was worth $2 billion to purchase the dealer affiliations in the U. S. thereby gaining a foothold in the U. S. car market.

I do think we’ll soon see the day when Western firms get out of the economy car business, ceding it to China, India, and Korea. We’re simply not going to be able to compete on the basis of cheap. I think we’ll see the end of cars as we know them before we see the demise of luxury and sports cars being made by Western, including American, firms.

One argument I've heard is that unions "won't let" the big 3 use (enough) robots. To the extent that cars have irreducible labor hours, your argument for low-cost nations holds. To the extent that automation is possible ... maybe not.

(Ford's highly automated Brazilian plant.)

(Of course, if "cheap nations" stay cheap by polluting themselves, the advantage might stay unequal.)

Here is Krugman on the NY financial industry:

In the real world not only agglomeration in general, but any particular example of agglomeration, typically reflects all items on the menu. Why is the financial services industry concentrated in New York? Partly because the sheer size of New York makes it an attractive place to do business, and the concentration of the financial industry means that many clients and many ancillary services are located there. But a thick market for those with special skills, such as securities lawyers, and the general importance of being in the midst of the buzz are also important. Why doesn’t all financial business concentrate in New York? Partly because many clients are not there, partly because renting office space in New York is expensive, and partly because dealing with the city’s traffic, crime, and so on is such a nuisance.

From The Role of Geography in Development (pdf)

For a long cars did come from Detroit (and big 3 plants around the country). Once they have the industry it tends to perpetuate. For a long time there was not another Detroit, until there was ... first via Asian imports and then the Southern, mostly non-union, plants.

It's quite sad that Detroit is bound to certain business models, certain labor models, and certain auto models ... but that too tends to perpetuate ... as long as it can.