America's other Auto industry

[Drew Dowdell]

On of the largest political bloggers out there, Andrew Sullivan, posted this article from Peter Klein:

The proposed bailout of GM, Ford, and Chrysler overlooks an important fact. The US has one of the most vibrant, dynamic, and efficient automobile industries in the world. It produces several million cars, trucks, and SUVs per year, employing (in 2006) 402,800 Americans at an average salary of $63,358. That's vehicle assembly alone; the rest of the supply chain employs even more people and generates more income. It's an industry to be proud of. Its products are among the best in the world.

Their names are Toyota, Honda, Nissan, BMW, Mercedes, Hyundai, Mazda, Mitsubishi, and Subaru.

Insinuating that if the domestic 3 were to fall, and they should fall, the transplants could pick up the slack.

Yesterday afternoon I wrote a rebuttal to the piece and Andrew Sullivan posted it:

Regarding Peter Klein, a few points,

• Ford has owned a majority stake in Mazda for decades. Nearly every vehicle in Mazda’s lineup is platform shared with a Ford, Lincoln, Mercury, or Volvo.
• Until last year GM was the majority stake holder in Subaru. GM sold off their shares to Toyota. Ditto Isuzu.
• Mitsubishi has been kept afloat for decades by Chrysler. In the 80’s and 90’s about half of the entire lineup at Chrysler was platform shared with Mitsubishi. Engines and transmissions are still shared today.
• Toyota and GM share a factory in California. The factory produces the Toyota Corolla, Toyota Matrix, and Pontiac Vibe.
• BMW has used GM automatic transmissions on and off for years. BMW paid GM to develop the automatic transmission in the BMW 5-series and Cadillac CTS.
• GM, Chrysler, and Mercedes Benz have a joint venture to build hybrid powertrains.
• Chrysler alone, backing out of a deal to buy automatic transmissions, forced transmission manufacturer Getrag into bankruptcy. Getrag supplies transmissions for every auto manufacturer.
• Ford and Nissan buy their hybrid technology from Toyota.

All of the auto manufacturers share suppliers. Any one of the Domestic 3 failing would likely take out the other two and severely damage the foreign owned companies ability to continue to operate here. That’s not to say they don’t need to reorganize, but to even do that they have to be able to make payroll and buy materials. That is what this loan is about. Additionally, to the foreign governments who are planning to protest any bailout by the US government as unfair to imports, the imports have been getting their own “bailout” for years via socialized medicine and other government subsidies.

Andrew Sullivan's blog gets an average of 200k hits per day. I've written many rebuttals to his posts, but this is the first time he has posted one of mine.

[Camino LS6]

Well done!

[FUTURE_OF_GM]

The voice of reason

[PurdueGuy]

makes too much sense, no one will listen to it

[A Horse With No Name]

Excellent and well written, Drew!

Chris

[ocnblu]

Congratulations on being published, Drew. It's a concise, well-written note that states facts without coming across as too fanboy.

[Hudson]

Ford has owned a majority stake in Mazda for decades. Nearly every vehicle in Mazda’s lineup is platform shared with a Ford, Lincoln, Mercury, or Volvo.

Until last year GM was the majority stake holder in Subaru. GM sold off their shares to Toyota. Ditto Isuzu.

Mitsubishi has been kept afloat for decades by Chrysler. In the 80’s and 90’s about half of the entire lineup at Chrysler was platform shared with Mitsubishi. Engines and transmissions are still shared today.

Toyota and GM share a factory in California. The factory produces the Toyota Corolla, Toyota Matrix, and Pontiac Vibe.

Except that Ford has NEVER owned a majority stake in Mazda...33.4% is a controlling stake according to Japanese law but a majority would be 50.1%. And while the Mazda3, Mazda5, Mazda6, and Tribute share platforms with Ford Motor Company vehicles, those three platforms (C1, C/D, and U204) were primarily developed by Mazda.

GM was never the majority stakeholder in Subaru (only held about 10%). GM did, however have a 49% share in Isuzu, and while they were the LARGEST share holder, they were not a majority shareholder.

Mitsubishi floated along fine with or without Chrysler's help. As for platform sharing, Chrysler had a handful of vehicles but never near half the lineup. Today, Chrysler provides the Raider (assuming it's still in production right now) to Mitsubishi but they don't share any other engines. They did share the development (with Hyundai) of the Global engine family but each company builds its own.

NUMMI, the Toyota/GM joint-venture in California does NOT make the Toyota Matrix. The Matrix is built in Canada in a Toyota plant.

Edited November 26, 2008 by Hudson

[PurdueGuy]

I learned something new - I figured since NUMMI makes the Vibe, that it makes the Matrix too. Seems odd that they would build essentially the same vehicle in 2 different plants...

[Drew Dowdell]

Except that Ford has NEVER owned a majority stake in Mazda...33.4% is a controlling stake according to Japanese law but a majority would be 50.1%. And while the Mazda3, Mazda5, Mazda6, and Tribute share platforms with Ford Motor Company vehicles, those three platforms (C1, C/D, and U204) were primarily developed by Mazda.

GM was never the majority stakeholder in Subaru (only held about 10%). GM did, however have a 49% share in Isuzu, and while they were the LARGEST share holder, they were not a majority shareholder.

Mitsubishi floated along fine with or without Chrysler's help. As for platform sharing, Chrysler had a handful of vehicles but never near half the lineup. Today, Chrysler provides the Raider (assuming it's still in production right now) to Mitsubishi but they don't share any other engines. They did share the development (with Hyundai) of the Global engine family but each company builds its own.

NUMMI, the Toyota/GM joint-venture in California does NOT make the Toyota Matrix. The Matrix is built in Canada in a Toyota plant.

You caught me on saying majority rather than controlling. My fault.

Dodge\Plymouth Colt, Colt Vista, Summit, Dodge Raider, Dodge Ram 50, Stealth,Conquest, Laser, Eclipse, Cloud coupes were a joint venture, mitsu supplied some of the engines for just about every k-car and cloud car. So... while not exactly half, it's way up there. I really don't think Mitsubishi would have survived as long as it has without the ability to sell it's engines and to co-develop some platforms.

And you pwned me on Nummi. I did think that all 3 were built there. Would seem logical to build the Matrix next to the Vibe, no?

However, the overall point is still valid. The domestics and imports are so intertwined that the fall of GM... or any of the Detroit three... would severely damage the rest if not to the point of total collapse.

[FUTURE_OF_GM]

I'm pretty sure GM held a 20% stake in Subaru.

(Or maybe I'm thinking of Fiat)

Edited November 27, 2008 by FUTURE_OF_GM

[thegriffon]

Most of Chryslers fwd vehicles now use a Mitsubishi platform. That's the Journey, Sebring, Avenger, Patriot, Compass and Caliber. One of the three previous Sebring models (cabrio?) was based on the Eclipse, the others were unrelated Chrysler designs with similar styling. In addition Chrysler imports an older version of the Mitsubishi Delica from Taiwan for sale in Mexico as a Dodge van.

[thegriffon]

Hyundai, Mitsubishi and Chrysler share ownership of the GEMA engine manufacturing plant building the world engine in the US. There are minor differences between the engines used by each however, and I'm not sure if Mitsubishi is using any engines built there.

[Hudson]

...One of the three previous Sebring models (cabrio?) was based on the Eclipse...

The coupe. The sedan and convertible were entirely Chrysler designs.

[Hudson]

I did think that all 3 were built there. Would seem logical to build the Matrix next to the Vibe, no?

I agree, but for some reason Toyota doesn't.