No. of Recommendations: 5
Ever watch a hospital show and the doctors make a heroic effort to save a patient, and just when they think they've got it figured out, there is a turn for the worse, and it's time to gather the family for a tearful goodbye.

That is where the US auto industry is at.

This deep recession, teetering on depression is going to kill the US auto industry.

Back in December the Big Three said that they need annual US car sales to be at a 12 to 13 million level for them to be viable. Annual sales have drifted to 9.6 million in volume. That not only isn't enough to support Detroit, but analysts had said in October last year that under 10 million the whole North American auto industry would start to fall apart. Economies of scale fall apart (you just lost 40% of your economy of sale) production costs go up with a need to generate more profits and sell lower cost products to a battered consumer.

The perfect storm.

The Big Three SAID they needed 12 to 13 million annual to survive even with government help.

They can't survive.

If you're into GM, its time to get out, I just don't see them being viable past March 31, 2009 and I see the government letting them die. The only hope, is that by the governments own projections, the 1.8 million additional job losses over 12 months after a collapse will be seen as too much, and they'll keep them afloat anyway, even though they aren't viable. But - that is a long shot as Americans grow weary of any bailout that doesn't benefit them directly, or protect Wall Street banker bonuses. We can frog march auto execs into Washington D.C. and blast them for corporate jets, but we don't do the same for banks. Ugh - what's the point on that one.


1) Chrysler goes first
2) GM follows within 30 days
3) Suppliers start going almost immediately
4) Ford goes within 90 to 120 days from there
5) Nissan begs for help from the Japanese government, production is crippled do to parts shortages - Nissan has no truck line up for 2010 and makes a decision to limp along with the Titan and Armada for another model year
6) Toyota piles on massive losses in 2009 that will rival Detroit Big Three, and production will be crippled, particularly on the Tundra, Sequoia, Highlander, Camry, Sienna, and Venza - Toyota shops for a buyer of their 12% stake in Fuji Heavy Industries (Subaru) to shore up the balance sheet - part shortages are wide spread and costs go up
7) Honda goes into the red, not as bad as Nissan or Toyota, but they go red - part shortages and increased costs eat at margins
8) Subaru is hurt by parts shortages and increased costs
9) Mitsubishi pulls out of the United States
10) Smart pulls out of the United States
11) 2.5 million auto related job losses from manufacturing, parts, suppliers, dealerships, shipping/transit, and service departments nationally - not to even include the ripple effect for things like zinc mining or steel production

US annualized car sale volume drops to 9 million after the GM/Chrysler/Ford inventory is fire sold at 60 to 70 cents on a dollar, flooding the market with inexpensive, quality, vehicles. The US government is on the hook for the warranties on the cars to drive them out and forces TARP money to be used on the loans.

CAR-mageddon is coming. It's O-V-E-R.
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