One person's ramblings, can be another person's insight.
Posts tagged Economy
Do We Really Need Car Dealers?
May 15th
Do We Really Need Car Dealers?
While cruising the internet I came across this article. I have seen on the local news, all of the hate articles about the moves from Chrysler and GM to cut down on the number of dealers they have. A couple of points in this article is what is missing from most articles about this subject.
One, and foremost to me, is the restructuring is being done to meet the expectations of Obama’s auto task force. So in other words, it is to comply for the bailout they are trying to get. Which also lost in the shuffle is the fact that so far Ford is not asking for help. More on that later.
The second point I saw, was an interesting spin that relates very closely to my opinion of newspapers. Is the internet changing the way we buy cars? The conclusion in the article is we still need dealers, but I am wondering if that is only a temporary thing.
The internet certainly can make a buyer more aware of trends, and can compare pricing all over the US if they want to. With that information, they can haggle more effectively for that car, thus driving down the profit of the car. So is all these closings just something that would have happened in time anyway? Another bygone era along with 8 tracks?
As for Ford, I must give it to them. They are struggling that is for sure, but the longer they hold out the better it could be for them, especially with all these dealers closing. If I was in the market for a new car I would buy a Ford, not because I love the car, but because the bailout is tainting the other two.
Who would want to buy a car from a company that is closing dealerships, reducing brands, and in general is giving signs of being in severe distress. Ford may be just as strapped, and if they can hold on I think they will benefit greatly as people will feel safer buying a car from a Ford dealer over one of the other guys. Who knows, maybe in the future there will be only one of the big three left.
Obama urges Congress to pass stimulus plan
Jan 3rd
Granted, I am no economics expert, but I do think I know a few things on the basics. At least on a business level, and a personal level. “Obama urges Congress to pass stimulus plan” which is a great idea. The economy is in trouble, there is no denying that.
Remember though, we just spent $700 billion dollars on the Wall Street bailout so between these two plans the proposal is to spend $1.5 Trillion dollars. That my friend is a lot of money. The concept is great, but where are we getting this sort of cash? The current national debt reported in the Wall Street Journal is exceeding $10 Trillion dollars, so I just do not understand where this $1.5 Trillion is coming from.
In the article it speaks of tax cuts, building projects, roads, and so forth. But once again where will the money come from? Is this like that desperate second mortgage you take out on your house for some quick cash now, and later you pay for it?
When you run a business or in your personal life, and bad times come, and things are uncertain that is not the time to take a loan, or increase your debt. It is time to save money, cut the expenses you do not need, be careful what you spend. You do not take a loan out on the hopes, that in the near future you will be making enough to pay it back. Isn’t this what we are doing, since we obviously do not have the cash lying around.
Now, maybe the government plans to fund this by reducing their spending, that would be a perfect way to handle this. Redistribute the money to make it more efficient to help where it is needed, but somehow I doubt that is part of the plan.
Granted, I might be totally off base here, but I think we do need to take a second look at this. I understand we need to do something, but is this the most fiscally responsible alternative we have?