The Big 3 – The Future for GM, Ford and Chrysler

Bankruptcy and Consumer Confidence in U.S. Car Manufacturers

Sep 1, 2009

It seems that many consumers have lost confidence in U.S. car manufacturers ability to stay afloat during hard economic times. What's does the future hold for the Big 3?

There’s been a lot of buzz lately about GM and Chrysler's future after bankruptcy reorganization. Consumers fear that if they purchase a new American vehicle, that the car companies won’t be around for repairs if they have any warranty concerns. Do consumers really want to purchase a car or truck from a car company that can’t remain solvent?

The Obama Warranty Plan for GM and Chrysler

In a bid to restore consumer confidence for GM and Chrysler products, President Obama assured the public that the government would pick up the tab for warranty repairs that GM or Chrysler couldn’t handle. What about GM or Chrysler vehicles purchased before Obama’s announcement? What about any kind of recalls in the future, after the normal warranty expires? It seems that many of these consumers would just be out of luck.

Cash for Clunkers Program – A Telling Sign?

Automotive New reported that Ford, Subaru and Hyundai led the pack in August 2009 for the first sales gain in 21 months, mainly due to the CARS program or Cash for Clunkers. What about GM and Chrysler? Are more Americans leaning towards Ford because of their confidence in the other Big 3? Perhaps Americans are just upset the way GM and Chrysler ran their companies and they’re switching to Ford Products.

The Strategy Behind GM and Chrysler's Dealership Closures

The average consumer probably wonders what strategies are behind closing dealerships. Many might think that more dealers translates into selling more cars. Closing a dealership is basically a long-term strategy. As car sales continue to decline, dealerships profits naturally decrease. By eliminating weaker dealers, the strategy is to make the stronger dealers even stronger. The hope is that the stronger dealers will realize an increase in vehicle, parts and service sales due to the elimination of dealers down the street.

GM and Chrysler’s Bankruptcies Affect on Ford

Ford is already starting to feel the affect of GM and Chrysler’s insolvency. Many of the auto parts suppliers that GM and Chrysler use are the same suppliers that Ford uses. Because of the parts suppliers’ inability to get money owed them from GM or Chrysler, some are forced to file bankruptcy or close their doors all together. Japanese and other foreign car manufacturers don’t have this problem because many of their parts suppliers are in other countries.

The quality of American made cars has never been better. Many believe that American cars of today are equal in quality to their Japanese counterparts. The biggest problem is getting the American consumer to accept the quality of American cars as equals, after years of inequalities. So where are the Big 3 headed? What futures in store for GM, Chrysler and Ford? Only time will tell.

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