Total Pageviews

Wednesday, February 18, 2009

Confidence Pays......in Billion$

While driving by the row of car dealers in my area, it's easy to see why automakers needed the multi-billion dollar bailout they received as their massive new car inventory sits in the rain; a sign of overzealous forecasting amidst a crashing economy.

The auto industry relies largely walk-in customers buying impulsively, but I don't see the necessity for dealerships to have every model they make, in every color, with every option package, all sitting on their lot. I suppose the automakers were either oblivious to the economic free fall which dominated headlines in every publication available, or ignored it completely. Reports have stated that CEO's and their excessive use of company perks are to blame. I'm bad with money too, but I've yet to receive money from taxpayers to resolve my shortcomings.

I've seen reports of automakers laying off employees by the thousands, while other companies close specific locations in an attempt to cut losses down. Perhaps if millions of dollars in new car inventory weren't sitting out in the rain, people would still have jobs, could still afford their mortgage and would still feel secure enough to do their part in boosting the economy and investing. Instead, the big shots of these car companies are taking vacations, using limousines to get from one place to another, and then getting it all paid for by YOU AND ME when the company's balance sheet dips into the red.

I remember a store called Consumers from my early years, where everything was bought from a catalog and you basically walked up to a counter and picked up your item. Of course if the automakers only built cars to fill orders, they'd never survive. However, if an inventory cap were placed on dealerships, automakers would not have such a surplus of cars sitting on the lot which would mean much less impact if sales stop or slow down at any point. As a result, companies could afford to keep their employees on being that they don't have years' worth of salaries invested in rows of cars sitting on the back lot of dealerships everywhere.

I'm no expert in economics, but this is a simple matter of supply vs. demand and the anyone who's been paying attention to the economy during Bush's last years could easily see that demand went down as the recession continues. Now that these car companies got their massive stimulus package AKA bailout, it's time they take responsibility for their mistakes and end the greedy ways of thinking that got them into their situation.

No comments: