Imports in different ways

Every so often a half-witted twit or a support seeking politician, categories which are not mutually exclusive, boldly steps out of the mind-capsule and starts to preach about how imports are to blame for the decline and fall of the US automotive industry. Or declares war on current “imports” and urges, under threat of dismissal from the job, employees to Buy American, as Jim Fouts, mayor of Warren, Michigan, did.

The problem with Mr Mayor’s idea is the definition of what an American car actually is. Take a Pontiac Vibe and a Toyota Matrix. These cars are siblings, products of an unholy alliance between former and current world No. 1 car manufacturer. It would be interesting to see what would happen if a daredevil city employee bought a Saturn Astra. The brand is American, but the car is, let’s face it, a German Opel Astra, or, for those missing colonial ties and times, a British Vauxhall Astra. There are few European Chevrolet sourced cars in the US, not to speak about Korean based Chevrolets and Pontiacs. A Mazda Tribute is a badge engineered Ford Escape, in other words, that particular Mazda model is exactly as American as the Ford’s car sans the brand sign. There was a time when a Ford Probe was a Mazda MX-6 with a Ford’s body and, well, quality control…

Unions have a long history of bashing, often literally, imports and latest round of negotiations with General Motors didn’t really buck the trend. Although this time it was about GM’s own imports. As a way to streamline operations, the US manufacturer plans to increase imports of its own cars from China, South Korea and Mexico. This outlook didn’t mix well with the proposal to cut 21,000 jobs in the US. But lets do the math. According to Automotive News, quoting Jato Dynamics, in 2006, of over 4 million cars sold in the US, GM imported 23%, about 1 million, out of which 618,912 cars and trucks rolled from Canada and 214,096 cars and trucks from Mexico. In 2014, GM plans to sell 3+ million vehicles on the home soil. 51,000 will be imported from China, 501,000 from Mexico, 157,000 from South Korea and 330,600 from Canada. That’s 1,040,100 vehicles.

Speaking of Canada. Former CAW boss Buzz Hargrove can’t pass by a microphone without uttering a rant against bad bad bad imports, but that’s already well documented phenomenon. Here’s the news. Canadian Automobile Dealers Association (CADA) went on a crusade recently against, wait for it, right hand drive vehicles (RHD). Now, Canada is the last place one would expect to have a problem with RHD imports. RHD in Canada? Like, how? And, more importantly, like, why? Canada’s market is about the size of California’s. Size wise. Although that’s subject to discussion, because Canada minus oil riggers and hockey players equals Vatican so, as a consequence, Canadian fast and furious community lusting for JDM only (Japan Domestic Market) sports cars is too small to drive the demand for RHD.

But, apparently it exists. Despite and because of Canada’s ridiculous import restrictions. Even importing a car from the US is a chore. Imports from Europe and Japan are practically impossible. However, cars older than 15 years can be imported without complying with the Canadian “motor vehicle safety standards” which roughly translates as ‘are exempt from import restrictions’. According to CADA estimates, more than 13,500 exempted vehicles were imported in 2007. Out of them, 1,934 were likely RHD, up from 1,230 in 2006. British Columbia estimates that 100-200 RHD cars are registered in the province every month, probably due to large Asian community.

It is hard to imagine that these are all collectors’ cars from pre-war continental Europe or Blighty. CADA claims that most of them are 15-16 year old sedans, minivans and SUV.

It’s understandable that in these times CADA is fighting for every possible car sale but fighting the RHD issue on safety standard grounds is just too simplistic and too insincere. Any new car brought in from Europe would be just as safe as any car sold and bought in Canada, especially those models that sell both in Europe and North America. Which is yet another point why Canada and US should adopt international vehicle standards and stop this protectionist nonsense. Of course, CADA is not calling for rewriting Canadian import laws to allow modern and safe LHD imports.

Back in RHD-car-in-LHD-country world, driving a car with a steering wheel on the wrong side of the car is no big deal. On a highway, it makes no difference. In the city, apart from few very specific situation, it makes no difference. And overtaking on rural roads is not an issue as these are empty in Canada.

GM needs stability of being bankrupt

Bell tolls for General Motors. The company is burning cash at an alarming rate, $5.9 billion in Q4, $19.2 billion in 2008. GM has already received $13 billion from the US Government, it wants another $17 billion, but the survival plan the loan is based on is, in turn, based on sales. However, while all major car manufacturers’ sales suffered in February, GM was the only company that saw more than 50% drop, 52.9% to be precise, even when adjusted for less selling days in February 2009 (24 vs 25).

GM is doing so badly that nothing can really hurt it more. Well, one thing can. The uncertainty if or when it will file for Chapter 11.

The case for bankruptcy grew stronger on Thursday after GM released the report made by auditors from Delloite & Touche who expressed their “substantial doubts” whether the manufacturer can sustain its operations. GM is offloading everything it can, Saab and Opel, for example, but the speed of its actions points to panic. Which is very catchy these days and the fact is that most of plans to sack tens of thousand of people coined overnight are not plans. They are emotional reactions. And when emotions prevail, it’s no longer only about money, investments, markets and bailouts. That’s why it’s necessary to calm things down.

Which, for GM, means bankruptcy. Sure, it will mean rock bottom, but at least it will be a solid one.