Three reasons US car companies are failing:
A few years ago I bought a used car. I did a lot of research. I was only willing to spend $3500 or less, so my options were limited. Another limitation--I'm tall enough that I don't fit in a two-door car such as a Geo Metro.
I went to Consumer Reports.
Best compact cars in my price range? The ones that don't break down?
Honda Accord, Toyota Corolla, Geo Prizm. The last year for the Prizm was 1997; I had several people tell me it was basically a Corolla, just with a different name. I found one from that year and have been happy with it.
So where are Chrysler, Ford, and GM? The American car companies?
Well, they don't exactly have a history of making quality products. Go to Consumer Reports. It's pretty obvious that their cars are less reliable.
Sure, they have style. They look good. I worked for a rental car company and would sometimes drive a Dodge Intrepid. The 2001 model looked very cool, it drove smoothly, and it felt very comfortable. The 2001 Dodge Neon also looked and drove nice (although, being a compact car, it was less comfortable). But the reliability stinks. Some people go for style, for looks, or for brand name.
More people prefer reliability. So Americans buy Toyota and Honda.
Handling their money poorly. Plenty has already been said elsewhere about how they compensate their employees. The top executives showing up in private jets to beg Congress for relief money was more of a stupid image decision than a bad financial decision, but it seems to illustrate their wasteful ways.
Size and gas mileage.
American car companies have been big into size. Get a monster truck! One that can tow a house! Look! Our SUV is bigger!
What you end up with is a bunch of little ladies and guys with Napoleon complexes driving huge vehicles around. Most of these vehicles don't get used much for towing, hauling, or off-roading. They're mainly a status symbol.
Gas prices went way up, the economy went way down, and all of a sudden these big vehicles aren't selling. They never sold much internationally (people in other countries are either too poor to afford them, or laws are to stringent to allow gas guzzlers). Now they're not selling anywhere. The companies were struggling anyway, but gas prices and the economy were the last straw.
Now, what do we do? Do we go in and save these guys? Or are they too big to fail? If we let them fail, the economy goes down more. But if we use huge amounts of money to help them out, their problems, which I mentioned above, will probably continue. Poor reliability, poor money management, big size and poor gas mileage.
I think at least one of them needs to fail. Companies, especially big companies, need to realize that they are not too big to die. I hope Congress will hold off on any help until one of these guys goes under, and then step in with loans to help the others. Let them know that they're not too big to fail. Let them know that, like all other things in a changing environment, if they don't change and adapt, they will go extinct.