U.S. Auto Industry Screwed – Hope, India is Next

Cars are a curse, the spawn of the Devil himself.

Cars are not liberating but incredibly suffocating.

After the stress of driving several lakh KM over many years, you have no idea of how much schadenfreude we derive from the current dismal state of the auto industry.

To say that GM, Ford and Chrysler are in extremis (dire straits) would be an understatement.

Following decades of putting out shoddy cars, ignoring emission standards and overpaying their executives, the U.S. auto industry has run out of options and now stands on the cliff’s edge with a begging bowl pleading for help from the Congress.

Congress must not give them a dime (fat chance they’d listen to us) but the idiots will. Media reports in the U.S. say the auto industrey is begging for $50 billion.

Hummer H3 – Ugly Gas Guzzler

As U.S. President-Elect Barack Obama said in his first press conference (post-election) today:

The news coming out of the auto industry this week reminds us of the hardship it faces — hardship that goes far beyond individual auto companies to the countless suppliers, small businesses and communities throughout our nation who depend on a vibrant American auto industry. The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil.

Look at the latest quarterly losses of GM & Ford (since Chrysler is a private company, it does not report its numbers but we have no doubt that they are as ugly):

Third Quarter Loss & Stock Price (Friday)
GM – $2.5 billion  $4.36
Ford – $3 billion  $2.02

Public transportation is the panacea (one of them, at least) for so many problems caused by the auto industry in America and elsewhere – buying oil from the Middle East despots,  rapid depletion of a precious commodity, pollution, road rage and sheer waste of money on these scary and dangerous metal boxes on wheels (if you don’t think it’s scary try driving a SUV in pouring rain after sunset on Bay Bridge near Annapolis, MD with monstrous tractor-trailers in the next lane).

Cars also force government investment in highways, toll infrastructure, police to enforce speed limits and the like when all that money could go into safer high-speed rail infrastructure.

The U.S. is pathetic when it comes to trains but invests so much in supporting the decrepit airline and auto industries because of corporate donations to Congressmen and Senators. India and Europe are so far ahead in their railway system.

Indian Auto Industry
As the U.S. car business is in decline, American, European and Japanese manufacturers like Ford, GM, BMW, Honda, Toyota and Mercedes Benz have dropped anchor and established manufacturing facilities in India.

Some experts predict that 4.2 million four-wheelers will be sold in India by 2015.

How sad and what a tragedy if Indians embrace the car with the same vengeance that Americans have done for over 100 years.

The good news is that auto demand is said to be weakening in India also with reports of a ‘virtual panic’ because of poor sales in October.

Improving public transportation is the key for major Indian metros like Bangalore, Chennai, Mumbai, Delhi and Kolkata. The crowded trains in Mumbai are a disgrace.

Of course, some will complain that the auto industry provides employment to 13 million people in India. Well, nuclear power plants, chemical facilities and missile companies also provide employment. Should we have one in every village and town?

Rapid public transit systems is what India ought to go in for to cut pollution, reduce oil dependency, ensure faster and safer transportation and conserve oil for future generations. But Indians are drunk on the prestige and ‘freedom’ they mistakenly think cars provide and are unlikely to embrace or demand better public transportation. What a shame.

Alas, ours is a cry in the wilderness and we have no illusion that any meaningful changes will happen anytime soon.

14 Responses to "U.S. Auto Industry Screwed – Hope, India is Next"

  1. aditya_k   November 7, 2008 at 11:01 pm

    I don’t know about rest of the country, but in Mumbai at least, people are realising that having a car is a problem, and not a solution……and with the advent of new, more comfortable BEST buses, sky-walks and the sky-rail (don’t know when this one would be up and running),the situation should improve……

  2. the gora   November 8, 2008 at 4:42 am

    SI: Regarding the part where you said, “The U.S. is pathetic when it comes to trains but invests so much in supporting the decrepit airline and auto industries… India and Europe are so far ahead in their railway system.”

    I’m a little confused if you are referring to city transport for trains or national rail systems.
    In terms of a city like New York, public transport/subways are fantastic and it makes absolutely no sense to own a car living there. Some other cities like Boston, D.C. have very solid public transport too.
    But national rail is too tough to sell compared to countries in Europe because of the vastness of the US. In a place like the UK, the country is so small and the big cities not very far apart so that taking the train is very efficient to travel between cities like London, Manchester, Leeds, Birmingham. 2-3 hours between places tops. You just get in and get out of the station compared to a flight which may only take an hour, but requires people to arrive at the airport at least an hour early for check-in, security, etc. so in the end the time winds up even but costs twice as much as the train ticket. Even the Eurostar train crossing the English Channel between London and Paris is only 3-4 hours. Major cities are so close together so train travel is geared for it. The problem with this country is that it is so damn big and the cities are so far apart. Amtrak train travel between Boston and NYC, NYC and Philly, Philly and D.C. makes sense. But to go from NYC to Chicago on a train is a 12 hour trip. 99/100 people would rather pay the extra $100 dollars for a plane fare that gets them there in 3 hours. Same thing out west. People don’t even have the time to take a train from San Diego to San Francisco, let alone Seattle. The culture demands now now now so there is no patience. I don’t know what it is like for India regarding trains vs. cars on a nationwide scale, but it definitely sounds like they need to provide/improve train systems within the big cities.

    SearchIndia.com Responds:

    You write above: I’m a little confused if you are referring to city transport for trains or national rail systems.

    The national rail system.

    As you probably know, in the U.S. the tracks are for the most part owned by the freight railroads, which often causes unpredictable delays on the Amtrak passenger service.

    Plus, the lack of adequate coverage and the high charges for the tickets makes a bad situation worse.

    Before the recent surge in oil prices, we had $29 fares on Southwest to many cities (example: Philly-Pittsburg, Philly-Columbus, Baltimore-Buffalo…). Very attractive fares for people living not just in Philly, Baltimore..but also suburbs. There was no way those fares or travel times could be matched on Amtrak because we haven’t invested in our Railroad system nor do we subsidize them as we ought to.

    The pathetic investment on our national railroad system (Amtrak) compared to the lobbyists-dominated Airlines and highways businesses means Amtrak is forever starved of funds and a favorite whipping boy in Congress.

    This means Amtrak deteriorates continually. Coaches are not in great shape, signaling equipment, maintenance…are not the best and the system degrades and becomes less preferred by passengers and commuters, which gives the lobbyists an opportunity to claim that no one likes Amtrak. A vicious cycle.

    Then there’s the speed. Compared to the French TGV, Germany’s ICE or Japan’s Shinkansen, our Amtrak trains are much slower (one reason given is the curves on the tracks…remember Amtrak doesn’t own the tracks) because of our lack of investments in the entire rail system. If trains are faster and fares subsidized, more Americans would travel in them.

    If we can spend billions on Airline industry and Highways, why not on the Rail System. The problem is we have no one to speak for the common man or the railroads because we can’t afford high-priced K Street lobbyists.

    Even in New York, if you live in Manhattan the train system is OK but not that great if you live in Long Island.

    That said Amtrak service leaves a lot to be desired. The conductors are surly (particularly in the refreshment rooms) and the coaches could be cleaner.

    In any case, the public transportation system outside NYC in states like Delaware is beyond pathetic.

    Bottomline: In our view, Public Transportation and Healthcare ought to be low-cost and extensive, which mean the national governments must subsidize them in the larger interest. We no longer have private militias but trust in state-funded police/army. So why shouldn’t the govt take a larger role in public transportation & healthcare.

  3. shuaib68   November 8, 2008 at 7:49 am

    For some reason, the people here in UAE like Hummer very much. We see many of these models running everywhere. The reason can be that the Gasoline is cheap. The other reason is you can find finance very easily.

    There’s no tax in your income for now. But, maybe they would introduce in the future, no one knows for sure. The economic downturn in the US has affected the real estate business in a big way in Dubai & Abu Dhabi. Prices are falling and balloon sellers (The property trading mafias who push prices beyond the reach of ordinary citizens to maximise the profits) are panicking. These guys are the first to get affected by the economic tsunami.

    People are keeping away from investing in real estate. We don’t get a clear picture as the media is somewhat controlled by the state. They keep on saying that the Middle East economies are sound and unaffected. But we don’t believe that.

    Of course, these people have enormous petro wealth accumulated over time. But, I do know is that there were mega projects that were initiated and have been delayed in launching due these factors. Things are not rosy for the real estate & property business.

    UAE has been mooting to attract many of the western buyers of prime properties in exclusive modern projects in Dubai and Abu Dhabi. How the western buyers are going to get attracted in these unsteady market condition is very much a question.

    SearchIndia.com Responds:

    You write: For some reason, the people here in UAE like Hummer very much

    In the U.S., Hummer is completely screwed. GM is trying to get rid of it.

    You write: The economic downturn in the US has affected the real estate business in a big way in Dubai & Abu Dhabi.

    We remember reading recently that even Bollywood superstar Shahrukh Khan has gotten involved in a Middle East real estate venture (Shahrukh Khan Boulevard) in Al Dana Island in Ras Al Khaimah state, UAE.

  4. shuaib68   November 8, 2008 at 10:51 am

    Not only Shah Rukh Khan, Michael Jackson, Michael Schumacher and many others came in a big way. But, I don’t have any infomation about its details right now. There was some news about Gugenheim musueum being constructed in Abu Dhabi.

    They have all the plans for the rich and the famous. But, middle income section of the society is struggling to find a decent place to live.

    This is the sad part of the life in the UAE.

    SearchIndia.com Responds:

    You write above: Not only Shah Rukh Khan, Michael Jackson, Michael Schumacher and many others came in a big way

    You forgot to mention Idi Amin (of human flesh is salty fame) who made his home in the Middle East until his death a few years back.

  5. shuaib68   November 8, 2008 at 11:35 pm

    Yes, he was in Saudi Arabia I think. I wonder why Saudi wanted to have him in their country. There was no condemnation from western countries. Maybe, it was due to Saudi being a staunch US ally. The amount of human rights violations carried out by Saudi is enormous. But, they’re simply subdued by the mainstream media.

    If you belong to the US & Western alligned group, you can do whatever you like. This what Saddam Hussain did, and even the Israel is doing it for the last 60 years. Why the recent incident of Georgia attacking their own people with the aid & the full backing of US & Israel and it was a different matter when they got hammered and cornered in their own folly.

    Midlle East countries are a full of hypocrisy. It’s the power block that is controlling the affairs here. UAE is a staunch US ally. So, they don’t talk openly about the mismanagements of the US. These are US protectorate nations.

    You scratch my back & I’ll scratch yours – Policy.

    SearchIndia.com Responds:

    Not many remember today that besides being a butcher, Idi Amin also caused considerable distress to the ethnic Indian community (mostly Gujarati businessmen) in Uganda. He expelled most of them making a bad economic situation worse when most of the expropriated businesses collapsed.

  6. aditya_k   November 9, 2008 at 1:12 am

    yipeee!! Chandrayaan 1 in the moon’s orbit at last…..

    SearchIndia.com Responds:

    Wonder why Chandrayan is carrying a payload from NASA…strange.

  7. joeantony   November 9, 2008 at 11:48 pm

    S.I.: Wonder why Chandrayan is carrying a payload from NASA…strange.

    may be US hasnt ‘really’ made it to moon so far 🙂


    US would have made it to moon later.. but I somehow believe that 1969 was a fake..

    SearchIndia.com Responds:

    You write above: may be US hasnt ‘really’ made it to moon so far 🙂

    So Neil Armstrong’s famous line: A Small step for man….was all BS? 🙂

  8. shuaib68   November 10, 2008 at 12:37 am

    As further informations to support my above post I have provided the following links:

    This article discusses about the scaling back of major projects. Proceeding with the construction of the Gugenheim Museum, Slowing down on up-market segment of the real estate and focussing more on middle income market segment of the society..etc.


    Looks like these guys are coming to their senses, I believe. Balloon Sellers (Real Estate traders on maximising profit by fooling everybody) are going out of business. The cat is out of the bag, boy.

    Thank you USA for the invention of Credit Crisis that drove many of the Real Estate guys’ brains that were floating in the air up above their heads that came down and settled back again in their hollow skull as a result of it.

    The Arabs are tightening their skull covering cloth now. For it will help them to keep their brains in it’s originally intended location.

    Good news for us (for me especially). These talk of development and related activities do nothing to the poorer sections of the societies in any country.

    BTW, I watched SICKO yesterday. It’s sickening and freightening. I thought everybody should fear the so called impending attacks by the terrorists. But, it looks like the medical industry and the coporate world are the hidden terrorists who are actually doing the most killing and daylight robberies. The politicians on their part playing it very well by supporting these crooked killers for profits.

    Somebody must re-define the meaning of TERRORIST.

    SearchIndia.com Responds:

    Sicko is a great documentary. We watched it in NYC…liked it a lot.

    The New York Times had a front-page story on Sunday on how hospitals are deporting even legal immigrant patients if they have no money.

    The greed of American hospitals, insurance companies, pharmaceutical firms and doctors is unbelievable and a tragedy beyond description for poor folks.

  9. SRINIVAS   November 10, 2008 at 1:32 am

    This is a good article …the heading is a bit misleading though.

    My take : Public and Private Transport will and should always co-exist. Private Transport needs to be curbed or limited to some extent (the way singapore does it) .

    India and other countries wherein a vast majority does not own a vehicle – and hence will be a attractive market over a period of time .

    If you have heard of PLC or Product Life Cycle concept .. then Auto Industry in developed countries are heading towards the Decline stage

    India / China and others will keep many US brands / companies and other Global Corporations alive (hence some American Jobs also) by providing a market for their goods … if GM or Ford does not sell in India then Tata / Maruti will do so .. market is up for grabs either ways ..

    I share this unhappines of American Majors coming to India .. since they grab the Market share / growth at the expense of Indian companies …

    Public Transport is being developed all over India… since Population density is high .. you cannot afford a scenario wherein every body owns a vehicle ..

    SearchIndia.com Responds:

    1. We like the Singapore model too.

    Even in the early 1990s (if our memory serves us right), they had congestion pricing for cabs in some parts of the city. We like the city too…nice memories of Serangoon Road, Mustafa….

    2. You write: I share this unhappines of American Majors coming to India .. since they grab the Market share / growth at the expense of Indian companies …

    When American companies set up shop in India, they at least create some jobs in India even if they grab market share. But when American jobs are outsourced to India, the American employees here lose completely.

  10. SRINIVAS   November 10, 2008 at 1:37 am

    Wonder why Chandrayan is carrying a payload from NASA…strange.

    Chandrayan is carrying payload for many countries ..US being one of them .. Strategic partnership .. that’s all .. also can’t keep sending one every time you need .. then costs will become prohibitive …makes sense for all to share the costs

  11. SRINIVAS   November 10, 2008 at 1:45 am

    I am not sure if you have heard or watch a program called as ” Unreported World” in Channel 4 .

    This takes you to all those places in the world which you may have not heard of / or have very little knowledge about .. ex Haiti , Papua Guinea , PAraguay etc .. and talks about political and Business issues ..

    Watch one or two and you may like it ..

    SearchIndia.com Responds:

    We just checked out Unreported World. Looks interesting. We’ll watch it & hopefully also do a post soon.


  12. SRINIVAS   November 10, 2008 at 4:03 am

    SI : When American companies set up shop in India, they at least create some jobs in India even if they grab market share. But when American jobs are outsourced to India, the American employees here lose completely.

    American Companies don’t create new jobs / or create new market’s — potential for both already exists in India and is up for grabs ..Americans grab it so that their companies retain the competitive edge … Job creation is just incidental and not the main motive of these companies .. if they dont others will come or Indian companies will do it …. so when others start selling thier goods cheaply .. American companies will lose out and in turn employees will lose their jobs ..

    American companies dominate the globe because other countries allow them to set shop .. do business .. make money and Repatriate profits back to America . Many American Jobs exists because their companies are global .

    Software / Call Centres etc are not new jobs in itself … they are support functions of a company .. when you reduce cost on them by outsourcing .. the price of your core product comes down … so only then you will be able to match the price and sell that product in other countries .. only then you will retain/grow global marketshare .. only then you will dominate …

    so its not only about jobs ….. if jobs dont come by .. American companies will find that they are not welcome in many countries / market’s in the world ..they may not be allowed to Repatriate profits .

    This is how globalisation works ..

    SearchIndia.com Responds:

    You write above: American Companies don’t create new jobs …. Job creation is just incidental and not the main motive of these companies.

    Oh, really?

    But for the American companies in India, many Indian men would still be moving about in langot or komanam (loin cloth barely covering the schlong), many women wouldn’t have blouses to cover their tits, many kids would be running round naked, many families wouldn’t be able to afford dowries for their daughters and many youngsters like you would at best be looking up the words Internet and blog in a dictionary (Yeah, yeah, we know that’s a bit of exaggeration 🙂 )

    Whether it’s incidental, accidental or deliberate, American companies have created tens of thousands of jobs in India. That is an undisputable fact.

    IBM, HP, GE, Citi, Microsoft, Oracle, Yahoo, Google…the list goes on ad infinitum.

    Job creation in India may be the collateral benefits of American companies’ eternal search for lower costs. But the benefits are concrete to hundreds of thousands (employees and their families) in India.

    Bottomline, as a result of these tectonic economic shifts purchasing power has increased in India but decreased in the U.S.

  13. joeantony   November 10, 2008 at 8:27 am

    S.I: Public transportation is the panacea

    I lived in the Sillicon Valley for 9 months without a car… that part of CA had good pub trans, some of my buddies who had car also preferred to go by bus as its cheaper and costs only 10 mins more of your time…

    SearchIndia.com Responds:

    You write above: that part of CA had good pub trans

    We used to live in Southern California some years ago and the public transportation there was not good.

  14. joeantony   November 11, 2008 at 12:25 am

    S.I: We used to live in Southern California some years ago and the public transportation there was not good.

    True, most of the parts have this issue… esp there is no viable city to city transport… When we wanted to travel to Reno from SJ by public transport .. Amtrak shcheduled a 2 day journey (!?) funny isnt it… but I think the geographical nature of US makes it very difficult to make a strong land transport.. thats why I think they have investing greatly in roads (freeways esp).. I give you the road, you gotta get a car and ride yourself… I think it is sensible though…

    SearchIndia.com Responds:

    We think there is no committment to cheap public transport in the U.S.

    It’s distressing that even people don’t demand cheap public transportation as a right.

    Guess the only thing in demand here these days are breast augmentation, botox injections and Viagra/Cialis for you-know-what.

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