Is it time for a whole new company?

[RebelKnightCSA]

Ive been thinking lately - what if a Malcolm Bricklin, John DeLorean, or Preston Tucker were to come along today, start his own company, and produce his own cars? Lets say also that the cars were good, reliable, and attractive besides. Do you think hed be able to compete? More to the point, if GM were allowed to fail, do you believe that a new company would come up and take over GMs market share?

Personally, I believe that Honda will wind up owning it all when all is said and done. After all, their cars are the best on the road. However, in this current market, do upstart companies like the ones Ive mentioned really have a chance?

[Eric]

Ive been thinking lately - what if a Malcolm Bricklin, John DeLorean, or Preston Tucker were to come along today, start his own company, and produce his own cars? Lets say also that the cars were good, reliable, and attractive besides. Do you think hed be able to compete? More to the point, if GM were allowed to fail, do you believe that a new company would come up and take over GMs market share?

Personally, I believe that Honda will wind up owning it all when all is said and done. After all, their cars are the best on the road. However, in this current market, do upstart companies like the ones Ive mentioned really have a chance?

I think there's next to nil chance for an independent start-up to succeed, irrespective of its product.

Even in Tucker's time, the challenges were formidable. Today, the obstacles are all but insurmountable.

The entire existing auto industry is a giant cartel that's also for all practical purposes an arm of the government. GM, for example, now receives the same support from our government as Toyota and Honda do from the Japanese government. An independent/start-up would face a daunting, arguably impossible, contest with these "connected" goliaths.

Compliance costs are also something no smaller/start-up could deal with. For example, an automaker typically must destroy scores of new cars to "certify" bumper impact standards and so forth. GM, Toyota, Honda, etc. can afford to do that.

A new start-up can't.

Then there's emissions compliance. Engineering a new engine (powertrain) already involves a massive investment; then you have to not only meet current federal and state emissions laws (as determined in your labs, by testing yourself, etc.) you have to (again) "certify" to the satisfaction of the federal and state governments that your cars meet those standards before they can be sold. This involves massive expense on the order of many millions of dollars.

Even if all the above could be wished away, it remains true that economies of scale enjoyed by the majors make it almost inconceivable for a small start-up to eke out a profit.

Then there are labor issues (unions, EEOC). And local red tape for the assembly lines & factories... .

As my mobbed up friends would say, fuggedaboutit!

[misterdecibel]

Honda was an upstart in the '60s.

I think the only way a upstart could make it, apart from exotics and supercars, would be if they were already established in some other industrial field and decided to branch out into cars -- like if Freightliner or Harley Davidson decided to introduce a car brand -- 'cause they already have the facilities and the experience, and the access to money.

[Eric]

Honda was an upstart in the '60s.

I think the only way a upstart could make it, apart from exotics and supercars, would be if they were already established in some other industrial field and decided to branch out into cars -- like if Freightliner or Harley Davidson decided to introduce a car brand -- 'cause they already have the facilities and the experience, and the access to money.

Agree.

And Honda had many advantages in the 1960s that are long-gone, such as virtually nonexistent emissions and safety standards to comply with, or which could be met with minimal expense. (Honda didn't even need catalytic converters for several years in the mid-late '70s because the smog standards were so minimal that its CVCC engine could pass muster without the scrubbers!)

The computer controls (chiefly for emissions purposes) used on every new car engine today represent more cost than the entire powertrain of a '70s-era car.