Detroit Bankruptcy is going to continue to soar in 2009 just as the unemployment rate jumped to 22%. Michigan was one of the first states to feel the slow down of the economy. The first was the slow down in the sales of automobiles. This can could be attributed to energy prices skyrocketing and SUV’s and trucks being in high demand for the past 10 years. The bigh3 met the demand and placed those vehicles out on the road. Customers demanded large vehicles and the Big three provided that demand. Demand changed and they were able to retool and offer decent cars that were fuel efficent. However, people were not buying fuel efficent vehicles because they were stuck with auto payments for large SUV’s that they are upside down in. They owe 20k on a SUV that is only worth 12K. to show that this was not entirely GM or Fords fault. Toyota was just begining to jump in the mix and offer large trucks and cross over vehicles.
Just as people that are expereincing forclosure and watching their equityin their home melt away;people are watching as the value of their vehicle drop. Most people know a vehicle is not an investment. However, you expect your purchase to retain some sort of value. When energy/gas prices took off and people could barely afford to drive the SUV.. People couldn’t sell or get rid of them to buy the fuel efficent vehicles that GM, Ford or Chrysler had in show rooms.
Is it really the automakers fault people are upside down in their vehicles and people can get out of them?
Congress is willing to bailout Wallstreet and make the automakers come up with a detail plan to make better vehicles. The point is. They alread had those plans but people are stuck in houses that they can not sell and vehicles they can’t trade in or sell for the amount owed.
The plain fact is the United States has outsourced most of it’s manufacturing and what will affect detroit will also affect other industries. The U.S can be an entirely service oriented country and continue to be a world power. The sad fact with Walls street failing and Detroit Bankruptcies skyrocketing.. 2009 may spread out to other cities showing that Detroit still leads the way even if it is the collapse of Detroit with unemployment and Bankruptcy.
