On the heels of the announcement of a new president-elect, the automakers have announced that they are going to request immediate aid from the federal government, in the form of a 25 billion dollar bailout package, to help the struggling corporations avoid bankruptcy.  The government had previously agreed to a 25 billion dollar bailout loan back in September to update auto plants.  The new request is in addition to the previously approved bailout.  Recently, GM requested a 10 billion dollar loan from the federal government to facilitate its desire to purchase the struggling Chrysler corporation.  It is currently unclear as to whether the 25 billion dollar request is in replacement of the 10 billion, or in addition to it. 

In reaction to expected dismal earnings projections by the automakers, Ford has already hinted that it will suspend production to recoup some of it losses.  Gm is in worse shape, and is expected to announce layoffs.

The problems in the auto industry are seeming to mirror the problems in the housing industry.  Too many products, too few consumers.  While the automakers continued to crank out production line vehicles at record breaking volume, the consumers were learning to maintain their current autos and try to get as much mileage out of them as possible before shopping for a new car or truck.

The consumer is not trading in the old vehicle as they did ten years ago, the current consumer is driving it until it dies, donating it to charity, and then attempting to purchase a gently used car.  Many people have been capitalizing on the previous trend of the wealthy to lease a vehicle for a year, then turn it in for another.  This practice flooded the auto market with 12 month old vehicles that were still under bumper-to-bumper factory warranty until at least 36,000 miles, and had the advantage of being driven enough to work out the new car bugs.  Consequently, many many people currently own more than one vehicle.

Unfortunately, the auto market may have to wait it out, and some automakers may have to go under, before the volume of consumers one again outnumbers the volume of working vehicles on the road, and thereby creating a need for new production.  The mindset of the current consumer is no longer driven by status as it was in the past.  The current consumer is returning to a more conservative, need-based rationale that is making the outlook for the automakers seem more and more discouraging.