Tuesday, February 17, 2009
GM, Chrysler Push for More U.S. Aid After Mistakes
I guess the money that we have given in support of the auto bailout is not enough, who could have figured that the companies would keep coming back for more? GM and Chrysler have not shown many signs of improvement in the last few months and here they come again before the Treasury to get more aid. How long are we going to continue to support companies that do not have the proper management and organization needed for proper growth and success? The more we continue to give these companies funding, the more vested we become in their success. The government can only regulate so much and there is no way to ensure that every move the companies are making are beneficial or not, so we get left with the people who were a cause in the downfall of the companies making the decisions with our taxpayer money.
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First of all, the Detroit three had anything to do with the economic collapse. That blame rests with Wall Street and an American public (spurred on by Washington) that spent beyond its means. I think it is ridiculous to rail against helping the auto industry, which are victims of the credit market, and then give away billions to the banks that got us in to this mess.
Second, if we let GM and Chryslyer go bankrupt you can say goodbye to any semblence of an American automobile sector for at least a decade. Not only would this cause even more unemployment, but it could very well mean the collapse of the manufacturing sector. Personally, I think it is important that the United States actually MAKE something rather than simply be a creator of financial gimmicks. I suggest you read Alexander Hamilton's "Report on Manufactures" to see how the smartest founding father placed the future of U.S. economic growth on the strength of our manufacturing sector.
Third, as someone who follows the auto industry very closely, I can tell you that the Detriot Three are actually building competitive cars now. Ford will be releasing its new Ford Fusion midsized sedan, of which its hybrid version completely outperforms the Toyota Camry in every single category. You should also take a look at many of GM's new cars (Cadillac CTS, CTS-V, SRX; Buick Enclave and new LaCrosse; Chevy Malibu, Volt, Camaro; Pontiac G8 and SO ON) which are not only competitive performance and cost wise, but are completely stunning in terms of design. Detriot can build good cars, there is no question of that. It is just a shame all these cars are reaching showrooms when no one is looking to buy!
Many people say that the Detriot Three are getting what they deserve after decades of producing crappy cars and focusing solely on SUVs and large trucks. There is some truth to this matter, but the government has to take much of the blame as well. First, the use of Corporate Average Fuel Economy standards to motivate the building of more fuel efficient cars is absolutely DUMB. CAFE forces automakers to make cars people don't want to buy in order to meet the requirements. It also requires the cancellation of models that people do want due to their low milage. This is just another example of supply-side economic thinking that has failed to work. Simply put, the government should have instituted a demand-side rebate or some other form of incentive to get consumers to buy small cars rather than putting the onus on the automakers. If Congress wants people to buy hybrids, someone please tell me why the government rebates on them expire after a certain number of the specific model has been sold?!?! It's completely mind-numbingly dumb.
Oh and for those of you who believe the D3 are the epitome of evil and Toyota is the smartest company in the world, let me point to the Toyota Tundra and Seqouia that came out in 2007. Toyota invested BILLIONS in these two models in order to compete with the D3's large SUVs and trucks. Yet, thanks to its prius derived green-washed image, Toyota has gotten almost no flak for this decision. As I write this Toyota has cut production on both of these models, with thousands of unsold ones sitting on dealer lots.
This takes me to my final point (I promise). No car company saw the rise in gas prices or the economic collapse coming. Even now, automakers are having a tough time figuring out what cars Americans want to buy. In the Summer of 2008, SUV and Truck sales plummeted relative to sales of fuel-sippers. Now with gas at $2.00 a gallon, Truck and SUV sales are rising relative to small car sales. No car company is capable of adapting to these rapidly changing preferences. If a business can't even decide what cars it should be making, how will Congress?
/rant off
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