Friday, March 27, 2009
Obama likely to show automakers 'tough love'
Essentially, I see the auto industry bailouts as a means for the Obama administration to push forward with its energy and environmental policy goals. Instead of treating the car companies like the banks, we are forcing them to drastically alter their game plans to receive the funding they need to stay afloat. Now, I believe that this is a good thing because obviously the companies have failed at doing it their own way with building SUVs and not really reacting to the gas price problems that we have had over the past few years. I guess it just means that reorganization and new game plans are what President Obama and his team believe will best prepare our country for the future. He has already taken part in some energy conservation and alternative projects in his short time in office and moving the car companies in this manner is a nice first step. I just don't know about the short-term viability of the companies in the mean time. It takes a long time to build more gas-conservative vehicles and the first ones are probably going to be sold at a loss given the high price for production. Are we willing to take the short term loss to potentially have a long term gain? It appears President Obama thinks this is a risk worth taking because ultimately the reward could be significant.
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4 comments:
Do you want the government doing strategic planning for a major industry?
Not really. But what Obama said (“Just trying to build more and more SUVs and counting on gas prices being low and that’s your only profit margin, that’s just not a model that’s going to work.”) does ring true to me.
American car companies need to do something different - it's sort of sad when even in such hard economic times, Audi, a German company, was the only company that showed profits. American cars, which are usually cheaper than most foreign cars of equal standing, should show a profit, but don't. Remodeling, restructuring and paying more attention to what customers are looking for will bode well for GM, Chrysler, etc. But, you're right - we don't need the government to plan this. The companies are capable of doing this themselves.
I think the major problem with letting them be on their own, though, is that they would be playing around with tax payer's money - should be allow them a margin for error.
So the mistake was giving Detroit taxpayer money?
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