Wednesday, November 26, 2008
Why the auto industry needs a bailout
The personal jet thing is emblematic of what's wrong with the American automobile industry. Ever since I can remember, the attitude of the car companies relative to the common man, has been expressed in the slogan, "What's good for General Motors is good for the U.S. of A."
Why are our car companies in deep caca? Why have they been operating on such thin margins so that within days of an economic downtown, they begin to disintegrate before our eyes? No one is suggesting that the disintegration is not real -- although it's good to be suspicious of the poohbahs heading any major corporation these days -- the numbers are clear and too many local dealers are filing bankruptcy and shutting up shop.
Methinks the number one reason, as expressed in the arrogant slogan noted above, is that "Detroit," in its self-aggrandizement, has not paid close enough attention to what people want in their vehicles, and in spite of a constant and growing trend whereby Americans purchase "foreign" cars rather than American cars, the automobile industry kept building ugly behemoths like the new Chrysler line, which were not only not attractive, but failed on the driveability, reliability and safety levels too.
Thus, the editors at Kelley Blue Book, in their 2009 list of cars with the "Best Resale Value," show only three American cars: the Jeep Wrangler in the SUV category; the Chevrolet Tahoe in the Hybrid SUV category, and the Cadillac CTS in the full-size category. The 12 other categories are filled with imports.
It gets worse for the American manufacturers. In Kelley's "2009 Best Resale Value: Top 10 Cars," not one is American made. Honda takes the number one spot and Volkswagen number 10. Six of the others are captured by Toyota/Scion.
Then, there's Car and Driver's list of the Top Ten Best Cars for 2009. Only two American cars made that list, a Cadillac and a Corvette - both GM products.
There is no question that the collapse of the auto industry in the United States would wreak economic havoc. Maybe a bailout of sorts is necessary. But if that happens, it sure as hell needs to be tied to specific performance guidelines as to how the money will be used (not for executive bonuses or expensive retreats for head honchos). And it should be in the form of a loan not a Christmas present.
Most importantly, any bailout money must be related to the manufacture of vehicles that Americans will actually buy - in other words, our cars and trucks must be made to the same specs that companies such as Toyota use.
And before the first dollar is lent, the American auto industry must have in place a plan showing exactly how they intend to do that as well as the costs involved.
Well, hell, I can dream can't I?