Tuesday, November 18, 2008

Why We Shouldn't Bail Out the American Automakers.

This is going to be a long one, so please, bare with me. There has been much to do lately about bailing out the American automakers. Because of the behemoth size and reach of these companies, they must be bailed out just to keep our economy from collapsing. However, I would like to look for a moment at why they should not be bailed out. If you're like me, the recent tilt-a-whirl ride of gas prices has you thinking one thing: I want off. Unfortunately most US cities do not provide a robust enough public transportation system to make this a viable and livable option as it may be in places like Manhattan or Tokyo. Places where residents have as much need for a private jet as they do an automobile.

So, until the money to develop these systems magically appears in every municipality across the country where citizens would sooner pay $4 a gallon for gas than vote for tax increases we are forced to look to the future. But don't look to Detroit. The American automakers know about as much about fuel efficiency as President Bush knows about grammar and public speaking. GMs' new Cruze (the artist formerly known as Cobalt) was going to be delayed until major backlash erupted across the net forcing even the most irresponsibly staunch supporters of GM (cough, MotorTrend, Cough, Popular Mechanics, Cough, Cough) dissented, chastising the car maker.

Meanwhile, more Americans have been buying less and less American made cars for years, a trend that has understandably accelerated during the latest gas crisis. It has accelerated because of the inefficient nature of American cars. But sales of American made cars had been on the decline for many years now because of a lack of quality. This is no surprise to anyone who has purchased a car in the passed 5+ years. Buying a better made Japanese or Korean car with higher quality materials, better fuel efficiency, higher resale value for as much as $5k less than a comparable American made car has been common place for some time now.

However, and most likely unknown to you and most Americans, is that American cars are renowned the world over for their extreme fuel efficiency as well as their extremely high quality build, materials and reliability . . . wait for it . . . as long as you don't buy them in America.

Many will tell you to buy American made because "it's the American thing to do" to "help American industry" in this difficult economic environment. However, what you have to understand, is that there has never been one company let alone an entire industry of companies that are more un-American than those of the American automobile industry.

To understand what I mean, consider the Ford Focus. Not exactly known for any of the redeeming qualities mentioned above save for the fact that it gets 35mpg. But even that isn't very impressive when you consider that the Ford Focus sold in Europe gets up to 65.6mpg not to mention it carries a reputation for reliability and high quality. Consider also the Ford Mondeo, a mid-sized family sedan also offered in wagon form. An automobile whose reputation for reliability, high quality and impeccable driver oriented interior is only out shined by it's stylish exterior. So much so that it was featured in the last James Bond film: Casino Royale (the car 007 drove to the ocean resort in while tracking down "ELIPSIS"). Did I mention that the Mondeo, comparable in size and price to a Chevy Malibu or Ford Taurus, gets up to 53.3mpg and the interior quality has been compared to that of a Jaguar? You think that's air you're breathing now? No Morpheus, I don't.

GM as well is known for high quality stylish vehicles that are above reproach in the area of fuel efficiency under the Opel brand name, often called the Audi of GM, no joke. Not even Cadillac, GMs highest quality, most luxurious brand is strong enough to garner that kind of comparison.

So while you, as an American, continue to suffer the effects of rising gas prices and a beleaguered economy drastically effected by failing Multi-Billion dollar American automakers, the cars we NEED are being made by the companies that so desperately NEED us to buy them. But they refuse to make those vehicles here. Why? I've been asking that question myself for many years to no avail. It's a question that is never addressed by any American automaker because most Americans don't know about it (pay no attention to the man behind the curtain). However, although this information is never presented to the American consumer, that doesn't change the fact that while we long for higher quality, more fuel efficient vehicles, the American automaker sells them everyday . . . wait for it . . . to anybody but us, their home town, America. Instead we get Expeditions and Escalades shoved down our throats by automakers only concerned with the quick money. Americans should not bail out the American automaker because the American automaker doesn't like the American.

So, as Detroit begs for another $25 Billion in government loans on top of the $25 Billion already approved, all while lobbying with Nancy Pelosi to be included in the $700 Billion Wall St bailout, ask yourself this: If you asked an American company to sell you something you desperately needed, only to have them refuse and announce their disdain for the American consumer by selling the exact product needed to nearly every other country on the planet, including our enemies, would you give them $750 Billion when they asked for it?

No? Then why are we?

But to reiterate what I said in the beginning the American auto industry must not be allowed to fail. Below is a video released today by GM. The facts are correct and the grim future it portrays is absolutely true. What it leaves out is the angering fact that inept management, an inability to adjust to known incoming market changes, greed and horribly inefficient product offerings in large part brought this burden to our, the tax payers, doorstep. Instead, the blame is diverted to the bad economy as though they have absolutely no accountability or responsibility for the current situation. At the end of the video GM pleads with you to write your congressmen to urge them to bail out the Big 3. I suggest you do the same, but I also suggest that you stipulate that other major changes need to be made such as cutting the salaries of the over paid executives that got the Big 3 into the mess they are in. Point in Fact, as I was writing this news came of Chrysler paying out $30Million in executive bonuses rather than using that cash to stay alive. In the 2008 election, we voted in part to elect a new president but also to remove an inept administration. If we the tax payers are to bail out the automakers, to the tune of $750 Billion, we should have the same option to remove those who had a hand in creating this travesty. A free hand out with no consequences cannot be allowed to occur. To do so will only ensure that this type of debacle will occur again having breached the "moral hazard" that was so atrociously man handled on Wall Street this year.


Anonymous said...

very nice write up :)

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Neil said...

Fanastic write up! We are in uncertain waters to be sure and as much as I hate to say it we can't let these 'Big 3' fail. We can however demand that they be more accountable with the money they are give. No more blank cheques.


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