US Government tells GM and Chrysler what vehicles to build…

…as well as saying what’s wrong with the current ones (further to Damian’s post). President Obama is, er, dictating what the two auto manufacturers must make:

…as painful as it will be in the short-term, will mark not an end, but a new beginning for a great American industry;…a 21st century auto industry that is creating new jobs, unleashing new prosperity, and manufacturing the fuel-efficient cars and trucks that will carry us toward an energy independent future. I am absolutely committed to working with Congress and the auto companies to meet one goal: the United States of America will lead the world in building the next generation of clean cars…

The president’s Auto Task Force has released a “Determination of Viability Summary” for GM and for Chrysler. These short documents, worth reading, give a good account of what has gone wrong–and then the companies are told what to build to make them right. These excerpts are from another document outlining the administration’s plan:

Technology leadership: The new GM will have a significant focus on developing high fuel-efficiency cars that have broad consumer appeal because they are cost-effective, have good performance and are reliable, durable and safe…
Independent financial analysts and industry experts are nearly unanimous in their views that, to be competitive in the decades to come, auto companies will need to transform their processes and products to improve efficiency, reduce costs and offer a higher-quality, more fuel-efficient fleet. These transformations will require substantial investment that Chrysler – according to its own plan – is not capable of making. Therefore, the Administration does not believe that on its own, Chrysler can achieve the scale or depth of product mix necessary to compete in the 21st century global auto market…
…a partnership with another automotive company, such as Fiat [“there is a framework but no final agreement“] or another prospective partner, which addresses many of these issues could lead to a path to viability for Chrysler.

All that green stuff is fine and dandy. But how actually to make vehicles, of whatever size and fuel economy, that people actually want to buy at a price they will pay? And still make a profit?
By the way, has no-one in government noticed how big Toyota Camrys and Honda Accords now are? If those governments really wanted green cars, all they have to do is raise the price of gas through much higher taxes. The Euros did that decades ago. Will our governments dare do that? Hah! They rather want a free fill-up, as it were, provided by technologies that are still a commercial stretch.
This is the real story behind the General’s dire situation:

GM has been losing market share slowly to its competitors for decades. In 1980, GM’s US market share was 45%; in 1990, GM’s US share was 36%, in 2000, its share was 29%. In 2008, its share was 22%. In short, GM has been losing 0.7% per year for the last 30 years.

The president still is certainly is playing hardball with his apparent willingness to face bankruptcy for the companies:

While Chrysler and GM are very different companies with very different paths forward, both need a fresh start to implement the restructuring plans they develop. That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger. Now, I know that when people even hear the word “bankruptcy” it can be a bit unsettling, so let me explain what I mean. What I am talking about is using our existing legal structure as a tool that, with the backing of the U.S. government, can make it easier for General Motors and Chrysler to quickly clear away old debts that are weighing them down so they can get back on their feet and onto a path to success; a tool that we can use, even as workers are staying on the job building cars that are being sold. What I am not talking about is a process where a company is broken up, sold off, and no longer exists. And what I am not talking about is having a company stuck in court for years, unable to get out.

While Ken Lewenza of the CAW continues starring in the role of “Dr No“. And the governments of Canada and Ontario, necessarily, follow the president’s lead. But will warrantees in Canada be guaranteed (done in the US), and will there be subsidies to junk an old car and buy a new one (favoured by the president)?
Any real future for GM and Chrysler obviously depends on the specific decisions of the US government (cf. the prescriptions above about the types of vehicle to build). Canadian governments can do their best to maintain production in Canada and may be able to have some success if the Americans keep the companies out of bankruptcy. Keeping 20% of total US and Canadian production in Ontario is a pipe dream–more here. But “Dr No” might ensure that the companies just quit Canada. The idjit.
Mark C.

3 thoughts on “US Government tells GM and Chrysler what vehicles to build…

  1. Powell Lucas says:

    If the incompetents running GM and Chrysler want to take the money I guess they’ll have to learn to put up with the morons in the government. The taxpaying public has been putting up with government interference in their lives for years. The only difference is the public has to pay for this intrusion. Personally, I think they shouldn’t have received a cent. They’ve been given billions already and it still looks like they will be going into bankruptcy protection, which they should have been allowed to do in the first place. Now when they do it, the taxpayer becomes just another creditor that either cuts a deal or gets 10 cents on the dollar.

  2. Philanthropist says:

    If the UAW/CAW, GM, Chrysler, Ford and the Democrat/Liberal politicians they own got their way – a Honda Civic would cost $50,000 dollars and be built overseas, but they would give you a deal on a Ford Pinto, Chrsyler K-Car or Chevy Vega for $45,000!
    Let’em all fail. Obama is a corporate fascist.

  3. Anshu says:

    Obama must not be so stupid as to think people would pay more for green cars when gas prices are low. So I suspect the plan is simple. Force GM and Chrysler to make green cars that are wildly unpopular and no where close to profitable. Make them do this long enough to get a manufacturing and technological edge on the foreign competition, and fund this entirely with tax payer money.
    Then jack the tax on gas and watch as the masses rush to buy up all those Chryslers and GMs that had been languishing on the dealer lots.
    Then Obama claims he was right all along about green technology, and that the US has achieved a greater degree of energy independence on his watch.
    I think he could accomplish this, by throwing enough money at it, within his first term.

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