Thursday, November 20, 2008

No Point In A Bailout For Auto

There is no point in loaning the Big Three money unless they prove that they can continue on as going concerns. They currently lose billions per quarter, WHAT WILL CHANGE FROM A LOAN? If all giving a loan will do is allow them to lose money for a longer time, then there is no point in doing so.

I'm surprised that Congress asked some tough questions and got to the bottom line. What exactly will the Big Three do to change their circumstances? Don't tell me make more green cars, that's very poor thinking, they already make green cars like the Chevy Malibu and their hybrid SUVs. What matters is that those cars can't compete against the BETTER green cars of Toyota and Honda. Why buy a Malibu when you can buy a Civic? The Malibu is cheaper, but not cheap enough and they're as cheap as GM can go.

So basically the question becomes, how can the Big Three produce a BETTER small car than Toyota and Honda in the timeframe they have under a loan? The executives were vague because they know the answer is that they can't. They can't possibly make a better car and leapfrog Toyota and Honda in just two years or so. It takes that long just to come up with a new car, basically they'd have ONE shot to produce a car that would leapfrog Toyota's and Honda's new designs and that just isn't possible.

The Big Three can still survive, but not in their current form. They have to be allowed to downsize for real, that is close down whatever factories they need to and fire as many workers as they need to. THAT's the real solution, the long-term solution. From a SUSTAINABLE base, they can then start to improve on quality and expand. But they have no way of supporting their current structure, any money put in will just be lost.

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