Why we shouldn’t feel bad for U.S. automakers

The Associated Press yesterday released a story about U.S. automakers facing disaster after 30 years of ‘denial.’

The quick point of the story: Honda and Toyota slowly eroded market share of efficient, reliable cars since the early 1980s. In the 1990s, gas was cheap and Ford, GM and Chrysler were making a killing selling high-profit trucks and SUVs, never stopping to consider what would happen should gas prices rise.

Plus, because of union agreements, labor costs were outrageous and there was no way to make a profit selling small cars. The small car market was ceded to the Japanese, then the Koreans, but life was still great because of America’s love affair with trucks.

Then the economy collapsed and gas prices skyrocketed. Now the U.S. automakers face near certain bankruptcy and executives are whining about how the government won’t help them. 

But why should they be bailed out? They all made the choice to follow the money and ignore the possibility of fuel prices catching up with the rest of the world. The consequences of that greed are now becoming evident.

I don’t argue that a strong automotive sector isn’t important to a vibrant domestic economy. I just believe that the industry needs to suffer it’s consequences then find a way to rebuild; without the help of the U.S. government.

Even a recent Cargurus.com survey of over 8,000 auto enthusiasts found that a majority of them are against a federal bailout of the auto industry.

The price of denial can be high… and this case could even lead to bankruptcy.

What do you think? Did U.S. automakers cause the mess they’re in?  



1 Comment

  1. I agree that we shouldn’t feel bad for these large corporations that are requiring taxpayer money to help them out of a situation that they themselves got into… but we should feel bad for the domino effect of job loss that one of these companies going under, would create…

    (we should also feel bad for my English teacher if she comes across my love of run-on sentences and ellipses)

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