Chinese Building Cars in Mexico to Sell at Costco/Wal-Mart . . . and Other Less-Global Observations


Steve is right: I’ve got to get back into commentary mode, because there’s too much going on in the car world right now. So, while I’m decompressing from my Mexico trip, here are some thoughts on recent developments. For the Costco story, click here.

Yesterday we learned that car sales in March were better than expected—down, but at least rising from the depths of February. Some attributed the improvement to President Obama’s commitment to the industry’s survival—in particular, backing GM and Chrysler warranties and offering incentives for buying energy-efficient cars and turning in the guzzlers.

It’s impossible to know whether these proposals will make a difference until they are tried. What we do know is that there are lots of potholes and pitfalls ahead. Getting the government into the car biz means a lot more than kicking out Rick Wagoner. But, according to analyst Maryann Keller, the government’s threat of a “surgical and fast” bankruptcy drew a line in the sand and showed a “thoughtful and realistic” response to the crisis.

Why allow them 60 days? Well, says Keller, you have to permit Chrysler time to see whether the Fiat deal can come together, and it’s the final test for whether GM can restructure without bankruptcy.

The Backlash

Obama’s task force offered a strong and informed response to the industry. Predictably, the Wall Street Journal didn’t think so. Holman Jenkins of the editorial board says the president isn’t serious about reform for Detroit because he has sold out to the UAW: “The GM bailout has become a political operation run out of the White House.” Gimme a break, Holman. It’s always politics as usual for you guys, isn’t it?

He then goes on to tell us that Rick Wagoner “did more than any GM executive to deal with the cursed legacy of 75 years of too much government attention.” His attack on creeping socialism broadens to include the 1935 Wagner act, the UAW “monopoly,” and unions in general. Yah, yah, yah.

In fact, that desperate fear of socialism (never defined) and its still-mythical power (now totally discredited) to swallow the American economy whole is part of what made GM the moribund dinosaur it became. That is the worst kind of conservatism, failure to face the realities staring one in the face.

Pigs Are Pigs, But Not Forever

2006 HUMMER H2 SUT Limited Edition Fusion OrangePart of this denial is the American desire to continue in our consumptive dream world of big cars, unlimited credit, and runaway capitalism. Finally, says Maureen Dowd, knowing we can’t have our cake and eat it too is “the big nettle we’re grasping.” Americans have gotten piggy, selfish and afflicted with “affluenza.” Our cars have come to symbolize that, in particular the Hummer.

Not to end on too down a note, let’s hear from Jay Leno, car fancier and equal-opportunity zapper:

Actually, President Obama guarantees that if you buy a G.M. or Chrysler product and they don’t survive, they will back your warranty. Well, that’s great news for consumers. Combine the efficiency of the federal government with the honesty of car mechanics.

. . . Actually, this is highly unusual for the government to take this kind of action. I mean, the closest the previous administration came to getting involved in the car industry was Bush using jumper cables to jump-start Dick Cheney’s heart.

What are your opinions of Obama’s recent actions? Will they be sufficient to set the industry on a new path? Give us an earful, please.


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