Automotive News - November 3, 2008 - (Page 12)

12 • NOVEMBER 3, 2008 opinion Detroit 3 need and deserve U.S. help now Now is the time for government to come to the aid of the domestic auto industry. No rational person relishes the thought of the U.S. government getting involved in any business. But if the existence of a domestic auto industry is important to this nation, society — through its government — has an interest in investing in that industry. And it has an obligation If the existence to do so. The reasons cited for helping the of a domestic Detroit 3 range from their impact auto industry is on the U.S. economy, by means of important to this direct and indirect employment, to security issues involving the potential loss of more U.S. manufacnation, society turing capability. has an interest For many reasons, the loss of the domestic automakers, their supin investing pliers and dealers would send in that industry. shock waves through communities across the country. There are many ways government can help. They range from the Energy Department’s accelerating the $25 billion in lowinterest loans that already have been approved to the Treasury Department’s lending or investing as much as $10 billion to facilitate a merger of General Motors and Chrysler LLC. Another simple step would be for the Federal Reserve to buy retail automotive paper from finance companies. It makes no sense for the Fed to make credit available for banks to buy other banks but not for consumers to buy automobiles. Whichever form the help takes, government must extend an equal amount of aid to Ford Motor Co. Ford is not yet in quite the same predicament as GM and Chrysler, but it could be soon. All three face a looming threat of bankruptcy. It would be a disaster if GM got billions and Ford got nothing. There must be provisions and guarantees that protect the taxpayers’ investment. But there should be as few bureaucratic strings as possible. The country must not be saddled with more quasi-governmental businesses that invite the kind of politically motivated mismanagement that permeated Fannie Mae and Freddie Mac and helped create the current financial morass. Some will call assistance to the Detroit 3 a bailout, but it must be more than that. The domestic industry — GM, Ford and Chrysler — must use a helping hand from government to forge a new, sustainable business model, not just to resume business as usual. It’s a huge challenge. A government-industry partnership is the only way to accomplish it. Make no mistake; Cerberus is desperate to find a buyer for Chrysler. Cerberus is losing billions of dollars of its own and its clients’ money and realizes that it cannot continue to do so. At the same time, Cerberus is trying to figure out what to do with its 51 percent of GMAC Financial Services, which also has cost it billions of dollars and requires more capital every day. GMAC even wants to become a bank holding company to cash in on some of the $700 billion that Congress gave the administration to help bail out banks. Cerberus will take the money any way it can get it. Meanwhile, for reasons that few outside General Motors can understand, GM is intent on buying Chrysler and taking it off Cerberus’ hands. GM might even give away the rest of GMAC, which would compound the earlier mistake. Unless GM gets a substantial amount of DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. Chrysler needs a buyer, but not GM cash from the U.S. government — perhaps $75 billion or more — it will only be postponing the inevitable by buying Chrysler. The number of people GM would have to fire, the plants it would have to close and the dealerships that would become redundant would eat through any bailout money from the government in a hurry. If Cerberus had any interest in saving Chrysler, it would have made more sense to shop Chrysler in China. The private equity group was completely unsuccessful in trying to peddle the company in Europe so Cerberus fell back on good old GM. I don’t know whether Cerberus had any feelers in China. The Chinese have enough money — mostly ours — to support Chrysler for years while they take Unless GM gets a substantial amount of cash from the U.S. government, it will only be postponing the inevitable by buying Chrysler. advantage of the assets. It’s a strange world. It was bad enough when Chrysler and GM worried about $4-agallon gasoline. Now gasoline is $2.50 a gallon, and we have traded that for a financial crisis and a recession/depression. Not a very good trade. If Chrysler doesn’t get help soon, it will begin to exude that terrible odor of finality. When that happens, there won’t be anything that dealers or marketing people can do. If Washington is going to give GM and Chrysler an influx of cash to try to save them, the government had better act quickly. Life support can last only so long, and both companies are in the intensive care unit. manufacturing processes for electric systems. What we in the United States should be doing is clearly spelled out by Wright. She’s certainly not alone in her thoughts. We in industry must keep the pressure on those in Washington to act. They are not very quick here by any means. They require a lot of attention, not unlike a clearly underperforming, incompetent employee. But we can’t seem ever to fire them all, and the incompetence just creeps back in. It’s not just the policymakers. Government procurement, for example, a regulatory morass, is one of the most arcane and screwed-up systems I have ever witnessed. So just because a major loan or program or regulatory law is passed, don’t think success has been achieved and you can now move forward. You are still far from it. Most important, never accept government leadership and control over your own destiny. MIKE CUMMINS President Impact Engineering Inc. Washington. The writer is a former U.S. engineering and science congressional fellow. THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Dealers pay fair share of taxes To the Editor: In response to “2 views: How the candidates’ tax plans affect dealers” (Oct. 13): I understand that your article has to be balanced, but I contend that Virginia dealer Don Beyer’s views mirror those of maybe 5 to 10 percent of the dealers in this country. I for one would rather keep my hardearned money and expand my business or give to local charities and causes that I believe in. The dealers of this country are probably the most generous in the world. Dealers in this country pay more than their fair share of taxes. I have read that according to IRS data for 2005, the top 1 percent of the population bore 39 percent of the total national income-tax burden while the bottom 50 percent paid 3 percent. Maybe Beyer ought to send an extra check with his quarterly estimate if he feels so strongly about redistributing his income. KRISS SPRADLEY Spradley Barr Ford Fort Collins, Colo. Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com rgreer@crain.com Phone: 888-446-1422 Phone: 313-446-6050 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. Compressed natural gas is the best fuel To the Editor: Considering the implications of carbon dioxide production to keep electric cars rolling — as outlined in “Where is the power going to come from?” (Comment, Sept. 29) — my best-choice fuel for the present and the future would have to be compressed natural gas. It is natural, clean and available, and its use would support American companies vs. Middle Eastern companies. Additionally, the cost is less than that of gasoline, and most current automotive engines are easily converted. It seems to me that the answer to the automotive fuel problem is obvious. CNG, CNG, CNG! JIM W. CARTER President Carter Chevrolet Agency LLC Okarche, Okla. Washington hurts, not helps, electrics To the Editor: As an electric-hybrid technologist, Mary Ann Wright makes good sense in “Energy alternatives/It’s time we control our own destiny” (Oct. 20). She states, “Fortunately, there is an effective replacement for petroleum motor fuels: electricity.” Most agree that a major battery breakthrough is still absolutely necessary if electric systems are to achieve high volumes. The Japanese will continue to spend large amounts on development, on subsidizing the early adopters, on generating new materials and inventions, on maturing the http://www.autonews.com/signup http://www.autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - November 3, 2008

Credit? Come and get it, industry groups say GM's product delays signal dire health Ford sticks with small-car plans Mitsubishi CEO: Let's halt Galant production in U.S. A dealer â and his reputation â on the ballot Help vehicles shed pounds American Axle posts loss UAW hires bailout adviser Ford to spend $200 million to upgrade 2 Ky. plants No off-lease cars? Certified will find others Arlena Sawyers China's stock market plunge has spooked car shoppers Advantage, Ford: Mulally likes owning Ford Credit Supplier execs join innovation panel at congress Quietly, Mini seeks 500 drivers to lease electric car for a year Reynolds bolsters document business Winterkorn: Audi needs to build in U.S. The great revenue drop of 2008 Bidders bet they can rebuild Heard 1 size fits all NADA: Give us tax incentives, dealer loan guarantees Campaigns' climate, energy plans hit economic wall Detroit 3 need and deserve U.S. help now Chrysler needs a buyer, but not GM Dealers pay fair share of taxes Washington hurts, not helps, electrics Compressed natural gas is the best fuel New ads aim to raise Suzuki's low profile Suzuki's new ad strategist: This brand has soul Fuel efficiency is coming â it just takes time Electrics edge closer by 2010 Tougher CAFE standards loom R&d chiefs shift gears for an electric future Japan carmakers lead charge into electrics Buffett backs BYD's sketchy plan for U.S. electric car Q&A: BYD envisions 2010 exports to U.S., Europe Girding the power grid for an electric fleet Hype powers plug-in vehicles Coachbuilders see salvation in electric cars Electric vehicles are charging into Europe Expect stop-start's big start to arrive in 2010 Flexibility will help Honda survive the storm Nardelli: Bailout not perfect â but needed Audi goes high-tech to boost service Acura offers quick service to win business Toyota's fashion fan Picture this Hondaâs N.A. operating profit falls 80.6% in quarter Aug. RV shipments fall 44% VW drops hints about car for new Tenn. plant Mexico sales fall 10.7% in September Honda to boost CR-V, end Civic output in Ohio Ford and GM jockey for steel discounts Dealers Ford Credit seeks to tap $700 billion package GM will end a used-car incentive early Nissan, Mitsubishi, Mazda recast fiscal 2009 forecasts Metaldyne to bondholders: Take 30% or Chap. 11 looms Detroit 3 ties hurt profits of dealer groups GM takeover would eviscerate Chrysler ranks, model lineup Mitsubishi plans electric hauler To match Toyota, Nissan offers 0% loans Sticker, sticker at the mall, what's the cheapest of them all? The Versa Waiting is what it's all about, Alfa Buy Chrysler? GM should sell Buick to SAIC Pickups pumped up by pump price plunge Chrysler hybrids, we hardly new ye Ghosn: Your best partner is a president in your pocket Sonic wins, but Mercedes wants last word

Automotive News - November 3, 2008

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