Automotive News - November 24, 2008 - (Page 12) 12 • NOVEMBER 24, 2008 opinion It’s time to put partisanship aside; Detroit needs help It doesn’t matter whether Washington’s helping hand to the Detroit 3 comes from new funding approved by Congress, is carved out of the $700 billion Wall Street bailout package or emerges from some other pocket. Repurposing the $25 billion in federal loans that are supposed to help automakers develop more fuel-efficient vehicles could be a short-term solution. But if General Motors, Ford Motor Co. and Chrysler LLC don’t get loans to bolster their cash reserves, they face the likelihood of an ugly, catastrophic bankAn ugly, ruptcy that would torpedo the U.S. economy. catastrophic Regrettably, the resistance to making bridge loans to the Detroit 3 bankruptcy would seems to break down along political torpedo the U.S. party lines. Last week, during the lame-duck session of Congress, Democrats economy. pushed a relief package that would have used a small portion — $25 billion — of the Wall Street bailout money for loans to the Detroit 3. But the Bush administration opposes diverting any of the $700 billion because it was earmarked for banks and financial institutions. In House and Senate committee hearings, critics of help for the Detroit 3 barraged GM CEO Rick Wagoner, Ford CEO Alan Mulally, Chrysler CEO Bob Nardelli and UAW President Ron Gettelfinger with tough questions and outspoken criticism. Some even said bankruptcy could help the automakers forge new business models. To be sure, Wagoner, Mulally and Nardelli could have been more forthcoming about their plans to rebuild their companies. When the old Chrysler Corp. needed the federal government to co-sign for loans in 1979, then-CEO Lee Iacocca unrolled plans for the K car to show that Chrysler was moving in the right direction and was worth saving. It’s easy for Republicans to take the philosophical high ground and espouse a pure market economy where automakers are concerned — even though they threw nearly threequarters of a trillion tax dollars at Wall Street in September. Of course, that was before the election. In less than two months, the Obama administration inherits the problem. And if the domestic auto industry hits the fan, it will be a political problem for Democrats. Still, using the fuel economy loans to help the Detroit 3 survive until the new administration can tackle the problem is a reasonable compromise. Despite the partisan nature of government, it frequently forges practical, if inelegant, solutions. This must be one of those times. One of General Motors’ great strengths over the years has been a finance arm that Alfred E. Sloan created almost 90 years ago. It has been one of the cornerstones of GM’s success. For what we can only assume was an early need for cash, GM sold 51 percent of General Motors Acceptance Corp. to Cerberus Capital Management in 2006, losing control in the process. That’s the same outfit that owns Chrysler, so one might even consider the possibility of a simple conflict of interest. But the critical question is: How can GM, bailout or not, continue to operate a viable automobile company while it is relying on someone else for credit? The automobile business runs on credit. Few dealers if any have enough money to buy all the cars and trucks they keep in inventory. Many dealers used to borrow the money from GMAC. 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. What GM needs is GMAC.2 A huge number of customers of those dealerships have to borrow money to buy new or used cars from those dealerships. GMAC was not created to make money as a finance company, although it has done a heck of a good job over the years doing just that. No, GMAC was created to enable GM to manufacture and sell millions of cars and trucks to consumers. Sometimes those sales came at the expense of a short-term profit for GMAC. Cerberus saw GMAC as a permanent profit center. When the recent cash crunch came along, it stopped lending money. Ford Credit didn’t stop. Toyota Credit didn’t stop. But Cerberus decided that it simply wasn’t profitable. GM dealers were crushed in the process, General Motors needs its own financing arm. and so were their sales. When a car company or an importer sets up shop in a new country, the first thing it does is set up financing for its dealers and its dealers’ customers. Sloan set up a finance arm for GM many decades ago, and it has served GM, its dealers and their customers well. It has enabled GM to grow and its dealers to carry a goodly amount of inventory. That is important in the United States because U.S. customers aren’t willing to order a car and wait four to eight weeks for delivery. When they want a car, they want it now, and they expect the dealer to make financing available. GM needs its own financing arm. GM might not be able to get it, but it sure should realize that it needs one. Don Runkle will do nothing to help the industry regain its competitive footing. MICHAEL J. STANTON President and CEO Association of International Automobile Manufacturers Inc. Arlington, Va. It’s time to move to mass transport To the Editor: The current state of the auto industry is complex, dire and emotional. This is a high-impact issue, not only to the industry but also to the world economy. As politicians go about their bickering ways regarding the subsidizing of the U.S. economy, they are missing the perfect opportunity to move this country forward toward mass transportation. As anyone who has traveled abroad knows, the United States is dramatically behind the rest of the world in mass transportation. A transportation network would succeed in several ways. First, it would maintain and possibly add jobs to the economy. Also, it would create a new infrastructure and, therefore, maintenance jobs. It would keep manufacturing jobs in the United States. It also would reduce the number of autos on the road and reduce our dependence on foreign oil, as well as help the environment. Finally, if this industry were located in the northern Midwest, it would replace any lost jobs. Contracts could be awarded to companies such as the Detroit 3 and help the area become what it once was: a great center of transportation and manufacturing capability. President-elect Obama and other U.S. politicians have an opportunity to make good on some of their promises by taking advantage of this situation. They must do so for the good of the economy, the good of the auto industry and the good of the nation. FRANK A. TURNER Marysville, Ohio The writer works for a major automaker. THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. ‘Buy American’ talk won’t help industry To the Editor: It was only a matter of time before the well-intentioned but tired, wrongheaded idea of providing incentives for purchasers of Detroit 3 vehicles surfaced once more (“How to revive the industry and help it thrive,” Opinion, Nov. 17). In times of industry crisis, the advancement of this idea is as predictable as the tides. The incentive idea also is unhelpful and unproductive. The economic turmoil roiling our industry is real; proposed solutions, therefore, must not rest on antiquated notions of an industry neatly divided into “domestic” and “international” camps. The Association of International Automobile Manufacturers understands the importance of maintaining a strong U.S. automobile industry — our members are an integral part of that industry. We’ve got mail As the CEOs of the Detroit 3 went to Washington last week to seek federal help, the Automotive News mailbox was overflowing with letters from readers. Excerpts from many of them are on Page 14. There are also instructions on how to add your opinion to the mix. 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. You’ll find more reader comments on our Web site. autonews.com We empathize with the challenge facing our Detroit 3 competitors. The consequences of the current downturn are not felt by them alone. 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Table of Contents Feed for the Digital Edition of Automotive News - November 24, 2008 Iacocca tip: 'Equality of sacrifice' Ch. 11 would hit dealers hard â fast Detroit 3: Bankruptcy = doom Down the road and a continent away Used-vehicle demand shrivels O'Neill will lead Power GM tweaks production plan Mitsubishi: No to Detroit Ford will cut more output Nardelli: Chrysler is running on fumes GMAC on brink of bankruptcy, S&P warns Off with their heads! (But whose?) In defense (kind of) of Detroit Bailout Motors? Britain went down that road CEOs could have pre-empted the grilling Ford: We still want Mazda expertise Imports clog ports as sales plunge Volvo's N.A. boss will resume leases to boost volume Nissan expects Chrysler pickup deal will survive Toyota: Venza is a trendsetter, not a crossover It's time to put partisanship aside; Detroit needs help What GM needs is GMAC.2 'Buy American' talk won't help industry Readers weigh in on auto industy woes No one bailed out Oldsmobile It's time to move to mass transport We still need manufacturing Bankruptcy is a bet Let's get wages under control Will America be better off? First step: Bring the jobs home America owes it to GM to help The answer is simple: Leasing What about dealerships? Detroit 3 CEOs must offer to quit Oct. truck sales fall 17.4% Honda plant adds parts center They're sold on Camaro Drawn to Ferrari Japan poised to control key batteries Europe's worst month hits all automakers Dealers BMW: Diesel 7 series could come to U.S. Honda's FC Sport mixes green and go Infiniti G37's hard top retracts in 30 seconds Redesign of Lexus RX series hard to see Mini electric: Jolt comes from sticker Ford hybrid sedans aim at Camry After only 3 years, Ford revamps Fusion Hyundai plans new crossover, turbo engine Restyled Mustang: More refinement, horsepower Honda: Don't count on CR-Z gasoline variant '09 Nissan Z delivers more of what fans like Mazda3 gets new look, powertrains Nissan Cube joins the box brigade Infiniti upgrades powertrains Lincoln MKZ gets a makeover Porsche won't stall Panamera 2010 GLK priced below rival Bentley's Azure T gets 500 hp Detroit 3 squeezed by credit, cash â politics Waxman could mean trouble for Detroit GM formulates a 'Plan B' if it doesn't get federal loan Infiniti replaces Igo Sharks vs. Jets, D.C.-style What's good for â uh, how'd that go again? Mazda deal imperils Ford training ground More like Toyota, Honda? Careful what you wish for Maybe he's Buck-a-year Bob now Romney: Bankruptcy, not bailout Automotive News - November 24, 2008 Automotive News - November 24, 2008 - (Page Intro) Automotive News - November 24, 2008 - Detroit 3: Bankruptcy = doom (Page 1) Automotive News - November 24, 2008 - Detroit 3: Bankruptcy = doom (Page 2) Automotive News - November 24, 2008 - Ford will cut more output (Page 3) Automotive News - November 24, 2008 - Off with their heads! (But whose?) (Page 4) Automotive News - November 24, 2008 - Off with their heads! (But whose?) (Page 5) Automotive News - November 24, 2008 - CEOs could have pre-empted the grilling (Page 6) Automotive News - November 24, 2008 - CEOs could have pre-empted the grilling (Page 7) Automotive News - November 24, 2008 - Volvo's N.A. boss will resume leases to boost volume (Page 8) Automotive News - November 24, 2008 - Volvo's N.A. boss will resume leases to boost volume (Page 9) Automotive News - November 24, 2008 - Toyota: Venza is a trendsetter, not a crossover (Page 10) Automotive News - November 24, 2008 - Toyota: Venza is a trendsetter, not a crossover (Page 11) Automotive News - November 24, 2008 - 'Buy American' talk won't help industry (Page 12) Automotive News - November 24, 2008 - 'Buy American' talk won't help industry (Page 13) Automotive News - November 24, 2008 - Detroit 3 CEOs must offer to quit (Page 14) Automotive News - November 24, 2008 - Drawn to Ferrari (Page 15) Automotive News - November 24, 2008 - Japan poised to control key batteries (Page 16) Automotive News - November 24, 2008 - Dealers (Page 17) Automotive News - November 24, 2008 - Dealers (Page 18) Automotive News - November 24, 2008 - Dealers (Page 19) Automotive News - November 24, 2008 - Dealers (Page 20) Automotive News - November 24, 2008 - Dealers (Page 21) Automotive News - November 24, 2008 - Dealers (Page 22) Automotive News - November 24, 2008 - Mini electric: Jolt comes from sticker (Page 23) Automotive News - November 24, 2008 - Restyled Mustang: More refinement, horsepower (Page 24) Automotive News - November 24, 2008 - Bentley's Azure T gets 500 hp (Page 25) Automotive News - November 24, 2008 - Bentley's Azure T gets 500 hp (Page 26) Automotive News - November 24, 2008 - GM formulates a 'Plan B' if it doesn't get federal loan (Page 27) Automotive News - November 24, 2008 - Infiniti replaces Igo (Page 28) Automotive News - November 24, 2008 - Infiniti replaces Igo (Page 29) Automotive News - November 24, 2008 - Romney: Bankruptcy, not bailout (Page 30) Automotive News - November 24, 2008 - Romney: Bankruptcy, not bailout (Page 31) Automotive News - November 24, 2008 - Romney: Bankruptcy, not bailout (Page 32)
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