Automotive News - November 10, 2008 - (Page 12) 12 • NOVEMBER 10, 2008 opinion U.S. aid is needed now, but not to help Cerberus Now that the election is over, the lame-duck Bush administration and the incoming Obama administration must stay focused on saving the domestic auto industry and the economy. Government officials must consider, quickly and collaboratively, a range of options — not just the proposal that would give $10 billion in taxpayers’ money to General Motors to help it acquire Chrysler LLC from Cerberus Capital Management. The best solution may be for the government to invest directly in Tax dollars GM and Ford without any mergshould be used ers being involved since a GMChrysler merger almost certainly to keep as many would cost tens of thousands of jobs. factories humming Investment in GM and Ford would leave Cerberus responsible as possible. for rehabilitating Chrysler or dealing with another buyer — maybe one from overseas — that finds more value in Chrysler as a going concern than GM would. When Cerberus purchased control of Chrysler from Daimler last year, Cerberus officials said it was in for the long term to save an American icon, not just to strip and flip parts of Chrysler’s corporate cadaver. To be sure, much has happened since then. Sky-high gasoline prices hammered light-truck sales. The credit crunch hammered the economy. New-vehicle sales are in the tank. GM and Chrysler are so low on cash that they’re delaying or canceling new product programs. But Cerberus has exacerbated the problem of slow sales for GM and Chrysler dealers by choking off wholesale and retail auto loans through Chrysler Financial and its controlling interest in GMAC Financial Services. And Cerberus has been unable — or unwilling — to infuse sufficient capital into Chrysler. Now Cerberus wants out of Chrysler, its pension obligations and other potential liabilities, and GM is willing to buy. But tax dollars should be used to keep as many factories humming as possible, not just to let GM and Cerberus concoct an easy deal that permits the private equity fund to extricate itself from the automobile business at the expense of Chrysler’s workers, suppliers and dealers. Saving as much of the Detroit 3 as possible is imperative. Too big a slice of the U.S. economy is at stake to let the domestic industry collapse. GM and Ford may yet become the Detroit 2 after Chrysler withers or is controlled from overseas. But letting Cerberus off the hook must not be a factor in Washington’s considerations. Last week, the country elected a new president. But for the next three months in the automobile industry, it’s still business as usual. The new administration will have a lot to tackle when it takes office in January, but someone must try to give the auto industry some relief before that. It is a slap in the face that the Bush administration isn’t willing to take on the difficult task of helping the nation’s No. 1 industry. It’s as though our leaders are interested only in bailing out their cronies on Wall Street with billions of taxpayer dollars. The strength of General Motors, Ford and Chrysler is important to our nation. The Detroit 3 are essential parts of the industrial base of the United States, and to ignore them is inconceivable. The federal government has to look at giving the auto industry, namely GM and Chrysler, significant aid, and it has to do it now. Whether it makes sense for GM to take 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. They are too big to fail over Chrysler might have to be debated, but one thing seems sure: Without federal aid, one or both of those companies will fail and tens of thousands of jobs will be lost across the nation. The loss of Chrysler, its dealers and suppliers would be devastating. Regardless of what is done, there has to be equality for Ford Motor Co. as well. GM, Ford and Chrysler are too big to fail. The Detroit 3 — and GM in particular — probably would get a better audience under a new administration. But GM and Chrysler don’t have a lot of time. The clock is ticking. Some companies declare bankruptcy to protect themselves from creditors and continue to operate. Bankruptcy is not an option for Detroit’s automakers. It would erode confidence, and the companies It is a slap in the face that the Bush administration isn’t willing to take on the difficult task of helping the nation’s No. 1 industry. might as well close their doors. Many appointments that affect the auto industry, both foreign and domestic, will be made in the next few weeks. They will give us a much clearer glimpse of the new administration. In the meantime, some pressure has to be put on the Bush administration to create a workable solution to Detroit’s woes. The manufacturing base of our nation deserves more support from our government. The Bush administration cannot ignore the problem and leave it for the next administration. There simply isn’t enough time for GM and Chrysler. Honda) strong is the flexibility in its manufacturing system. It may not be able to forecast the future any better than anyone else, but it has taken effective steps to assure that a major surprise does not cripple it. The Detroit 3 have failed to do that, and it is costing them dearly. GEORGE C. EADS Washington The writer was vice president and chief economist at General Motors from 1986 to 1994. Why should we help GM and Chrysler? To the Editor: Why should we bail out General Motors and Chrysler? I have been in the automobile business for 36 years. For 11 years, I was a BuickPontiac-GMC dealer and a Chrysler dealer. I was selling more than 1,200 automobiles annually at the Chrysler store and more than 600 at the GM store. When I bought my stores 11 years ago, I was worth more than $3.5 million with no debt. On June 30, 2008, I had to close my doors because of the drastic decline in sales. I couldn’t cut my expenses as fast as business was dropping. I sold my GM store to the Chevrolet dealer in town at a huge loss. I had my Chrysler store sold to another individual. My Chrysler buyer was approved by the corporation. Chrysler approved his credit and agreed that he had the required working capital and automobile experience. But I was told that Chrysler Financial was $600 million over its line of credit with its lending institutions and couldn’t open any new floorplan lines. After three months of delay because of Chrysler Financial’s paperwork, I could do nothing but assign my dealership over to Chrysler Financial. I had no other choice. Today, I am 56 years old and have to see LETTERS, Page 14 THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. First and foremost, you must be flexible To the Editor: Laurie Harbour-Felax has hit the nail right on the head (“What flexibility is and what it isn’t,” Comment, Oct. 27). In a world in which uncertainty is going to be the rule, only flexibility of the sort she describes can save auto companies from disaster. No one can predict what energy prices are going to be in the future, but we know that fluctuating energy prices wreak havoc with product plans. For years, General Motors mistakenly thought that the principal threat to its product plan was an increase in corporate average fuel economy standards. It pursued a political strategy to delay that increase as long as possible. As we now know, the real threat was a sharp upward shift in energy prices. Only investment in flexibility of the sort that Harbour-Felax describes can cope with that threat. Keith E. 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Table of Contents Feed for the Digital Edition of Automotive News - November 10, 2008 Life at 11 million: Slash, rethink The options: Bailout or disaster Can Toyota reheat the frozen Tundra? Chrysler dealers cheer halt to merger talk VW will unveil roadster at Detroit auto show BMW boosts dealers' year-end ad money Mercedes' $220 million flagship Mercedes hit hard in Northeast, once a sales stronghold Mercedes will kill CLK, add larger coupe, convertible Mitsubishi reclaims its finance business Toyota's Esmond to speak at congress Loss is more: Europe snatches bigger share of U.S. market Cash burn rates threaten GM, Ford GMAC: We're nobody's captive As losses mount, suppliers risk cash-flow crunch Tata: Yes to Jaguar XF derivative, no to SUV U.S. aid is needed now, but not to help Cerberus They are too big to fail Why should we help GM and Chrysler? First and foremost, you must be flexible U.S. trade policy gives it all away To the Editor: A rough ride is nothing new for autos Dealer's politics were pertinent Chrysler's 1st electric: Probably a cargo van Auto meltdown forces Mercedes to scrap prediction of sales record Boosting mpg will bump up stickers, too Adding up the tab for fuel economy Camaro Black: Eye-catching, affordable and available Honda sees green in Civic HFP's street performance Honda offers peek at future Fit Ford F-150 Raptor flies off-road Souped-up, tricked-out â and headed for the showroom Report: Toyota plans $5,000 car Amid gloom, Mazda chief sees revival in 2009-10 Report: Past-due subprime loans jump Toyota aims to win loyalty with credit card Study: Car buyers turn green for different reasons Thanks, buddy Hyundai helps Dealers Metaldyne offers pennies to bondholders Obituaries Personnel As expected, Oct. sales sank Another Chinese automaker plans Mexico factory Honda backs off U.S. clean diesels Industry pal, foe vie for key post in Congress Industry expects more activism from D.C. N.A. output falls 19.9% Toyota moves in striking distance of GM's U.S. sales crown Going, going . . . An ex-GM exec's view: It's going to get nasty Sex, Nazis, chicken and BMW: A scandal that puts fiction writers to shame Recession rips up roadster market Toyota takes heat for 'the herpes of the advertising world' Want to boost mpg? Turn up the heat on AC Cutting energy loss: A nibble here, a nibble there ... Carbon slashes weight, but it's still too pricey Carmakers shift to gears in search of mpg gains Natural gas draws interest as alternative fuel Friction? Ay, there's the rub Electric for a week Automotive News - November 10, 2008 Automotive News - November 10, 2008 - (Page Intro) Automotive News - November 10, 2008 - (Page Bellyband1) Automotive News - November 10, 2008 - (Page Bellyband2) Automotive News - November 10, 2008 - The options: Bailout or disaster (Page 1) Automotive News - November 10, 2008 - The options: Bailout or disaster (Page 2) Automotive News - November 10, 2008 - VW will unveil roadster at Detroit auto show (Page 3) Automotive News - November 10, 2008 - Mercedes hit hard in Northeast, once a sales stronghold (Page 4) Automotive News - November 10, 2008 - Mercedes hit hard in Northeast, once a sales stronghold (Page 5) Automotive News - November 10, 2008 - Loss is more: Europe snatches bigger share of U.S. market (Page 6) Automotive News - November 10, 2008 - Loss is more: Europe snatches bigger share of U.S. market (Page 7) Automotive News - November 10, 2008 - As losses mount, suppliers risk cash-flow crunch (Page 8) Automotive News - November 10, 2008 - As losses mount, suppliers risk cash-flow crunch (Page 9) Automotive News - November 10, 2008 - Tata: Yes to Jaguar XF derivative, no to SUV (Page 10) Automotive News - November 10, 2008 - Tata: Yes to Jaguar XF derivative, no to SUV (Page 11) Automotive News - November 10, 2008 - First and foremost, you must be flexible (Page 12) Automotive News - November 10, 2008 - First and foremost, you must be flexible (Page 13) Automotive News - November 10, 2008 - Dealer's politics were pertinent (Page 14) Automotive News - November 10, 2008 - Dealer's politics were pertinent (Page 15) Automotive News - November 10, 2008 - Auto meltdown forces Mercedes to scrap prediction of sales record (Page 16) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 17) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 18) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 19) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 20) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 21) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22a) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22b) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22c) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22d) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22e) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22f) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22g) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22h) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22i) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22j) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22k) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22l) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 23) Automotive News - November 10, 2008 - Souped-up, tricked-out â and headed for the showroom (Page 24) Automotive News - November 10, 2008 - Amid gloom, Mazda chief sees revival in 2009-10 (Page 25) Automotive News - November 10, 2008 - Toyota aims to win loyalty with credit card (Page 26) Automotive News - November 10, 2008 - Hyundai helps (Page 27) Automotive News - November 10, 2008 - Dealers (Page 28) Automotive News - November 10, 2008 - Personnel (Page 29) Automotive News - November 10, 2008 - Personnel (Page 30) Automotive News - November 10, 2008 - Personnel (Page 31) Automotive News - November 10, 2008 - Personnel (Page 32) Automotive News - November 10, 2008 - Personnel (Page 33) Automotive News - November 10, 2008 - Personnel (Page 34) Automotive News - November 10, 2008 - Personnel (Page 35) Automotive News - November 10, 2008 - Personnel (Page 36) Automotive News - November 10, 2008 - As expected, Oct. sales sank (Page 37) Automotive News - November 10, 2008 - Honda backs off U.S. clean diesels (Page 38) Automotive News - November 10, 2008 - Industry expects more activism from D.C. (Page 39) Automotive News - November 10, 2008 - Industry expects more activism from D.C. (Page 40) Automotive News - November 10, 2008 - N.A. output falls 19.9% (Page 41) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 42) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 43) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 44)
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