General Motors and Chrysler have submitted their recovery plans submitted to the U.S. Treasury and are asking for another $21.6 billion in government aid.
Not just no, but hell no… No amount of government aid is going to bring them back to profitability so long as the government forces them to build car consumers don’t want.
Henry Payne writing at National Review online suggests that:
If Washington and Detroit were really interested in returning GM and Chrysler to profitability, a restructuring might look like this:
- Congress would eliminate fuel-mileage regulations (so-called CAFE laws) costing an estimated $85 billion over the next decade. These arbitrary standards force automakers to make vehicles customers don’t want, impose nonsensical regulations on how many cars a manufacturer can import from outside the Americas — and what’s more, is encouraging GM to spend $200-a-vehicle to make its fleet ethanol-capable (which a CAFE loophole rewards).
- Concentrate on core products like sedans and light trucks instead of pouring millions into electric cars and other “alternate” fuel vehicles. Companies like Hyundai and Kia produce not a single hybrid yet are gaining U.S. market share by making cheap, profitable automobiles that customers want.
- Reduce manufacturing wages and benefits to industry-leading rates, immediately saving billions and setting a baseline on which to build worker incentives as the companies become profitable again. Not “competitive” rates of $29 an hour versus $26 an hour at U.S. Toyota plants. Not “competitive” beginning wages of $25 an hour, but a beginning wage of $15 an hour (the average U.S. manufacturing wage) with a raise to $21 an hour over two years — which is what Hyundai pays its American workers in its new Alabama plant.
- Slash dealership overhead. At 20 percent, GM and Toyota have roughly the same market share. Yet GM is burdened with a staggering 7,000 dealerships versus Toyota’s 1,500. Fewer and larger dealers would be better able to market, stock, and service the cars they sell and it would also make it easier for GM to slash its eight brands (Toyota has only three). Read the rest…
Payne pretty much nails repealing CAFE rules and letting Detroit build cars consumers want will go along toward returning GM and Chrysler to profitability. Lets not forget even when gas prices were pushing $4.00 a gallon half the vehicles sold in the U.S. were light trucks. In November even as the economy was crashing and high gas prices still fresh in people minds the two top selling vehicles were pickups from Ford and Chevy… The Dodge Ram was No. 7.