Let Chrysler Die
November 19, 2008
– Comments (6)
In the sea of auto company bailouts, let's set a precedent of drowning the second time you go under instead of the traditional third. Three strikes is just too expensive for the average taxpayer.
I grew up when the slant-6 was a good, economical, and competitive option, so I don't mean to pick on Mopar. But...
Chrysler, like Harley, has had it's chance and received federal protection or money to help give it the competitiveness it could not muster on its own. Unlike Harley, Chrysler did not use the opportunity to permanently position itself as a market leader.
Parent company Cerberus, as a private equity group, sells their institution partially on the expertise of in-house financial and production experts. They are in place to either turn companies around or sell off the components that still have value. The U.S. government should take no part in saving any part of a private equity group or hedge fund. Let big, private money succeed or fail of its own merits.Chrysler happens to be a $7 billion ($6B if deducting its current value) demerit.
Auto overcapacity is the current underlying problem with the auto industry. Rather than having congress give away money for all Big Three to limp through this recession, why not just solve the underlying condition by drastically slashing one of the three. Any valuable components, like Jeep, and service parts, repairs, etc. will be bought or default to the secondary markets.
And why is congress negotiating with all three at the same time? It's because all three decided that was the way they wanted to proceed. The only voices excluded from the hearings are those of citizens and the most successful auto makers who produce in the U.S.
Congress should just give a $500, 12-month voucher to each household that can be used on any vehicle with a 5-star safety rating that averages more than X-mpg. $25 billion divided by 300 million citizens is about $83 per person. Assuming fewer than half the housholds will use the voucher, $25 billion will still be about the top number. Congress could limit the total payout to $20 billion to encourage buyers to act sooner. Once $20 billion has been redeemed, the offer ends. That would immediately spur auto sales, but for all brands, not just the flailing ones.
All most U.S. citizens ask for is a chance to succeed on their own merits, and that's all the average voter asks of U.S. companies, too.
Lee Iacocca and the U.S. taxpayer gave Chrysler a chance to live. Let's consider giving Ford and GM that same level of support - just this one time.
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