The New Chrysler Bankrupt

Quote of the day today comes from Barack Obama on the dire state of Chrysler's finances:

 

"I don't want to run auto companies, and I don't want to run banks. I've got two wars I've got to run already - I've got more than enough to do."

 

He's got a point. Granted that thousands of jobs rely upon Chrysler being able to pay it's suppliers, but in the fierce automobile market, a company has to be competitive. The opinion in Europe is that most of Chrysler's range consists of gaz-guzzling, heavy, outdated cars, coated with an interior of cheap plastic. Needless to say, a company that sells products no-one wants to buy is likely to keep sucking on public resources as it struggles to survive.

 

It's a similar story with Jaguar Land Rover in the UK; although it is not the products at fault but rather the huge legacy problems inherited from Ford ownership. They continue to jostle for an £800m stimulus.

 

Governments need to approach this issue from the other direction. The only long-term solution to the survival of a car company is selling cars. Initiatives that encourage people to buy appear are surely the most effective stimulus for manufacturers as well as limiting the exposure of governments to companies with uncompetitive products. For example, the scrappage schemes such as those in place in six countries across the continent appear to be working to boost car sales. Renault is a case in point, with such schemes protecting it from a worse performance in the first quarter.

 

Buyer incentives such as the scrappage allowance scheme are the most cost-effective solution for governments, particularly if they wish to avoid the expense of publicly owned banks and car companies.

1 Comments
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  1. # Anonymous Kosmopolito

    Welcome back! :-)  



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