European Financial Aid Could Be Long-Term Negative

By Automotive Staff | January 14, 2009
The European automakers are going through problems, too. In their case, the credit crunch has forced them to go hat in hand to their respective governments for help. Unlike the U.s., the European governments are swift to react with aid. Now auto pundits in Europe are saying that the policies may, in the long term, will be bad. While they say that the governments' heart is in the right place as it tries to save jobs, they are rescuing companies that don’t deserve to be rescued. Also, say pundits, the governments are helping the wrong side of the industry. They say that the supply chain should be the focus of assistance and that group should be given credit guarantees. Finally, the governments are adding strings. For example, French President Nicholas Sarkozy has said that while he would be happy to assist Renault and Peugeot-Citroen, the companies have to keep production in France. Thus the companies, who want to move production to more cost effective regions of the world like Eastern Europe or a Third World country, have to rethink their plans.
More details can be found at the original article below. Our take? It will be interesting to see what results when the dust clears. Will the strategies followed by the European automakers make them stronger after this recession or will the help afforded to the Big Three here in the U.S. prove the difference in making the U.S. automakers more competitive. It’s like reading a good book. You’re tempted to go to the last few pages to see how the story ends. via Detroit Auto News