Impact of Government Regulation on General Motors, Ford, and Chrysler

By Automotive Staff | December 08, 2008
Should the Detroit Three, composed of General Motors, Ford, and Chrysler, take out a loan from Congress, it would not be unreasonable to say that our government has purchased a semi-controlling stake in these companies. The real question is whether or not lawmakers would make decent auto company managers.For example, many Senators and Representatives are interested in fuel-efficient vehicles and think it'll be easy to legislate such a thing. They ignore the very simple reason being car manufacturers have yet to figure out how to make fuel-efficiency profitable; hybrids and plug-ins are incredibly expensive to produce, with powertrains and batteries still costly despite efforts to improve the technology. Such a business model that involves producing high cost cars beyond the means of the average American in poor economic conditions is doomed to fail. General Motors’ upcoming Chevy Volt is not expected to be anything close to a cash cow. Thus automakers will live or die based not upon the sales of fuel-efficient vehicles, but the sales of more conventional cars. Many pundits believe that unless Congress imposes higher taxes on gasoline to steer the public away from gas guzzlers, America will never veer towards fuel-efficient cars. Our take? The real problem with the auto industry is that it is geared to produce 18 million vehicles per year when only 11 million are selling. Will sales ever recover? Your guess is as good as anyone else’s. Besides, government-controlled car manufacturers sound reminiscent of communism. Hmmm. Such a form government seemed to work with the financial institutions, didn't it. Oh, wait. That's right. The government loosened the regulations eight years.... via Detroit News
  • 12271882 Jpeg
 
2 comments
jarellano
jarellano

i agree, melville248. we voted with our dollar which is why, when gas prices went up, we switched to smaller vehicle. there's already evidence americans would be returning to their larger vehicles en masse except no one can get a decent car loan due to the economy.

melville248
melville248

The Automakers can't take all the heat for selling trucks and SUV's, Americans like to drive big cars. It was just the recent increase of gas prices that had americans scrambling for smaller cars. They built them, we bought them.

close