Tag Archives: auto

The Auto Bailout…….my idea

Well they have been talking for a while about trying to save the auto industry.  The problem is that people just stopped buying cars for obvious reasons, no money/no credit/focus on more important things.

The car companies are very far in debt, this is from loosing money for decades, mostly due to high legacy cost.  This means that they are paying billions each year to pay for health insurance and give money to people who no longer even work for the company.  They also pay more for the ones that work there.  All of this make is very hard for them to compete

Basically it all came down to the Unions, and they know that if they wait they will not need to give up nearly as much.  The car companies will be more desperate and they will have more friends in Washington come January.

So what is my idea.  Well the problem is not enough sales, so lets just fix that problem.   Give people “down-payment” assistance from the government.  Say $4,000 if you, your company or your local government buys a new car from the big three by the end of March or so.   And also get the government to buy cars, lots of them.  They could use them for police work, give them to cities that need them and give them to charities that need them.   If you put $4 billion, into the first plan that would move 1 million vehicles, resulting in about 30 billion of sales for the industry, reducing inventory and solving their main problem.  If the government purchased another $10 billion in vehicles, of course only from the big three, and divided up by 2007 market share, it would basically solve their crisis for the time being.  There would not be any messy loan that would not be repaid, and the government would solve this problem while getting something of value out of it.

The next step to help cut costs is to have the government make labor come to the table and renegotiate terms so that they are more like Toyota, Nissan or Honda, so that our big three can compete.  If we could to that and cut these costs we could save this thing.

Tell me what you think…please comment.