Saturday, January 3, 2009
High time for U.S. automakers to get moving
Four billion here, $4 billion there -- pretty soon, we'll have enough for a real blowout. Figuratively speaking, of course. The billions have been loaned by the U.S. government to General Motors Corp., the largest U.S. automaker, and Chrysler LLC, the smallest of what used to be known as the "Big 3." Chrysler received $4 billion Friday to help the company pay its bills while it restructures during an industrywide downturn, its management said, according to the Reuters international news service. U.S. auto sales are projected to have fallen to their lowest point since 1992, and no wonder. GM, Ford and Chrysler have nearly surrendered the small car market to foreign competitors, even though that market is expected to show the most growth in the foreseeable future. What these companies -- perhaps even more than a government bailout -- is a change in philosophy and a change in management. If Japanese automakers can make money building high-quality small cars, U.S. automakers can do it, too. GM got its $4 billion on New Year's Eve, Reuters said, while Ford Motor Co. has not requested bailout money now but wants $9 billion in revolving credit. General Motors Acceptance Corp., GM's financing arm that is 51 percent owned by Cerberus Capital Management, is in line to receive $6 billion from the financial system bailout. Cerberus is the owner of Chrysler. If the U.S. automakers have ideas on how to make the needed changes, they had better get started quickly. Under the terms of the bailout, GM and Chrysler are required to submit restructuring plans by mid-February and demonstrate to regulators by March that they can be viable.