I am wondering if there is a better way to save the American auto industry, what if their bailout was based on them meeting some fuel efficiency measurement, say 50mpg, or maybe even 100mpg? The bailout might be amortized over a period of time based on performance expectations. Maybe there is even a bonus for companies that have the highest fuel efficiency in their class?<p>Just a bunch of Wednesday night thoughts.
Standards for the bailout are a nice idea, but hitting those measurements doesn't mean people will buy the vehicles.<p>Perhaps it would be better to give tax credits to consumers who buy American-made vehicles.<p>I maybe way off because I haven't done enough research, but I've always thought that the unions have indirectly caused much of Detroit's woes by not adapting with the expanding global marketplace. The Asian companies make their cars faster and cheaper than the US–even in their US-based factories. To me, that's clearly an efficiency/productivity issue.<p>I read that in '06 GM lost $1,400 per vehicle and Ford lost $5,000 per vehicle. Also, benefits being paid to retired US auto workers add $1,500 to the cost of every vechicle. I'm all for retirement benefits, but c'mon ... these US companies are basically paying for the salaries of all their workers–plus the salaries of all their <i>former</i> workers.<p>When you're selling cars and your profit margin is -10%, a bailout is not the right fix, IMO.<p>Full disclosure: I drive a '97 Bronco :)
the most efficient thing to do is allow the free market to determine which companies live and die. auto companies make money by giving people what they want. those that don't give people what they want should not be propped up with taxpayer money.
Shouldn't we ask first if it is necessary and wise to "save" the American auto industry? Isn't the decline of the American auto industry the creative destruction of economics at work?