The bosses of the big three US car makers are pleading with the Senate for $25bn in aid from the Troubled Asset Relief Programme, aka the $700bn bank bail-out fund.
Well they’re not banks (although most of the cars they sell are financed by the car makers themselves) but they’re arguing that it’s the credit crunch that has brought them down, rather than their own mad policies, the same line the banks used.
General Motors boss Rick Wagoner told the hearing that millions of jobs and four per cent of GDP would go out the window if GM went bust, Ford boss Alan Mulally said ten per cent of GDP was at risk if they all went down and millions more jobs, in suppliers and the local communities as well as on the production line.
Democrat senator Christopher Dodd (and the Democrats are more inclined to be helpful than the Republicans) accused them of “seeking treatment for wounds that were largely self-inflicted.”
And he’s right.
The big three carried on churning out 4×4 sports utility vehicles and huge gas-guzzling pick-up trucks (most of which were destined never to go near a farm or a factory) even as the price of oil began to rise nearly two years ago, as these vehicles were much more profitable than smaller, more fuel-efficient sedans.
Even Toyota, the Japanese interloper that is now a big manufacturer in the US, spent a fortune launching its own pick-up, the Silverado, barely a year ago. It can’t sell any either.
The White House has backed a $25bn loan to the car companies to invest in ‘greener’ models but they now seem to be saying that they need a no strings $25bn (at least) injection of capital. Hence the lack of enthusiasm in Washington.
GM says it will run out of money before the end of the year, but some think it’s bluffing and trying to stampede the US government into a deal before Barack Obama takes over from George Bush in January.
But Mid-Westerner Obama is probably their best hope; he’s hardly likely to want to kick off his presidency with the US car industry collapsing around his ears.
But the car makers need to come up with something a little better than “we’re doing everything right, it’s the economy guv.”
[Image Attribution: Kevin.Ward]