American automakers General Motors and Chrysler are looking for even more money from the federal government.
The conditions that President Obama has set for General Motors and Chrysler are valid and make a whole lot of sense. The business model for Chrysler and General Motors needs to be changed or bailout money will be a waste.
Their job now is to convince the Obama administrations that they mean business.
Obama has pledged to fund the General Motors operation for the next 60 days while a more in-depth plan is being developed. The Obama administration’s task force pressured long-time CEO Rick Wagoner to resign. However, the administration should also look to replace all of the board of directors who also had a huge influence on past decisions that were made.
According to the Washington Post, Chrysler was promised federal funding for only 30 days. The Obama administration believes that Chrysler cannot survive as a stand-alone company. Chrysler must reach an agreement with another partner in the next 30 days to become eligible for $6 billion in federal loans.
It would be irresponsible to give General Motors and Chrysler an additional $21.6 billion without conditions attached. The two struggling auto giants have already received $17.4 billion in prior loans.
The revision of General Motor’s and Chrysler’s business model is pertinent to the success of these two automotive heavy-weights. Executive salaries should be reduced considerably. A 25 percent cut in car production is necessary due to current demand. The amount of dealerships needs to be reduced as well. A lot of blue collar manufacturing jobs will be lost, while salaries from employees will decrease to keep up with foreign competitors.
There is also is a demand for environmentally friendly American cars that are more fuel efficient.The American prototype was large, roomy cars and trucks that were not very fuel efficient.
The American auto industry is struggling because of its resistance to change. The fact that we are in the middle of a recession puts additional strain on General Motors and Chrysler.
The American economy is wavering like an old drunk. The lines of credit are tightening up and this has decreased sales. The American consumer is loyal to this great country, but why should they settle for an inferior car?
We need to remember that consumers want performance, functionality, affordability and reliability. The American automotive industry needs to improve in these areas to compete with the Japanese auto industry.
The administration’s diligence to keep an eye on the companies it is bailing out is completely warranted.
If it wasn’t for the federal government, Chrysler and General Motors would have declared bankruptcy. Some critics say that if General Motors and Chrysler had filed for bankruptcy, it would give them more leverage in dealing with the unions.
What the American automotive industry needs to realize is that their typical consumer is different today as opposed to a consumer in 1975.
The world is changing and Chrysler and General Motors have to keep up to survive.
