The auto industry bailout has been floating around Washington for the past few months and while I understand the grave short-term consequences if the Detroit three fail, I do take some issue with the proposed bailout. Perhaps instead of a bail out the government can assist in a gradual phase out these companies in order to reduce a shock on the economy. But here are some other reasons why the bailout won't get results.
1. Bailing out companies that are not competitive is foolish- Ford, Chrysler, and GM have not been competitive in the United States for quite a few years and have steadily lost marketshare in the domestic market. Although these companies perform slightly better abroad, I think the decline of these once dominant companies in the United States is a tell tale sign that some major business restructuring needs to happen. Besides producing a sub-par product, the Big Three are forced to compete with the likes of Toyota and Honda who do not have major union commitments inhibiting their business model.
2. American cars are Crap. I mean realistically are there any people in their mid 20's who would buy a new Buick or a Chrysler? Such individuals would be very hard to find, and no one is to blame except the car companies themselves. I really believe that the people who created the PT cruiser, Buick Rendezvous, and the Ford Taurus are heading straight for auto designer hell. Poor design and horrible quality has greatly tarnished the American car industry, and the bailout is unlikely to reverse the course.
3. From my understanding the bailout proposal stipulates that in exchange for funds, the Big Three have to commit to manufacturing more hybrid vehicles. Isn't that wonderful and honkey-dorey? What the gov't ignores is the fact that hybrid vehicles have actually hurt the Detroit automakers. It will be very hard for these companies to recover if they are forced to make unprofitable products.
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