• Sep 25, 2008
Matthias Wissmann, current head of the Verband Deutscher Automobilhersteller (VDA, or Association of the German Automotive Industry for us non-German speaking folks), is none too pleased with the passing of a $25 billion financing package for the Detroit automakers. Under the terms of the legislation, which has been approved by the House and is expected to pass through the Senate as well, the Detroit 3 will receive low-interest loans in order to finance the cost of bringing more fuel-efficient cars to America.
Of course, it's not entirely unexpected that Detroit's competitors aren't happy about the federal loans, but at least one piece of Wissmann's argument certainly makes a lot of sense. "If the U.S. car industry does not resolve its structural problems, then all the subsidies in the world won't help." Ain't that the truth. The hope, of course, is that this financial aid is just what the automakers need to fix said problems. Looks like we'll find out soon enough.

[Source: Automotive News - sub. req'd]


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  • 60 Comments
      • 6 Years Ago
      I think the entire auto industry should follow the consolidation plan that the detroit 3 are following.

      Let's face it, do we need three? I think we can get away with two. The remaining two can easily pick up the lost sales from the one with their under-utilized production. Some jobs will be lost, but it will not be the widespread panic that most seem to believe. Those suppliers can simply now sell their wares to the remaining two.

      My vote: Chrysler goes away. I'm not chrysler bashing in any way - I drive a jeep and one of my friends is a Chrysler dealer. I just don't think they are in the best position to move forward.

      I also don't think that $25 Billion is going to go very far - the detroit 3 will burn through that very, very quickly. They've already admitted this.
      • 6 Years Ago
      "Matthias Wissmann, current head of the Verband Deutscher Automobilhersteller (VDA, or Association of the German Automotive Industry for us non-German speaking folks), is none too pleased with the passing of a $25 billion financing package for the Detroit automakers."

      Well, that's unfortunate for him.

      On to something that matters, what's the next headline?
      • 6 Years Ago
      The German Automotive Industry and Mr. Wussman in particular can shove their Eurojunk up their collective asses. Bunch of snooty dbags.

      Focus on yourself and your country and let our leaders worry about ours.

      It was barely 60 years ago when these guys or the Japanese were trying to take over the world and exterminate those who's beliefs didn't agree with theirs. Now they want to tell us how to run our affairs.

      FO
      • 6 Years Ago
      $25 billion would fix a lot of my problems. Why don't all the tax payers give their money to me... I'll give them a ride in my Aston Martin I'll buy if they do!

      Perhaps we should all get an Aston Martin for free to even out this socialism crap that's plaguing America right now... oh yeah, Ford sold Aston Martin, doh! What else do they have that I want? Nothing... hence them in trouble.
        • 6 Years Ago
        Derek,

        The big 3 can't afford it either, otherwise BANKS would lend to them, they wouldn't have to go to "taxpayer bank and trust", the US Gov't.

        They are going to lose that money faster than you could count it in $1000 bills.
        • 6 Years Ago
        It is a LOAN. Granted it is a low interest loan, but can you afford to even begin to pay a few percentage points of interest on $25B?
      • 6 Years Ago
      We've ALREADY bailed them out!!!! IT WAS CALLED THE FRICKIN MARSHALL PLAN!!!! Talk about ungrateful!!!
      • 6 Years Ago
      The point is that everybody will have a hard time to recall when was the last time Deutsche automakers had to get government help.

      It's 2nd time for the big three (sorry, no B this time) in 30 years.

      Interestingly, in Britain, it was all about government help since the 60s until the demise of MG Rover. It's the Germans and the Japanese who manufacture meaningful numbers of cars in Britain. London Taxis' maker is the last British car-maker. Spain is better-off thanks to Seat (VW), Austria is better off and even Finland is better off than the UK.

      The subsidies that went to Japanese or European manifacturers were mostly investments into prosperous manufacturers aimed at developing new technologies (Prius). Most US Gov investments into the big three were bail-outs.

      And, actually, Boeing gets subsidized by constant government aerospace contracts. When the government finally awards a contract to a much better offer from a US/EU consortium, half of the States is up in the arms (in all possible meanings) protesting and proclaiming patriotism. Which is weird because when it comes to space, it was Wernher von Braun's rocket that made the one big step for mankind possible, so it might as well be called VW Camper not Saturn V :-)
      • 6 Years Ago
      It is official then ... the American owned automotive manufactuers have failed (are failures) because they now need to be bailed out by the government for survival.

      To me, that is admitting corporate failure and proves the Japanese and European manufactuers have gotten the better of the American car companies.

      All bloggers take note : GM, Ford and Chrysler have FAILED.

      Oh yeah
        • 6 Years Ago
        Welcome to 1960 Sean. There have always been tarrifs on foreign made cars in the USA, except when it's one of the big 3 that's the foreign auto maker of course, then suddenly a Mexican or Korean car becomes a domestic.
        • 6 Years Ago
        The Japanese have always funded healthcare and research for their automobile industry as well as other industries in competition with the rest of the world. So the US should have been offering low interest loan assistance all along. The Japanese have won at nothing.
        • 6 Years Ago
        @Moonrover.

        The US government does help fund a lot of the research the Big 3 does. Primarily in the form of DOE grants, especially for projects that involve alternative energy. The reason for the Big 3's current woes is the fact they didn't properly invest in keeping their passenger cars competitive when gas prices took a hike. You can't blame these mistakes on foreigners.

        Also, healthcare is paid for by Japan because it has universal healthcare, much like every other developed country in the world, not the HMO driven system we have here in the States. Those issues are bigger then the auto-industry and in fairness all business, foreign or domestic, have their healthcare paid for in these countries (not just Japan).
      • 6 Years Ago
      He's right you know, if the fundamental business model is flawed because of short-term thinking, then business needs to suffer the consequences. In long run (we'll all be dead) it'll be the best thing.

      Look at airline industry which still cannot get its house in order.

      But look, rest of the world is very frustrated with US. The global slowdown we are experiencing can be solely attributed to US and US only. This was the country which irresponsibly lowered interest rates, promoted lax lending standards, had Fannie and Freddie insure BS loans, and lenders did not have to worry about getting their money back. All while lying about, and throwing upon the world, these mortgage backed securities. All of this, is US based.

      Current virus spread out of US and to rest of the world, and that's why America has zero credibility politically, economically, or financially on the global scene.

      So when other countries scorch this joint, yes, their aruments might be somewhat flawed, but essentially they are right to criticize US and its inept way of running country, companies, and then trying to borrow money from rest of the world.
      • 6 Years Ago
      Well over the past week the US Constitution has been completely thrown out the window. Not that it already hasn't, but just spitting on it doesn't help.

      It is spelled out in the Constitution that the US Treasury can not use its power to give any company an unfair advantage in the marketplace. Giving certain companies a better loan than another is an example of this. If the Treasury acts and gives a bailout they have to give a bailout to everyone.

      If Detroit can't get by because they made bad business decisions they should go out of business, period. End of story.
      • 6 Years Ago
      Why should they care? American cars will never be competitive with theirs because American cat buyesr do not want imitation German (Or any import) cars from the American automakers.

      Detroit, take this money and hone your skills doing what you do best. Stop chasing buyers who will never give your cars a chance.
      • 6 Years Ago
      I totally agree with the post before concerning our MIXED economy. We're neither purely capitalism nor socialism. Just like we're not a pure democracy. The signs of our economy heading on a course for disaster began in the late 90's and is coming to fruition this year. Shame on the people of this country being to ignorant to how things work in government, and its relation to the private sector. Trust in government has fallen to all time lows, as ignorance of its function has risen to all time highs. I disagree with this "bailout," yet its a drop in the bucket to our proposed 700 billion "bailout" of mortgage corporations. (Government secured agencies.)

      I too would be angry as a competitor to the big 3. Seeing it as an unfair competitive advantage. Especially since foreign competitors were making huge strides in quality control (variable tooling plants, etc.) in the 80's. The big three lagged until, in my opinion the late 90's, when the seemed to get a clue. My point is that BMW's point is valid, but the domestic industry has been making leaps and bounds. This "bailout" is nothing new, nothing that other host nations have not done in the past, and certainly not socialism. After all, if this economy truly fails, does that help BMW?
      • 6 Years Ago
      A bit like Boeing getting all upset over European governments giving cash to Airbus!
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