Filed under: Government/Legal, Earnings/Financials
Germans none to happy about U.S. aid to automakers
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]
Reader Comments (Page 1 of 4)
stevereportdotcom 7:31PM (9/25/2008)
The Germans would do the same thing (simular) if it happened to VW, BMW or Mercedes. So the Germans should stay out of our affairs.
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Samurai Jack 7:59PM (9/25/2008)
Actually, that probably isn't true. The German government might be tempted but European Union competition rules prevent it. Member governments that flout these rules are severely penalized. That's not to say that there haven't been exceptions. But I can't believe that Renault or Fiat would sit by and not complain were Germany to attempt such a thing.
Cameron42985 8:19PM (9/25/2008)
Dude, don't knock the German automakers. They've got American workers too, y'know.
RealityCheck 8:44PM (9/25/2008)
You are 100 percent right! They almost destroyed Chrysler and now they are complaning that Americans want to save our largest industry. Its none of their business and they recieved billions after the war for the United Staates to save their butts!
MM 8:52PM (9/25/2008)
Didn't the US and UK help "Bail Out" the German Auto Makers 60 years ago, if I'm not mistaken a similar event happened in Japan about the same time... What was that again?
why not the LS2LS7? 4:47AM (9/26/2008)
Samuarai Jack:
The EU rules are terribly flexible when needed to benefit EU member countries.
Airbus has received large loans to help launch every plane they've made.
http://www.boeing.com/news/releases/2005/q4/nr_051006b.html
So the Germans can protest all they want, that's really expected. But this kind of thing is done in the EU too, so they shouldn't be too shrill about it.
tekd 4:46AM (9/27/2008)
Well, the thing is GM sells cars in Europe too so if they really wanted to be spiteful they could attempt to levy more taxes on US vehicles, etc. Don't expect that they'll just stay out of our business since all these automakers are global.
jhewell 7:41PM (9/25/2008)
C'mon! This is a reputable website. Spell your headlines correctly. - None "too" happy..... -
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Bah 9:40PM (9/25/2008)
I think you need to look up this word: "reputable"
jg 7:42PM (9/25/2008)
'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'
Privatize the profits, socialize the cost.
'The Germans would do the same thing (simular) if it happened to VW, BMW or Mercedes.'
And you wouldn't hesitate for a second to call it socialist.
If they can't run their business they should let someone else run it or go under. The term to big to fail needs to go away and die a slow death.
Free market, she who reaps the profits should also bear the consequences.
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Andrew 9:03PM (9/25/2008)
You hit the nail on the head. This is a free market capitalist country. Tossing on the shackles of socialism while we're on our economic knees is like a dagger to the heart, from a small business owner's standpoint at least.
Derek 9:47PM (9/25/2008)
Andrew: with safety regs, economy regs, and coming requirements for 'black boxes' stability control, etc, the auto market is hardly a free market anymore.
The Luigiian 10:48PM (9/25/2008)
Derek, the definition of a "free market" is "A market with few government restrictions on how a good or service can be produced or sold or on how a factor of production can be employed." -Macroeconomics 2e, Glenn and Patrick, Prentice Hall.
So, like you say, the United States isn't a totally free market. However, it's more free than a market like China's, where the government essentially decides which businesses are allowed to do business.
Yes, the government has restrictions on safety, but that doesn't mean it regulates who runs the companies, how products can be produced, which companies are allowed to exist, and which products are produced. If you want to build a car, and you follow U.S. safety regs, they'll allow you to do that.
Ours is a "mixed economy." Neither communism nor capitalism, when pure, is a good ideology. Would you really want to be in a country where they allowed carmakers to do absolutely whatever they wanted, regardless of safety or contractual obligations? In an absolutely free market, the government wouldn't regulate anything. If a car killed its passengers because it was poorly designed, there would be no punishments whatsoever.
The last time America was completely capitalist, our food was tainted by disease, our milk was taken from starving cows and had to be colored with chalk because it was blue, and children and the elderly began dying off due to disease and tainted foods; the situation got so bad that a guy named Sinclair actually persuaded a guy named Teddy Roosevelt to impose government regulations. And TR, mind you, was a conservative Republican.
I'll take modern American mixed market capitalism, thank you very much.
nardi 7:55PM (9/25/2008)
A bit like Boeing getting all upset over European governments giving cash to Airbus!
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jonathan charak 7:56PM (9/25/2008)
The Europeans don't complain when their gov't give 'aid' to Airbus so they can compete with Boeing
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James Sonne 7:57PM (9/25/2008)
$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.
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Derek 9:42PM (9/25/2008)
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?
BoxerFanatic 10:03PM (9/25/2008)
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.
Fyrewerx 8:02PM (9/25/2008)
Those smug Germans .... just because everyone wants a BMW, Audi, Porsche, or GTI. What we can't produce with fine engineering, we'll make up for in volume -- so there!
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Frylock350 8:59AM (9/26/2008)
GTI? Who would want that. The Cobalt SS destroys it (and the R32) in every conceivable peformance metric and gets better economy. Hell the Cobalt SS outperforms a 335i