• Jan 23, 2009
To be fair, the new president faces a lot of immediate challenges. But when it comes to the auto industry, the biggest four challenges could be the bridge loans, fuel economy mandates, the EPA vs The California 14, and the board of czars that will oversee the fortunes of GM and Chrysler. The similarity between these challenges and others on the domestic and global agenda: he doesn't have a lot of time to get them right.
It was clear that the $17.4 billion granted to GM and Chrysler was just the beginning of a process needing a well thought out and long term endgame. Part of that endgame involved the two automakers coming up with viability plans, which are due on February 17. Then Congress and the president will need to decide, based on those plans, whether the car companies should receive more money.

Should the carmakers get more money, the necessary car czar position is looking like a body-of-car-oligarchs instead, which sounds like a more reasonable idea. One name that has popped up to head the group is Steven Rattner, a former NYT reporter turned private equity fund founder. What hasn't been explained yet is how this board of overseers is meant to work with the car companies.

On the issue of fuel economy, some of Obama's campaign pledges might cause additional consternation. He had said he wanted to double the CAFE standard in 18 years, which would mean a 50 mpg average by 2027. He has backed off of that to the more generic "I want to raise fuel economy standards." His other campaign trail pledge was to review the EPA not granting California and 13 other states a waiver to set their own emission standards. His EPA designee has said one of her first priorities will be to review that decision, and she sounds like she intends to overturn if she can. If that happens, as the Obama administration lifts up the industry with one hand, the industry will probably feel itself being choked by the other hand.

[Source: Detroit News]


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  • 48 Comments
      • 5 Years Ago
      With the Feds getting so involved in the private sector - cars, banks, etc - it is becoming apparent that we in the private sector may well be screwed. Let's face it, Liberal Democrats are not our friends. They are friends with other Liberal Democrats, and the rest of us can suck air.
        • 5 Years Ago
        @chrispc88

        I respectfully disagree! President Bush is rated on PoliticalCompass.org as being pretty conservative!
        http://politicalcompass.org/uselection

        Ironically, President Obama is slightly conservative as well according to their ratings!
        http://politicalcompass.org/uselection2008

        Bush getting a "chance" didn't matter since he vetoed anything he wanted to! He game himself ultimate power (the closest we've come to a dictatorship in the US) by way of instilling fear in the publics mind which cause the people to allow their senators and congressmen to give that power to Bush (look it up, I'm not bashing)

        Furthermore, Republicans had complete control for a portion of the Bush administration which by law allowed them to repeal any previous law, policy, decision, rule, guideline etc) so in two fold, the suggested "no chance" scenario you suggest is factually incorrect BUT I can see how you could come to that theory since we only know what we are told (agenda ridden media on BOTH sides).

        Finally, as for the country being half democrat and half republican. That too is incorrect! I for one am neither and believe a two party gives us a see-saw effect of policy and plan.. 4 year to the left, 4 years to the right... etc The only way to combat that is to get rid of the "parties" but who in their right mind would take the power away from themselves! Oh wait our founding fathers!

        As for the 50/50 split you infer!
        55 million registered Republicans
        72 million registered Democrats.
        42 million are registered as independents
        some other minor party or with a "No Party" designation.

        That's
        31% Reupublican
        41% Democrat
        24% Independent
        3-4% No party designation or a minority party!

        But it is correct to think that the Independent party does win the election! That's a good thing if you ask me!

        I just spent an hour on this! I hope someone read it! LOL Peace!


        • 5 Years Ago
        I just thought I'd point out that Bush is part of the 'Republican' party - but he demonstrated that he is not 'Conservative'. This country is still basically 50/50 between those who call themselves Republican and those that call themselves Democrat. Yet, Bushes approval ratings were far below 50%. Democrats basically never gave Bush a chance (he was Evil from day one in many of their eyes). However, there is still the other half of the country that is Republican, yet roughly half of those people (including myself) came to dislike/distrust Bush over the course of his presidency. This was in large part due to those issues in-which he did not follow a conservative mindset. Case in-point, huge spending and bigger government. However, I would also argue that as for the current financial crisis - Democrats have been in charge of the 'purse strings' now for over 2 years... oh' and the worst of our economic troubles have been in the past 2 years out of the last 8. Maybe it's just a coincidence, maybe not.
        • 5 Years Ago
        That's funny! I could have sworn a Conservative Republican was at the helm for the past 8 years! Silly me! I though his last names was... was..... well it rhymed with "completely disgraceful united states president" Oh yeah, BUSH!

        Not the old one, the drunk with 2 DUI arrests, an AWOL from the Military and was quoted on live news across the world (and available on youtube) "What does the war in iraq have to do with 911? Nothing! Nobody ever said the war in Iraq had to do with 911"

        Or we could think you're right on this and blame Obama since he's been in office for 3 and a half days and has had so much time to completely ruin this country! Oh wait, again I'm wrong, that was Bush too! Ooops!

        Pay attention to the bumbling!
        http://www.youtube.com/watch?v=5LwMTjeu5f4&feature=PlayList&p=B76B9BE0F4E0DD13&playnext=1&index=26

      • 5 Years Ago
      The government needs to fix itself before it can even think about touching the car industry or any other industry. Its ok to give the car companies loans with strict agreements and deadlines with public being informed about the money is being spend, but the government should not get involved in product, engineering and marketing decisions. That is market run and should be untouched. Let the government deal with the financial aspect of the car companies and the engineers, designers, project directors and marketers work their magic without any interference.
      • 5 Years Ago
      GM just upped its stake in GMAC from 49% to 60%. That would effectively give them control of GMAC, would it not?

      But here's the part I don't get. GM agreed to reduce its stake to less than 10 percent of the voting and total equity interest of GMAC.

      "Cerberus, which led an investment group that bought a 51 percent stake in GMAC from the automaker for $14 billion in 2006, will reduce its stake in GMAC to no more than 33 percent of total equity."

      That means the Fed would hold the remainder. But does GM run the show at GMAC again, or what?


      GM buys additional stake in GMAC
      Friday January 23, 2:54 pm ET
      http://biz.yahoo.com/ap/090123/gm_gmac_investment.html?.v=1
        • 5 Years Ago
        Financial smoke and mirrors. The government gives GM money with the instructions that they are to use it to prop up GMAC. Since they can't just give it as a gift they buy GMAC shares. Since it is a bank holding company now it would be unseemly to have one company hold too much power over it so they are forced to take non voting shares and put a big chunk of what they own into a trust. So yes GM owns the lionshare of GMAC now but they still don't get to call the shots. It will however be an investment that will likely pay dividends for them down the road when the rebound happens.
      • 5 Years Ago

      Maybe they should start drilling in Alaska.
      emerillovesbam
      • 5 Years Ago
      Global Warming is another hoax that is closer to a new world order.
      • 5 Years Ago
      as emerillovesbam stated, more people should learn about this 'new world order' cos this, if it happens, is more important than any car - educate yourself - don't get brainwashed
      • 5 Years Ago
      I don't understand why we don't increase the gas tax by $2/gallon to pay for these loans. That way, the market will demand more fuel efficient cars (forget CAFE) while money can be used to fuel research and development by the car companies.

      There, all done.
        • 5 Years Ago
        the CAFE is weak, its a way for politicians to try and impose their will on the people to be more eco friendly without actually trying to get people mad at them.

        The point of the CAFE is to get better fuel efficiency. It sucks. The best and most efficient way to get cars to have better fuel efficiency is to just slowly push the gas tax up. Now I am not saying I am for it just that if the govt wants to wean us off fossil fuels or use less and demand better fuel efficiency then increasing the gas tax is the best way to do it. For once I must say go look at Europe they tax their gas like crazy and have great high mileage vehicles.

        IF the point and objective is to get us to consume less fuel then just tax it.

        Its like income, if the govt wants us to spend less of our money they just tax us more, lol. Sad but true.
        • 5 Years Ago
        I don't understand why we don't just let people buy the car they want and or can afford. If you want and can afford a gas guzzler, then fine and if you can't then you will automatically buy something else. What gives any of us the right to dictate (through artificially raising prices and or taxes) what a person can or can not drive? Last I checked, I'm living in a free country. If we allow this, then what next? Maybe start charging higher taxes on companies that make DVD players in-which the carbon emissions during manufacturing was higher than some other manufacturer. This is the problem with the democrat mindset - you people always think you know what's "good for all of us" and never look beyond your own nose.
        • 5 Years Ago
        Luis -- "I don't understand why we don't increase the gas tax by $2/gallon to pay for these loans. That way, the market will demand more fuel efficient cars (forget CAFE) while money can be used to fuel research and development by the car companies."

        I'm sorry but this is absurd. Since when is the government suppose to engage in social engineering?

        Not to mention, if people are taxed 2 dollars a gallon, they'll demand more fuel efficient cars for sure, but how will they afford them? Especially when they've been dropping an extra fifty bucks a week into their tank?

        And don't forget the incredible liability they've just inherited: they won't be able to pay someone to take their worthless, 'gas guzzling', (and now expensive to run) car. Watch the values plummet, and watch people have even less money to spend.
      • 5 Years Ago
      Instead of being a lurker on this, here's my two cents: Impose higher gas taxes, increasing them over time (5 years?), then offer refunds/rebates via the IRS based on a sliding income scale, and also whether the vehicle is used for business or personal purposes, and use the balance of funds obtained for transportation infrastructure. Tie the increase to the price of gas, so the tax goes away after gas gets to a certain level (i.e.: $4.00/gal). If you are going to mandate more stringent emissions standards, do it across all 50 states, spreading the cost over a larger base, but no waivers for any groups of states to do it on their own as that just causes chaos for the automakers and buyers. Remember that automobiles are actually a very small part of the emissions picture, and that static human sources - particularly coal fired power plants - are a much greater problem, even before you factor in non-human emissions like cattle, etc. CAFE has not and does not worked as intended, and we are reaching the practical limit of cost effective mobile emission controls - at least unless someone makes a significant breakthrough they aren't telling anyone about (very doubtful). Finally, as to diesel - the new US standards are more stringent than the EU's, and we have been taxing diesel at a higher rate to pay for the wear and tear commercial trucks cause to the roads (at least supposedly). There is some discussion that the next round of higher EU diesel emission standards may kill diesel cars there anyway. In any event, you need to remember that there are no magic solutions, there is no single answer to the problems, and government has not demonstrated any particular genius in managing the world economy that should give us any confidence that they can manage the car companies any better than they have been.
      • 5 Years Ago
      Demanding more MPG is just stupid. Engines only get so efficient and gasoline only has so much power. The cars are there is the people will buy them, but they don't want to be bothered with paying for what they are demanding the government make the car makers do...
      • 5 Years Ago
      Obama, give them money, BUT demand 40-45+ MPG by 2015
        • 5 Years Ago
        thats just about retarded.... but thanks for chiming in...
        • 5 Years Ago
        @JF: It is a myth that CAFE will mandate cars that are dull, boring, and undesirable to the general public. CAFE stands for Corporate *Average* Fuel Economy. Automakers can still make fun cars with poor gas mileage, as long as they also make boring cars with great gas mileage, so it's not like fun cars will become illegal because of CAFE(*). And if an automaker (like Porsche) decides to focus on expensive and profitable sports cars, completely foregoing fuel-efficient econoboxes, that's not being stopped either, and the automaker only has to pay a fine, which is then passed onto the car buyers. Which, if you think about it, is a lot like the gas tax being touted by the anti-CAFE crowd: Increase the cost of ownership of gas-guzzlers. If you look past the partisan bickering, CAFE is accomplishing what the detractors say should be done.

        (* This doesn't even take into account how fun cars can also be fuel efficient. Horsepower is just one part of the power to weight ratio.)
        • 5 Years Ago
        @notYou:
        Scientist can't even predict the 10-day weather forecast accurately, and you want me to believe that we are doomed if we don't stop producing GHG by 2012. HA! Stop breathing then because you are creating CO2 right now. Oh and don't have any children because each one of them is probably the most disastrous thing to society over their lifetime.
        • 5 Years Ago
        Sea Urchin: Obama, give them money, BUT demand 40-45+ MPG by 2015

        That just isn't good enough. Jim Hansen - Nasa scientist and leading climate expert - released his report stating that Obama only has 4 years to defuse the Man Made Global Warming which our vehicle fuel consumption is cuasing:

        http://www.guardian.co.uk/environment/2009/jan/18/jim-hansen-obama

        We must have at least 100MPG by 2012 or we are all doomed.

        Actually, it would be even better if we had 0MPG - by that I mean no car consumed fuel or produced global warming gasses at all.

        There is no alternative, we must act now. Obama promised he would do this - anything less is unacceptable and disastrous to all mankind.

        (snicker)
        • 5 Years Ago
        That's ok if, and only if, the consumers demand it as well. Hopefully they'll end up wanting the same things as the government will be demanding.
        • 5 Years Ago
        NotYou - "We must have at least 100MPG by 2012 or we are all doomed."

        If this is true we are already doomed because that is an impossibility by 2012. Even if cars were available by then capable of achieving that target, there is no way to replace all the less efficient vehicles still the road.

        As nice as 0 oil dependence would be it is not going to happen by 2012 unless we all start living in log cabins and using horses to get around like it was 1865. Maybe Obama will get to be more like Lincoln after all.

        • 5 Years Ago
        I just want to point out to everyone who kindly "disagreed" with me - my (snicker) at the end or my post.

        Correct, my post was just as ridiculous as the "facts" that I cited and Sea Urchin that I replied to.

        (snicker - stirring the pot, again)


        • 5 Years Ago
        @JohnB:
        There's a difference between "weather" and "climate". Weather is to climate as speech is to language.
        • 5 Years Ago
        @notYou:

        I know this is an automotive blog, but why does everyone seem to focus on automotive vehicles being the sole problem for any (real or preceived) global climate issue?

        The latest chart I saw stated the producers of greenhouse gas were:

        21.3% Power Stations
        16.8% Industrrial
        14.0% Transportation
        12.5% Agriculture byproducts.

        Remember, "Transportation" includes the vehicles on the roads, as well as airplanes, boats (recreational and shipping, i.e. bardges and tankers), etc.

        It just seems to me that we are attacking one source (automotive) with much more vigor the we are the other sources.

        • 5 Years Ago
        The world economy has gotten worse and worse. At this point car companies in europe are also suffering and if economy doesn´t jump up, they will soon desperately need money from their goverment.
        So US. car companies should receive more money.
      • 5 Years Ago
      Obama should do nothing - it's a private industry. Government is what has forced these companies into this problem in the first place (cafe standards, and unions). And if we must have 100MPG by 2012, guess what - it aint gonna happen, not everyone can drive around on a 50cc moped.
        • 5 Years Ago
        Mike,

        I'm nearly speechless that you don't "get it". This is "Autoblog" and I'm the one on the side of the 'auto'. You seem to be on the side of - "lets do what we can to punish anyone who doesn't ride a horse to work". As for the "Peak Oil" thing. Ok, that one I can buy - but here's the rub... Democrats (sorry - I wouldn't harp on Democrats so much - except I'm just speaking the truth) have FOR YEARS blocked all attempts to drill off shore. They have made EVERY excuse they can to keep it from happening. While at the same time, many of them have stated that we need to get off of foreign oil... hoping (I guess) that a miracle happens with battery technology. If we truly get to a point that the world is almost out of oil from it's current suppliers, then even democrats will not be able to stop the public from demanding that we drill anywhere and everywhere to get more oil. Unless - of-course that occurs at such a time that battery tech for electric cars can provide a true alternative.

        I'm not here as a 'Troll' - and I apologize if you feel that I fell for some other troll on the 100mpg thing - I've just heard certain politicians say the same kind of things. I get ticked off on these things because it seems to me at least, that Democrats are typically the ones that want to take away or at least limit our freedom of choice - and it's not just the auto industry (food is another, as well as this story that just showed up on Digg... http://www.counton2.com/cbd/news/local/article/sen._robert_ford_pushes_to_outlaw_profanity/19213/ )

        Republicans aren't blameless either - but the worst of them are the ones that don't have the guts to stand up and speak the truth... leading us to our current administration.
        • 5 Years Ago
        Yes - I understand that I'm "simplifying" the issue. But it is a correct simplification. The ONLY reason that you feel that the government should REQUIRE either better gas mileage or higher taxes on gas is because you actually buy into the Man Made Global Warming Theory. Those of us who see that as nothing but a bunch of crap fed to us by our own government and politicians - and scientists funded by said entities, realize it's purpose is to cause just such a reaction. Thus government always gets more money. Once the car manufacturer is FORCED to make 100mpg cars or be fined - the government gets the proceeds from those fines. If the government raises taxes on gasoline, well again - they get the money. So of-course government and politicians will do anything they can to make the average dope believe in man made global warming so that you will support your own ticket to the poor house... while the biggest proponents of said disasters fly around in private jets, and own multiple mansions. GET A BRAIN!!!!
        • 5 Years Ago
        Luis is right.

        When gas is $2 a gallon, nobody cares how inefficient a 6000 lb SUV is.
        But when it was $4 a gallon, customers quickly shifted into smaller cars.

        Drop the Federal and State taxes on gasoline today, and impose a 100% retail excise tax on gasoline. The money garnished should be used to improve infrastructure (roads, bridges, etc) and fund better public transportation.

        Because people would be driving less and using more efficient automobiles, our gasoline and emissions footprint would be halved (not to mention our dependence on foreign oil). I doubt we would need foreign oil at all then, except as a backup.
        • 5 Years Ago
        "The ONLY reason that you feel that the government should REQUIRE either better gas mileage or higher taxes on gas is because you actually buy into the Man Made Global Warming Theory."

        No, I believe we should have higher gas taxes because I buy into the Peak Oil Theory. We need to reduce our oil use as much as we can while there's still time.
        • 5 Years Ago
        I read EVERY ONE of your comments. And I'm utterly convinced that you are either:
        1. An idiot.
        2. A troll.

        You seem to associate any amount of change to the norm as being a Democrat (which is apparently negative in your eyes). You are ignorant of a majority of the facts about fuel standards and the ability for the Big 3 to produce fuel efficient vehicles. Do you really think Obama's not going to do anything? I can't believe you believed the 100mpg troll from above...

        We have 40-60mpg hybrid cars RIGHT NOW OUT IN THE MARKET that aren't total shit and have more than enough power. Go drive a hybrid. Don't expect it to have a huge punch, but it can go plenty fast and get great gas mileage nonstop (I drive from NYC to Pittsburgh every now and then in my civic hybrid and make the trip on one tank).

        Oh, and we can't continue to let people get away with buying gas guzzlers just cause they can afford them. There isn't enough gas left to sustain them for much longer. As for never looking beyond my own nose, it's the other way around, bub. We're thinking of the US and global gas intake, where you're worried about whether or not Johnny 2x4 can drive his Hummer to Nova Scotia to get a hummer.

        This is Autoblog, not your own personal anti-democrat POV blog. Get lost.
        • 5 Years Ago
        Wrong.

        In 1993 the Partnership for a New Generation of Vehicles (PNGV) was a cooperative research program between the U.S. government and major auto corporations, aimed at bringing extremely fuel-efficient (up to 80 mpg) vehicles to market by 2003. GM, Ford, and Chrysler all created working concept vehicles of 5 passenger family cars that achieved at least 72 mpg at the 2000 Detroit Auto Show:

        The 80 mpg diesel-hybrid GM Precept
        The 72 mpg diesel-hybrid Ford Prodigy
        The 72 mpg diesel-hybrid Chrysler ESX-3

        http://en.wikipedia.org/wiki/Partnership_for_a_New_Generation_of_Vehicles

        The technology is already here. We just aren't using it. Dumb.
        • 5 Years Ago
        Honestly, you don't understand market failures and actual economics. Because the air we breathe and other byproducts of the private market, these aren't PRIVATE industries. They are very much public in that their continued use affects everyone, not just the private individual who drives a private car made by a private company.

        These things are called externalities and you should take a course in economics to fully understand what's going on.

        That being said - CAFE sucks. A carbon tax assessed on the fuel used would be much better. The market will actually work if you force consumers to make decisions based on their wallets - not what the government demands. A carbon/gas tax would cause car buyers to want more fuel efficient cars, much like what happened over the summer.
      • 5 Years Ago
      "The way I see it the auto industry is the only one that's been making steady progress to lowering emissions. The same people that bash the car don't seem to have any problem living in their vastly oversized, ac'ed, tv in every room house sucking juice like it doesn't matter then believing that they are saving the environment by driving a prius."

      YES! I argue that point to so many people, but they still refuse to listen... didn't 'going green' used to be called 'being efficient'? There's SO MANY WAYS to make yourself more energy efficient and environmentally responsible... like:

      Making less trips in the car, walking to places (if you can), carpooling, recycling (it's really easy!), compost piles, buying grocery bags you just bring with you to the store, proper insulation in your house, proper windows in your house, turn off lightbulbs when you're not in a room, don't buy all the electronic gadgets you can (they suck down lots of power... ever seen the power converter for an XBox 360? It's the size of a brick!), buy more energy efficient lightbulbs, don't buy a huge a$$ house (costs less to heat and cool it), buy a woodburner stove if your house can support that system, get a cistern system so you are independent of the water line, etc.

      And a lot of those things are cheap or free to do, and make you more 'green'. I've been doing all of them for years, so I guess I was 'green' before it was 'THE' thing to do!

      It's amazing how often people don't consider the means to their ends. Heck, Obama should demand 100MPG cars that actually run on C02 in the air and produce pure oxygen emissions (call it the Tree-us). But unless the government (and governments around the world) start fronting money to pay for such research and create incentive for the research, the companies will never take a large enough cut of their budget for something that may not be sold for another 20 years.
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