Government Motors

President Obama pretty much had the government take charge of what's left of the American automobile industry, dismissing GM and Chrysler's survival strategies as insufficient and having them go back to the drawing board . . . and giving Chrysler only a month to finalize a partnership deal with Fiat that has only a slight chance of being completed in that time. The government will now back warranties for GM and Chrysler products, and GM chairman Rick Wagoner has been forced out of a job, with a severance package of $23 million. That's pretty good for someone leading an industry whose remaining employees are asked to make the kind of sacrifices the bankers don't have to worry about.

It seems weird to many that the automakers are being punished so severely for their bad business practices while the banks get even more money on top of the bailout funds they've already received for their bad business practices. But Obama has gotten caught in the devil's bargain. The banks are too big to fail, and money has to be pumped into the system to get credit flowing again. This is what most consumers need to buy a car.

Some of the government's policies in helping out Detroit make sense. GM and Chrysler are overrepresented by too many dealerships meant to cater to a market share that was once much larger than it is now, so dealerships have to be sacrificed. Also, many of GM's brands, which once dominated American highways,have become irrelevant and redundant. Pontiac, after trying to produce a distinctive high performance image for their cars, are once again becoming nothing more than Chevrolets with split radiator grilles; its "newest" model, the G3, is actually a rebadged Chevrolet Aveo. I used to insist that Dodges were Plymouths and Plymouths were Dodges and Chryslers were Dodges and Plymouths with upright grilles, plushly upholstered seats, and more chrome, but even with the Plymouth brand name long gone, Dodges and Chryslers are still rather redundant, and even the distinction of Jeep trucks and SUVs (made by Chrysler since 1987) is getting blurred as some Dodge trucks (like the Nitro SUV) derive much of their styling and engineering from the Jeep lineup.

GM should survive; even though new chairman Fritz Henderson (do you really want a guy whose nickname is slang for something that's broken?) has indicated that bankruptcy is "probable," its new product should help. Many of GM's latest models are more competitive with their Asian counterparts; my own cursory, unscientific census suggests that the all-new Chevrolet Malibu is selling well among the few Americans still buying cars. Chrysler is a question mark; even though some question the logic of its deal with Fiat, due to the fact that Chrysler's 1998 merger with Daimler-Benz was a fiasco, it's worth noting that Fiat makes more cars for the average buyer; its legendary 500 was and the retrograde 500 is the Italian equivalent of the Volkswagen Beetle. This deal will allow Chrysler to make and sell European-engineered cars prices for more of a mass market.

Ironically, despite Obama's call for Detroit to make greener cars, his administration has declared that the coming Chevrolet Volt hybrid is too expensive to turn things around for GM. Its sophisticated components are too costly to produce. And here's another dirty little secret; hybrids are only a small part of the car market. Most people in this country buy cars that use gasoline, and, as long as gas is cheap, prefer bigger cars that use more of it. Unless gas prices go up again and stay up - or unless gasoline subsidies in this country are eliminated and more punitive federal taxes for gas guzzlers are imposed - you won't see many more Aveos or G3s on the road, much less Volts. Which works out fine, since the Aveo/G3 twins are made in Korea anyway.

Obama hopes to save the American auto industry, and I hope he does a better job than the guys who actually ran the industry. But that industry could just as easily disappear, or be reduced to total irrelevance even in the best of circumstances. I'm somewhat skeptical myself. In fact, I saw something really eerie today. On the road, driving home from work, I saw a Model T going the other way. Okay, it was a collector's car, being driven by its eccentric owner. But even though Ford is doing relatively better than GM or Chrysler, the sight of a Model T Ford was still rather symbolic. The Model T is a ghostly symbol of Detroit's glory days, and the sight of one was like a premonition of the industry's death.

After all, Model Ts are black.

(Whew! I certainly didn't go out like a lamb tonight! It's March 31, 2009, and that's the end of the first quarter!:-D)