The AutoExtremist writes Part 2 of his analysis of the current auto-industry situation.....keep checking the site, you'll be glad you did.
http://www.autoextremist.com/
SPECIAL AUTOEXTREMIST UPDATE, PART II (Monday, March 30, 2:30PM EDT)
March 30, 2009
Obama weighs in, telegraphs bankruptcy for GM. Fiat's "deal" with Cerberus and Chrysler? It's still a giant "wait and see."
By Peter M. De Lorenzo
Detroit. President Obama made it very clear in his address to the nation this morning that he and his team had no intention of running GM and that they only had the best intentions in mind when it came to the future of the American automobile industry. He then went on to say, of course, that he had ordered the sacking of GM's Rick Wagoner and that a "quick rinse" bankruptcy could be the best way for GM to emerge a stronger and healthier company. Why he bothered to say that they had no intention of running GM while they in fact are running the company at this very moment is a little hard to understand, but the net-net of his message wasn't. And that is that he and his administration's brain trust are moving GM toward bankruptcy, but that it would be the "good" kind, meaning that the government would take the onus off of the word "bankruptcy" by guaranteeing people's warranties. He also made a pitch for how good current American cars are, which was all very interesting.
After arguing vehemently against bankruptcy for GM since last December, the President's speech this morning got me to shift my thinking. Why wait 60 days at all? Given that Obama and his crew are basically telegraphing the fact that they are going to move GM toward bankruptcy anyway, I recommend GM cut a deal with the Obama administration to go to bankruptcy immediately, with the following conditions: 1. Obama becomes "Car Salesman in Chief" and he and his wife participate in a one-hour infomercial that will tout American cars complete with proof points as to why they're worth buying. 2. The government guarantees warranties for all GM cars and trucks and makes sure every American knows it via "live" read advertisements at the end of Obama's weekly radio addresses. And 3. Offer $5,000 to every American who purchases a car assembled in North America (domestic or import).
Why screw around 60 days and miss the heart of the spring selling season? The Obama administration has made it very clear in that they will not rest until GM resembles exactly their vision for an American car company even though that beyond the usual smarmy platitudes, they haven't exactly been forthright in delineating what that is, but so be it. This way GM can go right down to two divisions - Cadillac and Chevrolet - with a couple of Buicks and GMC trucks thrown in for good measure, and we can get on with the future of the American automobile business, whatever form that takes, without the Obama administration hovering over GM's shoulder at every turn.
As for the Fiat-Chrysler-Cerberus deal, let's not carried away here, because there's a l-o-n-g way to go before we see a concrete plan emerge. I am quite certain of one thing, however, and that is that Chrysler is dead and buried one way or another, which is exactly what I've been saying for many months now, much to the chagrin of the Chrysler nostalgia buffs out there who equate me with being the anti-Christ. But the problems for this deal are deep and ugly. Chrysler is over-dealered by two-thirds, and that one issue alone is so fraught with peril that it could derail this deal right out of the blocks. Short of total capitulation - meaning an Obama-ized "clean" bankruptcy - Fiat-Chrysler doesn't have a snowball's chance in Hell of surviving, no matter how good the linguine tastes.
And so it goes.
Thanks for listening.
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