The Complexity of the Auto Rescue

At least for this session, it appears auto-rescue legislation is dead in the water. So we may celebrate today with a market plunge. This current market has been using 8000 as a bounce level, so we start the day with a 500+ cushion.

Whether it’s a loan, rescue plan, or a bailout (so call it what you want), the automotive situation is much more complex and convoluted than most of us really know. I’m sure the lobby factors from all sides are working overtime on this one. So below are some random thoughts and resources to show It ain’t that simple.

I continue to maintain the following:

  • As organizations, they don’t deserve a dime.
  • As for the UAW, they helped create this mess and are part of the problem.
  • From a workers and supply chain aspect, help is needed.
  • From a community point, another big need.
  • Washington should not dangle dollars under conditions of developing alternative energy vehicles that the public may not buy.
  • I’m leaning toward a fluctuating gas tax to keep prices gas prices at a point that it makes consumers think and act.

Congress is an interesting mix on this topic as they are all over the place. See this article from Politico.

In terms of world-wide sales, GM and Toyota sell approximately the same number of cars. One of them turns a double-digit profit and the other operates at a loss.

This Homan Jenkins WSJ article is a very good read. On a similar note, George Will wrote this in mid-November.

Congress could help the Detroit Three by allowing them, when meeting CAFE (corporate average fuel economy) standards imposed by Congress, to count fuel-efficient cars they import from their overseas factories. Congressional Democrats oppose that because those imports are not made by members of the United Auto Workers. Those Democrats, their rhetoric notwithstanding, really care most about the union. “Saving the planet” comes second and last comes the health of the auto companies.

New York Times columnist Thomas Friedman recently wrote an interesting column on innovations (While Detroit Slept) and looking ahead at history (The Real Generation X).

Carlos M. Gutierrez, U.S. Secretary of Commerce chimes in with his take in the Washington Post.

Surprise! According to, The National Automotive Dealers Association (NADA) donates slightly more money to campaigns than the UAW.  NADA, consisting of auto and truck parts makers, auto repair services, and car rental agencies, give 65% to Republicans while 99% of UAW donations go to Democrats. Of the automotive industry, outside of the UAW, 72% go to Republicans.

As the Democratically controlled Congress wrestled with the latest energy bill, car dealers and Detroit auto manufacturers mounted a lobbying blitzkrieg, claiming that CAFE standards, which would set minimum mileage standards for the future, were too stringent and could limit consumer choices or bankrupt the struggling automakers. Automakers spent $47.7 million on lobbying in 2006, but despite the objections of Michigan lawmakers, the Senate passed legislation requiring cars to average 35 mpg by 2020. The industry gave $14.2 million at the federal level in 2006—76 percent to Republicans—and may begin to keep Democrats in mind when writing checks.

By the way, conspiracy theorists are alive and well; claiming the oil industry is driving down oil crude prices to discourage new transportation technologies. I just had to that.