GM and Chrysler Merger Won’t Get Bank Bailout Money
Right now, there is a great deal of lobbying going on by people who want access to the $700 billion bank bailout. Indeed, GM and Chrysler were hoping for a piece of the pie to help with a merger they are trying to put through. See, since both GM and Chrysler both have financing arms to help customers buy cars, they think they should have access to the money. (And one has to admit that they have a point.)
At any rate, they’ve been told that they are not getting access to any of that bailout money. After all, the government, before passing that $700 billion behemoth, provided a $25 billion bailout loan to the auto industry as a whole. Maybe GM and Chrysler should go after that money.
In the meantime, though, perhaps it is time for the two companies — along with Ford — to start rethinking their business model. Peter Cohan points this out on BloggingStocks:
I think that the industry’s best short-term hope is that plummeting gasoline prices bring people back to the showrooms for those popular gas guzzlers that fueled the auto industry profits earlier in the decade. Unfortunately, that would lead them to defer again the decision to build a new breed of electric-powered vehicle that does not ship hundreds of billions of dollars worth of our money, in the form of gasoline payments, to people who don’t like us very much.
The problem is that the Big Three were lulled into a sense of security. Their efforts at lobbying kept lawmakers from forcing any real change on them, and they continued with business as usual. Meanwhile, with the economy in a shambles, it is evident that many consumers are, well, no longer consuming as much. And that means cars as well as other items. Perhaps the Big Three need a little help. But first the auto industry should show us a viable plan for retooling the business model and the products being offered.
Tags: $700 billion bailout, stock market news, auto industry, GM Chrysler merger,
economy, investments, bailout
