Wednesday, December 10, 2008

Big 3 Part 3 -- Closing in on the finish line

As we get closer to an agreement for supporting General Motors, Chrysler and Ford, I continue to press for structural reforms.

What concerns me is the lack of discussion around several issues:

1. Rationalization of brands and dealer networks: whoever becomes the Car Czar will rue the error of not being granted sweeping powers to supersede state franchise laws. GM had to pay millions to dealers when they retired Oldsmobile. This cannot be the case going forward. Furthermore, continued consolidation of GM, Chrysler and Ford dealer networks is required -- and speed and low cost is the key.

2. We need to incentivize consumers to "Buy American." I am perplexed by the failure to address this requirement. It should be a hallmark of the Obama-Biden stimulus program. I favor tax credits, like those for hybrid vehicles.

3. There are two meta-goals above this issue. President-elect Obama should use the U.S. auto industry crisis as a "laboratory" for fixing Medicaid/Medicare and Social Security. We must move to a defined contribution plan for retirement. We must get people to pay fair value for medical services. Insurance should be for catostrophic accidents and illnesses. We need to have a cost associated with not taking care of oneself (smoking, over weight, lacking exercise, etc.).

1 comment:

Chris Paladino said...

As a consumer with little vested interest (at least directly/obviously vested interest), I don't see a reason to buy American.

My first car was a Nissan, and I'll likely continue to purchase Nissan because it hasn't given me a reason to try any other company. My car is reliable, cheap, and safe.

I see word of mouth actually hurting US makers:
- it doesn't matter if it's true or not it's assumed that American cars fail more often, and cost more to fix.
- in my circle of friends Japanese cars are more sexy as well as more economical (both in price, and gas mileage) than US cars

I like your idea of incentizing - I'm just not sure what it'd take for me to switch to a US car. Maybe initial price + gas mileage + ongoing price (warranty, or cheaper parts/labor should it need fixed eventually) + a few upgrades for free.