The end of the American Auto Industry

Let's face it - American cars are terrible. They are poorly built, poorly designed, and don't cater to consumer wants at all. The American auto industry has been on its death bed for years, relying on hand outs from Congress to keep producing their sub standard cars. If they weren't going to fail before, they certainly are now.

Latest sales figures in the US show GM sales down 45% in October. Worsening consumer confidence and the credit crunch is keeping buyers away from the showroom. Ford and Chrysler are no better.

So, what does this mean for the future of the US auto industry? I think it means death. You see, GM and the other members of the big 3 have for years enticed people to buy their cars with sub prime auto loans. Chrysler offered 2 years 0% interest loans on certain models, and they have sucked people in for years with similar initiatives. Its the only way someone would buy their crappy cars, and with global illiquidity and a recession, nobody will be buying them.

My prediction is we will see the usual appeals to Congress by the CEO's of these companies saying how they are "too big to fail" and need cash to keep producing their sub standard cars. With over 2.2million direct and indirect American jobs attached to their auto industry, they may be right - but where will the money come from? I also think we will see possible mergers between any of these companies, and expect to see companies like Ford offloading assets such as Volvo as they go further into the red. The market capitalization of these companies is also now so low we could also see VC companies swooping in - but I don't think they are that stupid. (Besides Cerebrus who bought Chrysler, I bet they regret THAT!)

The US Government needs to stop this false Capitalist attitude they have going on. Big corps are seeking deregulation then screaming at Congress hat in hand when something goes wrong. The result are relic companies like the entire US auto industry and their airline industry, weighed down by ridiculous employee regulations and sub standard management practices.

DS