Auto Bailout: It Does Nothing But Delay The Inevitable

The above pretty much sums up my feelings on the recently announced agreement for the government (I mean the Tax Payer) to lend $14 billion to GM (GM) and Chrysler, it does nothing but delay the inevitable as the cash will be used to prop up a broken model instead of being invested in the much needed operational improvements necessary for the companies to flourish long-term.

I just don’t understand the point in wasting tax payer dollars in propping up a broken model in hopes that things magically change, instead of forcing them to declare bankruptcy or engage in some other sort of wholesale restructuring that will actually enable the companies to thrive again.

At the end of the day the fact remains that Detroit sells more than enough cars to be wildly profitable, the real problem is that the American car companies are badly run and grossly inefficient. SO instead of wasting time talking about technological advances, design changes, etc, which will take years upon years to develop and implement, the conversation needs to focus on how to introduce more efficiency into Detroit.

It’s time to talk about operational and cost improvements that can be deployed over the space of several months, as opposed to currently non-existent technology and design advances that will take years to bear fruit/become reality.

Disclosure: at the time of publishing the author didn’t own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn’t be viewed as financial or investment advice.

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