Well, you knew it had to happen since Uncle Sam effectively owns Chrysler and General Motors. The U.S. House of Representatives is trying to pass a bill that would mandate the large automakers honor existing franchise agreements and put off dealer closures. The Dow Jones Newswire article quoted Bailey Wood, a lobbyist for the National Automobile Dealers Association, with the following doozy: "Closing dealerships will not make either Chrysler or GM any more viable, and Congress is realizing that," Wood said.That the politicians are getting involved in operational decisions is clear evidence of the impending doom for the large auto companies. It's hard enough to exit bankruptcy and restart a business. It's far harder to do so while carrying political agendas on your back.
I've written before about Detroit's oversized dealer network in comparison to Japanese automakers and this development serves to underscore how much harder Detroit might have to fight to regain autonomy, let alone recover.
What's worse, the continued survival of GM and Chrysler could have a significant detrimental impact on Ford (NYSE: F). The only U.S. automaker now buying back its own debt and not the government dole, is forced to compete with highly-subsidized zombie companies. After gapping up for most of April and May, Piqqem Sentiment for Ford has plateaued and begun to fall in the past two weeks.
Former Boeing CEO Alan Mullaly has expertly navigated the crisis, and shares of the automaker have tripled off bottoms of last year. But when you have Uncle Sam footing the for your main competitors, good luck.
Alex Salkever is the Director of Research at Piqqem.com, a stock prediction community powered by the Wisdom of Crowds.
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Reader Comments (Page 1 of 1)
6-12-2009 @ 12:34PM
Chris said...
With the Government running the other two car companies they are sure to fail, they have never made a cent in history. The Government always spends more then whats in their pocket, and move slower than a snail.
6-12-2009 @ 6:07PM
Greg said...
My the wind sure is awful warm in here.