The path we're taking also involves steps to shore up
financing, because we cannot have viable car companies
without strong car financing companies. It's now clear
that Chrysler Financial -- the institution that finances
Chrysler cars and dealers -- would on its own require an
unacceptably large stream of taxpayer money to remain
viable -- and that's something I refuse to provide. And
that is why, as part of this agreement, GMAC, an
independent bank holding company that finances General
Motors, has agreed to finance new Chrysler sales. We will
be providing additional capital to GMAC to help unlock our
frozen credit markets and free up lending so that consumers
can get auto loans and dealers can finance their
inventories;
I wonder if this was in a way punishment to Chrysler Finance for refusing the $750 million TARP infusion because the execs didn't want to abide by the compensation rules? By refusing to prop up Chrysler Finance, Obama is really sticking it to Cerberus. As part of the requirement for GMAC becoming a bank, Cerberus must sell off most of its stake.
Using GMAC helps GM because GM still owns a large minority stake GMAC. And because GMAC is a bank holding company, it is easier for the government to support through the TARP.
It also may be a hint of Obama's future intentions. If Chrysler-Fiat fails, the groundwork for GM absorbing Chrysler may be laid here.
4 comments:
The troubles at Chrysler and General Motors are a major concern for everyone in the United States and around the world. I do not know what the correct solution is but I hope that it will all work out for the better. I hope with all the government assistance and restructuring that the automakers can bounceback and become strong during the latter half of the year.
Regards, homebizseo
Found your blog while researching cash for clunker deal. I also work in
automotive industry at an automotive supplier. Tough times here. 5%
paycut, no 401k match, mandatory unpaid time off. I thought I might be able
to weather the storm but due to the Chrysler and GM plant shutdowns I put my
chances of avoiding layoff at 20%
I figured it might be time to trade in my '89 Mazda MX-6. Will definitely
buy a Big 3 auto. I'm waiting for a few incentives to happen 0%
financing-check, loan payments if I lose job-check, $2000 to crush my car.
Sad that our salaries are to the point that an engineer working in
automotive industry can barely afford a new car. Very discouraged to hear
about these idiot business people responsible for current financial calamity
getting paid so much. The average engineer could easily do those jobs. I
think there was and still is too much emphasis on business related jobs and
not enough on engineering and manufacturing. The thought that MBA's are
responsible for economic growth seems to be prevalent. I tell people that a
country's value is the worth of the goods and services that it produces. If
you equate the worth of an MBA that produced the mortgage backed securities
(a product of which 50% were sold overseas and stamped "Made in America")
their salaries are way out of whack compared to an engineer that can produce
a car. Some of the things Obama has said seems that he gets it but I predict
that the current thinking will not change for many years. When we go
through a 5 year period where our economy grows at an anemic rate, people
might finally equate it to the loss of manufacturing. When they figure out
that we can barely make a light bulb, engineering as an occupation will get
better. Then again it may get masked by the next bubble. First we had the
internet bubble and then the housing bubble. Personally I'm reading enough
business books equivalent to an MBA in order to take my meager savings and
invest agressively. I'm planning on riding the next bubble up and making
money on the downside when it bursts. Shouldn't be difficult I just need to
be smarter than your average MBA:)
FIAT cars are, in fact, excellent. I've spent a lot of time in Europe, and know, have owned, and rented FIAT and Alfa Romeo cars. The technology and quality is very good, the style is fantastic, and If you thought having more small cars in America will be a boring hell, then you've never driven a FIAT.
Forget what your college roomate told you in 1974, most of the problems arose from US safety and emissions regs, dealer issues in the US, and Russian steel which the company unfortunately obtained in a deal for a factory there. I myself had a 1978 FIAT 131 sedan that was the most enjoyable economy car you could imagine... still on the road 30 years later, too.
And current FIAT CEO Sergio Marchionne is a genius, if you read what The Economist had to say about what's he's done at the company, you'd understand just how well run FIAT is. They, in fact, get good quality out of numerous plants in South America and Asia, so they should be able to do something with Chrysler's- you'd think.
FIAT's current models are nothing to laugh at, even the smallest FIAT 500 gets a 5-Star crash rating and is very similar to the ultra-popular Mini... but cooler to my eyes. I also rented a small, 4 door FIAT Panda in Greece... it got 40-50mpg on gas, and was a very sporty drive for an econobox. FIAT also makes what we would call a midsize, the Croma... which is like a Taurus, and they produce all matter of trucks. They invented the now widespread "single rail" diesel technology, and their smallest cars get 75mpg on diesel... who needs hybrids?
Any portrayal of FIAT as a producer of antiquidated, poor quality little cars is utter nonsense from the uninformed... like USA Today, for one. IMO, they are going to surprise a whole lot of people.
http://fiat2america.blogspot.com/
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