Friday, December 19, 2008

Bush administration $17.4B auto plan provides the carrots -- and the stick

General Motors and Chrysler now have a chance to become 21st century automakers.

The Bush administration's $17.4 billion loan plan provides the necessary carrots and the stick. According to the Wall Street Journal:

"The deal is contingent on the companies' showing that they are financially viable by March 31. If they aren't, the loans will be called and all funds must be returned, officials said."

The plan means GM and Chrysler won't have to go through what would have been a destructive bankruptcy. It doesn't guarantee they'll recover from their years of blindered decision making, but the money, plus costs savings and new product technology and design that are already being put in place, means the automakers have a shot at competing with foreign companies who produce increasingly popular U.S.-made vehicles.

GM, Chrysler and Ford (which doesn't need emergency financial help) can turn automaking into a "green" industry. If they become technology leaders in low-pollution, all-electric autos, the Big 3 could capitalize on major growth that's projected in global sales as millions more poor people achieve middle-class status in countries like China, India and Brazil.

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