Benz Gets A Clue

Daimler has just taken a 10% stake in electric car builder Tesla.  Tesla is that little car company that could, and possibly also a partner for struggling GM if they ever want to make the Volt or the cars that come after it succeed.  However, Tesla has struggled.  It took an extra year to find the right transmission for their roadster, something normally not an issue with electric cars.  Then again, most electric cars aren’t driven 150 mph.  (Unless you’re Al Gore’s son.)  On the other hand, them that build Mercedes have been trying to build an electric car since the 1970’s.  But who wants a $50,000 golf cart dressed up like an E Series that has to spend 12 out of every 24 hours plugged in.  (Pop quiz:  Why did GM really abandon the EV1?  Answer:  How many golf carts do you see in downtown Chicago during rush hour?)  Daimler Benz had an opportunity to make it big in this market.

But when they bought out Chrysler, they ran off the Dream Team that put the Detroit automaker back in the game, killed their hybrid program, and ran the company into the ground.  Then they sold what was left to a company that’s never built anything to do with cars before.  Result?

Benz cars are the laughingstock of German engineering.  Chrysler’s hybrids will be designed by Toyota and built by Fiat, and my guess is only the Jeep nameplate will survive the next five years.

Dear Daimler:  Try not to screw it up this time.

Why Save GM? We Can’t Afford Not To.

I confess.  I am, somewhat indirectly, a product of the Big Three culture that’s now on the ropes.  My paternal grandfather worked for GM for several years starting in World War II and on up through the mid-1950’s.  GM paid him handsomely for his service.  My maternal grandfather, when I knew him, sold Chevies for a living before disappearing on us.

But let’s be honest.  The Big Three and the United Auto Workers have been living in the 1950’s long after their foreign counterparts have embraced the New Millennium.  If you drive a BMW, a Toyota, or a Honda, chances are, it’s really an American car.

The Big Three and the UAW had their heads in the sand for so long that, by the time it occured to them to scrap the old post-WWII model they’d been using, it was too late.  Any other business that did this, I’d say let them rot.  They did it to themselves.

Too bad letting General Motors die would send our unemployment rate to 16% and crash a huge amount of the economy.  I keep hearing “Well, that’s what the market’s supposed to do.”  Excuse me?  How is this a good thing?

“Well, it means the market works.”

Um…  no.  It doesn’t work.  If it work, companies like AIG and Exxon and General Motors would not be single points of failure for the entire economy.  And before you scream “Socialism!” (which shows a monumental ignorance of the term’s meaning) or whine “What about market forces?”, remember the market is supposed to serve the citizenry, not the other way around.  Letting the economy spiral into an irreversible freefall in the name of preserving the market is, at best, immoral.  It would border on an atrocity to allow GM’s suppliers, dealerships, and domestic competitors crash with them.  It’s not Ford’s nor AutoNation’s nor Fram’s fault General Motors’ management has suffered from institutional stupidity for the last 40 years.

Yes, Ford, Chrysler, GM, and the UAW sat on their hands for too long, foisted gas-sucking oversized SUV’s on the consumer for about a decade, and only when gas prices skyrocketed did they agree they needed to streamline and give up the fat paychecks.  A competitive American car market is on the horizon, but only if they can survive until 2010.

However, fiscal conservatives, you’re not entirely wrong on this one.  The Big Three are just close enough to get back to being competitive, possibly being more competitive than their diesel-obsessed European counterparts that floating them a loan should be a no-brainer.  But…

There should be some pain involved.  Republicans and a lot of Democrats rightly believe we shouldn’t reward bad management.  Chrysler should get a free pass for their messy divorce from Daimler.  (How could the maker of Mercedes be so incompetent?)  It’s early in the new era for Chrysler.  Ford – meh.  They’re financed through next year.  Credit them and Chrysler for bringing in outside management.

I know what’s at stake.  I live in an area reeling from Ford’s implosion.  I wouldn’t mind seeing that transmission plant in Batavia open again.  And GM?

Give them a loan, but demand 1.) progress on new technology and 2.) a higher interest rate.  Time the taxpayer got a little ROI from these bailouts.

But GM?

GM brought us to this point.  GM is the one putting us all at risk.  GM is the one who would force us to pony up money we really don’t have.

If we’re going to do this thing – and clearly we should, since no one ever confused cutting off one’s nose to spite their face with wisdom – we need to make demands.

  • First, pay for it out of that $700 billion we’re throwing at the banks.  You can’t sell houses when 16+% of people are out of work.  Ain’t happening.  So if the bailout was to stabilize the economy, the Fed can spare $25 billion of that.
  • GM’s entire senior management should resign without compensation.  Including Richard Wagoner.  Demand outside managers, say maybe from BMW or Nissan, be brought in.  (But for God’s sake, don’t ever let Daimler touch another car company again!)
  • Instead of allowing GM and Chrysler to merge, break up GM.  It’s been discussed.  They already want to jettison Hummer.  One of the reasons GM in particular puts the economy at risk is it’s too damn big.  It was probably not a bad idea to split up AT&T.  Now that they’re back together, they’re no longer the only gay in the telcom village.  The American auto industry needs to do the same.
  • Subsidize startups, or cut venture capitalists a tax break for funding startups.  A French company with a curiously Henry Ford-type spin on capitalism wants to build compressed air cars in the US.  The catch?  The cars have to be built within 450 miles of where they’re sold.  Hmm…  That would create, like, yanno, jobs?  Another company, Tesla, has built an electric sports car.  Is it ready for prime time?  I think if someone ponies up for building them a decent transmission (Tesla’s biggest setback of late), they could go places.  Part of the problem with the American auto industry is you only have Ford, GM, and Chrysler, and no more Studebakers, Nashes, or Packards.  We need more of those smaller companies back into the mix.
  • This one is leveled at Chrysler.  Or maybe for it.  Daimler, which badly handled Chrysler when they owned it, should kick back some funds to their former sister company.  When they merged, Chrysler was building some decent cars (Yeah!  And American cars at that!)  and Mercedes Benz was the premier German brand.  Now?  Chrysler is now so behind on electrifying its cars that it has to have China’s Chery Motors build the next line of cars until Toyota can help them catch up.  And Benzes since the merger, even after the messy divorce, are…  um…  Did I mention some BMW’s are built in the US?  They build a damn fine automobile.
  • Benchmarks – Energy is a national security priority.  If Joe the Plumber’s cash is going to go into keeping the Big Three afloat, when, in turn, is Detroit going to allow us to tell Saudi Arabia, Venezuela, et al. to go to hell?  Personally, I’m not overly fond of depending on countries that don’t like us in the best of times to fuel my car.  Neither’s Joe.  The technology’s already here.  Time to put it on the street and let me and Joe and even Ralph Nader (unsafe in any election) take it for a spin.
  • An auto czar.  I have just the guy to do it.  His name is Lee Iacocca.  Can you imagine the guy Henry Ford II stupidly fired, GM let get away, and Chrysler hired as their savior cracking the whip on this mess of an industry?

I’d almost buy another Chevy to see that.

Almost.

If Chevy ever builds a decent car again.

Or any car.