Rescuing the Big Three

For the Big Three automakers (General Motors, Ford and Chrysler), the timing could not have been better. In November alone, the world’s largest economy shed more than half a million jobs bringing the total job losses to 1.9 million for the year so far. The depressing unemployment numbers have added impetus to save these unviable automakers that employ more than 2 million people both directly and indirectly through dealerships and parts suppliers. Allowing the Big Three to fail, as many had suggested, would have had disastrous consequences sending shockwaves around the world including the Middle East where those fuel-guzzling 4X4s manufactured by the US automakers are still popular. After all, the Middle East is still recovering from the shock of the Lehman Brothers’ failure. The decision not to bail out Lehman Brothers might be the direst decision the Federal Reserve ever made.

However, the auto giants might not get all the $34 billion they had sought. The Congress might just give them enough to survive till next month. Rightfully so. It makes sense for the new administration to take office before billions in taxpayer’s money are committed. The CEOs of these companies have made some big promises and funds should flow as and when these pledges are implemented. For decades, these companies have lagged behind the Japanese brands in terms of quality, technology, and service. It seems as though that these companies chose to ignore the changing needs and demands of 21^st century buyers. They are still churning out unwanted products in the face of growing demand for green cars. The proof is in the used car markets, where these brands sell for a significant discount compared to similar Asian or European makes. The crude oil might be down to 4-year lows, but this will not cause the buyers to line up in front of GMC dealerships. The Big Three have to go back to basics and start making cars that don’t reflect the American society in general—greed and over-consumption.