The intended consequence of the CARS programme did indeed assist hard hit domestic manufacturers by buoying sales (though largely foreign) and so helped forestall what was seen as a possible collapse of the US auto-sector, and its national economic repercussions.
Though appreciative of the need to assist the sector to reform as far more socially relative and competitive, investment-auto-motives was not a supporter of the scale and cost of CARS and the level of government intervention that has resulted in GM and Chrysler. Believing instead that these 2 entities should have worked largely within the structure of market forces and normative Chapter 11 processes, with the heavily constrained credit conditions requiring government aid, but done so on a far more pragmatic basis.
Instead today we see the outcome of less than financially & economically sound principles forming a picture that almost defies the principles of capitalism that historically is the cornerstone of the US.
The newly emergent picture of a further de-stabalised auto-sector is summed-up by the recent news that GM and Ford will increase Q1, 2010 production by 25% each. Whilst no criticism can be made of Ford given its independent standing (if we discount clean-tech Federal funding) to leverage its muscle, the Obama administration should recognise that GM vis a vis the underdog Chrysler sits in a very different position.
Taking a look at the massive November sales disparity between Chrysler vs Ford & GM, and their dual announcements to hike production, it seems that the bigger pair are 'ganging-up' against Chrysler to possibly flood the market with new vehicles which will enable them to gain market share through probably the age old value-destruction tactic of discounting and incentives. In short it appears that Ford & GM – recognising the strength of Japanese and Korean peers - seek instead to erode Chrysler's small slice of the pie yet further.
Whilst such hard-ball play presumably does not infringe into anti-competition/anti-trust legal territory given the number of players within & level of fragmentation of the US car market, it does appear that GM is utilising the financial bolster given to it (& Chrysler) intended to “save” US Autos Inc as a weapon against its smaller, weaker counterpart.
If GM was in Ford's position of self-sufficiency there would be no argument, but it is not. It is largely government owned and as such, in the spirit of the nation, should act with accordant perspicacity. GM will of course argue that part of its remit is to return government monies as soon as possible and so must earn its way to do so; thus it finds itself in the age-old paradox.
The US administration must address the issue, and so quickly and fairly. For let us not forget that beyond the direct and indirect aid given to Chrysler, the company's only 'white knight' in the form of FIAT SpA, effectively saved the company from full and final liquidation. FIAT effectively saved jobs and by virtue saved state and federal budgets from yet further deficit strain.
Thus the Administration has a moral and ethical duty to ensure that Chrysler itself – a vehicle of the future economic upturn - is not beaten-up too badly by what seems a new “Gangland Detroit”, and Marchionne and his Chrysler executives should raise the matter with Washington. After all what is the point of saving two industrial 'brothers in arms' only to have one seemingly take an overtly offensive stance against the other after the fact?
As investment-auto-motives stated previously, in truth commerce and government should only really be mixed when devising national economic policy. When forced to converge during times of economic malaise, the interaction - including financial assistance - should be as limited and pragmatic as is feasible. Otherwise, as we witness today, the interplay of massaged commerce becomes a very messy affair that requires further disentangling and attention.
And by default it seems that FIAT SpA becomes ever more marginalised as it seeks to rebuild Chrysler in the near future from what will possibly be yet an even lower sales, revenue and income base.
As Frederick Henderson steps down from a short but well regarded financially-focused role as GM's CEO, and Chairman Ed Whitacre seeks out his replacement, the new incumbent will require a broader and deeper appreciation of the new domestic environs GM must critically credibly operate within. That means a different business mindset, alternative tactical weaponry and changed market-targeted (alliance-based) strategies.
At a time when US Autos Inc needs to overcome its innate systemic problems, it should be working in greater unison, not attacking its own to gain a single percentage here or there. Otherwise the raison d'etre of the massive financial aid packages and incurred budget deficits – as investment-auto-motives speculated – simply becomes counter productive to the US auto-industry, foreign trade investment interests (ie FIAT) and ultimately the US nation itself.
Gangs of any ilk are akin to petty children in playgrounds, or small town adolescent groups that in reality have power over little. Such a mentality should not serve as the hidden or implicit industrial basis of a presently stalled world super-power. The US and international trade & FDI deserves and require better governance.