Monday, January 12, 2009

Sweden Has No Plans to Become Owner of Volvo, Saab

Jan. 12 (Bloomberg) -- Sweden has no plans to become the owner of General Motors Corp.’s Saab brand or Ford Motor Co.’s Volvo unit, a government official said.

Joran Hagglund, a deputy minister in the Swedish government, made the comment to reporters at the North American International Auto Show in Detroit. Sweden has met with GM and Ford to discuss aid packages and expects to make a decision in early March, Hagglund told reporters. Both brands are based in Sweden.

Unfortunately, the US Government lacks the wisdom of the Swedes. American Taxpayers are about to become the new owners of GM and Chrysler. Eventually, Ford may join them, and we will see the emergence of American Motors, though the company will have little in common with the former American Motors that was known for building the Rambler and Chrysler's only big seller in recent years -- the Jeep.

The New American Motors will employ the United Auto Workers to build a lot of cars that will fail to attract buyers. Undoubtedly they will be good cars. But American Motors will produce as many as government forecasters request, and Taxpayers will pay the wages and benefits of those workers.

How large will unsold inventories grow if there's no penalty for building too many cars? Will the government allow American Motors to clear out unsold vehicles by cutting prices at the end of the year?

Will American Motors persuade Congress to limit the number of cars Toyota and Honda can build in the US? Probably. How will that affect the market for used cars?

Our best bet for Detroit is to hand ownership of GM to the UAW. Taxpayers can acquire 100% of GM's stock for less than $3 billion. That's a worthwhile purchase for taxpayers. After buying the stock it should be GIVEN to the UAW and the union should take it from there. Im sure they know what's best.


Anonymous Anonymous said...

Give me an American jalopy that breaks down all the time any day!

2:38 PM  

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