Just as in the real estate industry the inability to obtain loans is causing a melt down of unsold homes and foreclosures to continue unchecked, so to the credit freeze is also killing the auto industry with USA based companies faring the worse. Even though the U.S. government has poured billions of dollars into supporting lenders, the lenders are NOT passing along credit to qualified would be borrowers. Personally, I think it's about time that the lenders receiving bailouts be told that they either get back into the lending business or else the supports will be withdrawn and they will be closed down. Adding to the egregiousness of the situation is the greed of incompetent CEO who ran their companies into the ground yet who want to walk away with big bonuses. They need to be fired as a condition of bailout assistance. Here are highlights from the Washington Post on the Chrysler shut down:*
Chrysler announced today that it will close all 30 of its auto manufacturing plants for at least a month starting at the end of shifts on Friday as it tries to conserve cash and avoid bankruptcy amid plunging demand for its vehicles. . . . It blamed its current difficulties largely on customers' inability to obtain financing to purchase new vehicles and said tight credit markets were discouraging would-be buyers.
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Chrysler's decision follows a 47 percent drop in U.S. sales in November. Because of customers' difficulties in obtaining car loans, Chrysler dealers say they are increasingly unable to close deals and that sales volumes have plummeted. For the first 11 months of this year, Chrysler sales are down nearly 28 percent from the same period last year. Now, Chrysler says, it is approaching the minimum level of cash it needs and will have trouble paying its bills after Jan. 1.
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I am not a fan of the Big Three's refusal to build cars that are more fuel efficient and friendly to the environment. Nonetheless, the credit debacle is inexcusable.
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