Home > Uncategorized > Chinese Takeover Of US Auto Industry? Bloomberg.com

Chinese Takeover Of US Auto Industry? Bloomberg.com

China’s largest automaker, SAIC Motor Corp., is poised to surpass the combined market value of General Motors Corp. and Ford Motor Co., as Detroit’s two largest automakers seek a bailout from the U.S. government.

GM, the largest overseas vehicle maker in China, makes cars including Buicks in the country with SAIC. The companies are also partners in a van and light-truck manufacturing venture. (via Bloomberg.com: Worldwide)

This is a good thing …

The market cap for the Chinese auto companies is more than that of GM or Ford. Chinese auto companies can lower costs for US operations by providing low-cost sub assemblies for manufacture in US. The jobs and revenues will remain in the US. Tax revenues will continue to flow to US Government. This will also draw down US debt – from the 2 trillion foreign exchange hoard that China has.

The Auto Meltdown …

The meltdown of the US auto industry could really set the cat amongst the pigeons. That will be the domino effect that people have only imagined – but never faced. That may collapse with 500,000 jobs on the line.

Lehman Brothers will look like small change after this …

Three problems of the Big 3

The US auto industry has three major problems – retirement benefits, which the UAW will do nothing about. Second, is the development cost, which the auto companies are doing very little about. Third, the quality of the vehicles, about which the consumers can do very little.

Money has very little to do with this. The problems have remained constant – and the Big Three + UAW have danced around these problems.

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