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Automotive Crisis? A Tale Of Four Companies

Breaking news has Congress creating a tentative agreement between the US Government and the “Big 3” that allows $15 billion of available loans. An agreement reached between the White House and Congress posed that the money should come from $25 billion in loans previously approved to help the automakers retool for energy fuel efficient vehicles, rather than drawing the aid from the $700 billion Troubled Asset Relief Fund for struggling financial institutions. Does this mean at some future time the US Government will be asked for yet another $25 billion for the retooling? The Senate and House of Representatives have confirmed they will be meeting on Tuesday to vote on the deal and finalize the appropriation of money. In addition, this is only part of the money that has been asked for. In March, after President Elect Obama takes office, a meeting to determine if additional money will be granted will take place.

However, on the other side of the world, as American automakers get $15 billion in federal loans, Kia has been setting the auto industry en-fuego on fire with it’s aggressive push into small and innovative cars that rival their Japanese counterparts. Looking at what the Japanese have been doing for the last 20 years, Kia (and Hyundai) have been slowly and silently creeping up behind Toyota and Honda with great looking cars and industry leading warranties including insurance like an European motorhome breakdown cover if the car fail in the run. With the new Optima, Boreggo, Soul and Forte, Kia is slowly and surely clearing a pathway to the top of the entry level car market.

  • Today’s news on this subject got me steaming. It looks like the big three will get 15 billion to get them through the first quarter of 2009. And I think that’s great! But senator Dodd wants Gm CEO Mr Wagner to step down? Out of the Big three CEO’s he is the only One with an automotive backround and has over 30 years with GM. Why does congress make such strange choices?

  • Mark, I couldn’t agree more. People like Chris Dodd and Barney Frank are more worried about power plays and forcing people to do what they want than actually solving the problems. They have no idea what it takes to run a successful company (whereas GM has had its ups and downs, Congress has been running us bankrupt for quite a few years). One of these days the American people will wise up and kick these corrupt clowns out of office. It’s a shame the rest of the country has to suffer because of them.