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Thursday December 4, 2008
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With November car sales down 37% in the U.S. and virtually every automaker suffering sales losses of 20% or more, there's a thin silver lining in that cloud. With everyone suffering, not just the Big Three, it makes sense to provide aid to Detroit since the numbers suggest what ails auto sales isn't a Detroit-created problem. It's the economy, stupid. (Or it's the stupid economy.) So goes one theory making the rounds of Detroit and the Detroit-friendly parts of Washington: The worse auto sales are, the likelier Detroit gets to line up alongside Wall Street at the bailout trough.
Here are a couple other theories advanced by the Detroit partisans:
If the automakers go under or even declare bankruptcy, it will take out all the auto parts suppliers, who'll be be unsure of getting paid, and unlikely to secure lines of credit.
If the pirates in neckties on Wall Street are worth $800 billion, surely little old Detroit is worth $25 billion.
Just give us a year or two and we'll be turning out the cars America wants.
I heard all three from several people in Detroit - not just the automakers but also some analysts and writers - in the past two weeks. The more of your life you've spent in Michigan, it seems, the more you're convinced there's no alternative but a bailout.
As for the sales numbers, they do show virtually every automaker is suffering. But there's still some differences among groups of automakers. U.S. auto sales were off 37% in November and they're off 16% for the year. In comparison, the Big Three's U.S. brands were off 40% in November while the Asian brands were off 34% and the European brands were off 33%. (Mini, in fact, managed a 41% sales increase in November.) In other words, either the sales problem is hitting Detroit harder than everyone else, or the cars Detroit makes continue to have less appeal. Chrysler is considered to have the weakest model lineup of the Big Three and it also had the worse sales falloff, 47% in November.
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