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Carmaker idea

Posted: May 8, 2009 10:08 p.m.
Updated: May 9, 2009 4:55 a.m.
 
The following was sent to Barack Obama’s Web site idea page.

Perhaps it is too late to comment on the auto industry problem, but as you say, there is hope.

I would like to offer an idea on how we could get the auto industry back on its feet.

Start by telling the Big Three to have a big sale. First month they could offer their cars at 50 percent off their price.

The government would cover the difference they would offer the car for and its true cost, plus a small profit (two to three percent). This would keep the manufacturer whole.

Now, this would go on for several months, with a decrease in percentage savings each month.

The second month could be 40 percent, third month 35 percent and so on.

While the government is subsidizing them, the automakers they would certainly move a bunch of cars.

And this in turn would drive huge demands at the factories currently being proposed to close, keeping workers employed.

This obviously could not continue forever.

Concurrent to the monthly sales, the auto manufacturers would be forced to show (auditable data) how they are lowering labor, retirement and parts costs through negotiations with unions and suppliers.

Any month not showing sizable progress would negate the subsidy.

This would help bridge the selling price and the cost price, and hopefully could be eliminated later.

If not, General Motors and Ford could join Chrysler by going Chapter 11, broke or becoming history. Then the union workers would be totally out of work.

This subsidy with incentive approach would account for every tax dollar provided to the auto manufacturers (except Ford) versus what we are doing now, which leaves us clueless on money accountability.

This would eventually result in lower auto pricing and drive other manufacturers around the world to do the same or disappear.


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