A DILEMMA FOR GM IS A DILEMMA FOR THE U.S.

Car Quandary; Political and economic contradictions of the 'new GM'
Editorial, June 9, 2009 (Washington Post)

"… Bob Lutz...of General Motors loves "muscle cars" like the Camaro. He knows that, unless fuel prices go much higher and stay there, the American market for big cars is likely to exceed the market for small cars. Yet he has to build a little four-seat plug-in electric hybrid called the Chevrolet Volt, roll it out next year and try to sell it for $40,000 (not counting a likely $7,500 federal tax rebate). It doesn't make much sense economically, and the few thousand Volts that GM plans to produce at first won't dent U.S. carbon emissions much either. But, as Mr. Lutz…feels pressure from Washington to do something spectacular on the electric car front…"

Could this be the answer? (click to enlarge)

"When GM was still a privately owned company, this latest episode of Detroit agonistes would be no one's problem but GM's and its stockholders'. But soon, if they become owners of 60 percent of the company, taxpayers could be on the hook for the Volt. And Mr. Lutz's quandary epitomizes the political and economic contradictions…The taxpayers' interest is to get GM out of the red and back in private hands as soon as possible, consistent with environmental and fuel-efficiency standards. By that logic, the automaker's only goal would be to make what people want to buy…[But] Congress's demand for a U.S.-made answer to the Toyota Prius…[is] stronger than ever now…So GM will build the Volt, even if it loses money, taxpayer money."

Only if it sells. (click to enlarge)

"And members of Congress will delve into other aspects of the car companies' business…GM and Chrysler dealers, thousands of whom are set to close in order to streamline the companies' sales efforts, have flocked to Capitol Hill demanding relief…House members of both parties have introduced a bill that would block the closure of GM and Chrysler dealerships…America can have nationalized auto companies with a chance, however slim, of someday turning a profit. Or it can have nationalized firms subject to constant political tinkering. It can't have both."