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Chinese automakers look to U.S. bids
An assembly line of Ford's 2009 F-150 pickups at the Kansas City Ford Assembly plant in Claycomo, Mo.
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TEXT OF STORY
Bill Radke: President Obama's auto task force in Detroit today. The team is looking into whether to rescue General Motors and Chrysler. The White House faces a March 31 deadline for deciding whether to give those two companies almost $22 billion more in federal assistance.
Ford has not applied for government assistance, but it is hurting as well. Ford is looking to unload its struggling Volvo division so it can raise cash and keep the rest of its operations going. Over the weekend, rumor had it a couple of Chinese companies were about to make a bid. From Shanghai, here's Marketplace's Scott Tong.
Scott Tong: Chinese automaker Geely has picked an investment bank to advise it on bidding for Volvo; that's one rumor. Another says Chinese brand Chery just got the government's permission to make its own bid. Lots of chatter lately about some Chinese acquisition of Volvo, or GM Saab brand, even assets of Chrysler.
Former Chrysler executive Bill Russo runs the consultancy Synergistics. He says the brands up for sale offer the latest technology and name recognition: two things the Chinese need to go global.
Bill Russo: They definitely want to be on the world's stage, equivalent to the brands with the highest level of esteem. And the only way I see of getting there any time within the next 10 years will be through an acquisition process.
Many Chinese automakers have the financing to pull off a deal. But none have managed a global brand before. And the brands in question may need a slew of repairs. Volvo, for instance, lost $1.5 billion last year.
In Shanghai, I'm Scott Tong for Marketplace.
We should not sell to China but stimulate our own industry. Its the only industry that is big enough to move the economy. Sell my plan below.
Frazier Plan
Auto and Economic Recovery Plan
As an observer of the economic recovery efforts currently underway I have not heard a single plan that seems to be working. Funding banks that are not loaning money is not working. The populace won’t borrow money because they worry about looming layoffs. So here is the “Frazier Planâ€
The Plan
This plan does not prop up the auto makers waiting on the economy to turn around. What they need is sales! The proposed loans to auto makers do not stimulate movement in the economy. A coupon program will help the one buying a car, dealers, suppliers, shippers and lenders. The auto industry is large enough to jump start the economy. GM, Ford, Chrysler, Toyota and other companies have models that are fuel efficient
Each card carrying tax payer that is a US citizen could apply on line for a coupon valued at $8,000 to $12,000. The coupon would have an expiration date on it that assures the holder will move in a timely manner. The coupons should also specify a fuel efficient vehicle. The difference in the purchase price of the auto would be paid by the coupon holder.
Customers would visit their local show room to order the car they want. Upgrades can be made with the purchasers cash as long as the car meets the fuel efficient requirements.
Benefits of the Plan
This plan will greatly reduce oil imports, by accelerating the transition to fuel efficient vehicles.
The customer matching funds will get cash off the sidelines and into the system.
The tax payer funding the stimulus will be one of the principal beneficiaries.
The automakers would have a four year manufacturing back log insuring sustained employment and incentive to transition to producing more fuel efficient autos.
The Cost
Economics of the plan Unit cost Daily BBL 112,000,000 US Homes
30,000,000 Minus non citizen HH
82,000,000 Net Households
Cost of Coupons $12,000 $ 984,000,000,000 Total Cost
New Money from buyers $ 8,000 $ 656,000,000,000 Purchaser contribution
$ 1,640,000,000,000 Total Stimulus Value
State Sales Tax Revenue 8% $ 131,200,000,000
Oil Import Savings annually $ 45.00 4,000,000 $ 65,700,000,000
The Frazier Plan Ed Frazier Author edfra@tx.rr.com www.eiradioshow.com
