Build or Break?
As the big three automakers wait for their government bailout, one question being asked is whether they should merge or be broken into smaller pieces?
Senator Robert Bennet of Utah asked the automakers in a hearing yesterday if they would consider a merger? The head of GM skirted around the question, the head of Chrysler, LLC, Robert Nardelli said a merger would save $8 to $10 billion.
In addition, there are too many dealerships. According to USA Today, Toyota has less than 2,000 dealerships while Ford has 4,000. The average Toyota dealer sold more than 1,600 cars in 2007; Ford 236. Consolidation would likely make some sense here.
On the flip-side there is an argument for breaking up the auto dealers and selling off the less profitable areas, for example GM selling off Saab and Saturn. More companies could mean more competition and better products.
Regardless, the current business model is not working and something needs to be changed as opposed to just giving away $34 billion of the taxpayers money.
So what’s your preference, put them together or tear them apart?
And don’t get me started on the UAW!
