The Detroit 3's problem is really... "vehicle density"?

Filed under: Government/Legal, Chrysler, LLC., Ford, GM, Earnings/Financials

There have been so many different arguments for why The Detroit 3 should or shouldn't get a bailout that we could make a casserole out of them. One argument against a bailout -- or at least, a reason for the futility of a bailout -- that we don't recall hearing yet is "vehicle density."

The argument is put forth by Anthony Mirhaydari at MSN Finance. Basically, he says that with 981 cars per 1,000 people of driving age in America and new cars being sold faster than used ones are taken out of service, there simply isn't enough room for U.S. auto makers to sustain the volume of sales necessary to avoid factory closures and layoffs.

As an argument against the bailout, though, we find it tenuous. No one is saying that Ford, GM and Chrysler won't need to cut a lot of fat whether or not they get bailed out. But the bailout is to aid the survival of the companies at all, not to prevent layoffs and shuttered factories, which, again, will happen with our without money. According to Mirhaydari, Detroit's only option is to go forth and colonize other markets. Well, except for Chrysler, because "Chrysler as we know it will cease to exist very soon."

[Source: MSN]

The Detroit 3's problem is really... "vehicle density"? originally appeared on Autoblog on Thu, 20 Nov 2008 09:59:00 EST. Please see our terms for use of feeds.

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