The invaluable conventional-wisdom-bubble-burster Mickey Kaus makes a point that seems obvious once you read it, but which has been missing from most mainstream media stories on the subject: the Chrysler deal the Obama White House is shoving through the bankruptcy court isn’t going to work. At least, if by work you mean “the company will some day operate profitably without government subsidy.” Here’s an example of Mickey’s analysis:
As for Chrysler’s “chance for long-term success,” it appears vanishingly small. Italian manufacturer FIAT is supposed to save Chrysler with new products, but according to a recent Automotive News article, “four of the six new vehicles from Fiat will enter the small-car segment,” which is highly competitive but “covers only 14 percent of the entire U.S. light-vehicle market.”
“The volumes need to be big for Chrysler to survive,” [market analyst Tracy Handler] said. “Will they be? I have doubts about that.”
See also this BBC article (“it’s madness”). Pathetically, Chrysler hopes that even if they don’t save the company the new small cars will “[b]urnish the environmental image of Chrysler brands,” says Automotive News.
My question: How many cars does burnishing a firm’s environmental image actually sell?
