Wednesday, June 06, 2007

Worthwhile analysis of US auto industry by Fed blogger

The linked post has very good data and charts concerning the state of auto manufacturing in the US currently as background for a discussion of the change in ownership of Chrysler. Items of interest from the discussion include:

-the fact that Daimler is keeping almost 20% ownership of the new entity. Presumably that means that Daimler's management believes that the new owners can effect a turnaround and want to participate in the upside of such a turnaround...

-Chrysler's sales in 2006 put it fourth in market share in the US, and 76% of its sales were trucks...no wonder the company has been foundering, as the skyrocketing of gas prices clearly dented truck sales which the company was totally dependent on...

-the blog mentions how Chrysler was bailed out by the US government in 1980...I believe that the radical changes that have taken place in the capital markets since then are what has enabled a private buyout and restructuring rather than any attempt at government action...this is a huge improvement in how the government and private industry interact...the fewer government bailouts the better...

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