Posted by: Dirk | August 18, 2008

The Big Three

The Big Three, for those who are not familar with the term, is a term that relates to Detroit based American car makers Chrysler, Ford and General Motors (GM). After some serious misestimation of what future cars would look like, all of them are in deep trouble now, reports Bloomberg. High oil prices have hurt their gas-guzzling vehicles, which is probably known to everybody by now. David Houle has more to say about The Future of the Big Three. If they have one. Here’s a look at their performance in the stockmarket since 1970 (via Google Finance; Chrysler is privately owned by Cerberus and Mercedes-Benz). I would have guessed that back in the 70s it would have been a sure shot to strategically invest in automobile firms for the long run.

Apparently, George Bush had at least one good idea related to the American car industry, over 2 years ago, as reported in the NY Times two years ago:

After Ford announced its cutbacks in January, Mr. Bush said the solution to reversing the automakers’ problems lay in developing “a product that’s relevant.” Rather than having the government bail them out, as Congress did in 1979 to save Chrysler from bankruptcy, “I think it’s very important that the market should function,” Mr. Bush added.

Robert A. Lutz, the vice chairman of G.M., who is known for his candor, criticized Mr. Bush’s comments this month. Speaking in New York, Mr. Lutz said: “I’m a lifelong Republican, by the way, but next time around, Hillary, here I come. I’m a protest vote.”

(I don’t know if Mr Lutz supported Hillary, but it looks like he supports McCain now and not Obama.)

UPDATE 21/08/2008: The Financial Times today reports on the same topic at more length. Continue reading here.

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