Tuesday, December 09, 2008

Cuban on the Auto Bailout

While I don't think that his proposed solutions will ever see the light of day, Mark Cuban is correct that the dire predictions about what will happen if the "Big Three" automakers disappear are vastly overstated. Cars will continue to be manufactured in the United States:

The reality of markets is this, If GM, Ford and Chrysler disappeared that doesn’t mean the demand for cars will disappear. We will still buy cars. The question is what brand we will buy, where will those cars be built, by what company and how many jobs will be created to fulfill the demand ? According to Cars.com the Toyota Camry is built in Lafeyette Indiana and has more than 75pct American Components. The Honda Civic is built in the US with more than 70pct of US made components. The Big 3 are not the only manufacturers making cars in the US. If they go away, buy American Made could still survive.

Mr. Cuban suggests alternatively, that either the automakers should be offered up for sale to Toyota or Honda similar to what has happened in the financial services industry or that they should be forced into bankruptcy under conditions that provide guaranteed warranty and repair protections to consumers.

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