Auto Industry
Mitt Romney driving uphill in Michigan
Another month of great numbers for car-makers exposes Romney's failed message on interventionism
A Chrysler dealership in San Jose, Calif. (Credit: AP/Paul Sakuma) Dueling pundits, start your engines: The auto industry kicked off 2012 with a turbo-powered roar, and Democrats won’t wait long to make hay out of the impressive numbers. The question of the day: How will the GOP respond to one of the most successful displays of forceful government intervention in the economy the U.S. has witnessed in decades?
The numbers are hard to argue with: After the major automakers released their January sales figures, Autodata Corp. estimated cars raced out of lots at an annualized sales rate of 14.18 million vehicles for 2012. That’s the best month of sales — excluding August 2009′s Cash-for-Clunkers — since April 2008. GDP forecasters are likely rejiggering their first-quarter estimates even now.
Among domestic auto manufacturers Chrysler led the way, with sales surging 44 percent from a year ago. GM dipped 6 percent — but that was actually less than analysts expected, since GM’s numbers a year ago were boosted by big discounts and other incentives. Ford’s sales rose 7 percent.
Further underlining the good news, Chrysler CEO Sergio Marchionne announced that, as a reward for the company’s first profitable year since 2005, all hourly workers would be receiving a $1,500 bonus. Meanwhile, GM announced plans to invest $200 million in a new stamping plant in Arlington, Texas. Oh, and Michigan’s unemployment rate declined again in December, to its lowest point in more than two years.
Chrysler’s numbers are particularly noteworthy, because without the Obama administration’s combination bailout/managed bankruptcy, Chrysler almost assuredly would not exist. Indeed, on Tuesday, while Florida Republicans were smacking Newt Gingrich around, Obama attended the Washington Auto Show and delivered a none-too-subtle jab at his likely Republican opponent, Mitt Romney.
“It’s good to remember the fact that there were some folks who were willing to let this industry die,” said Obama.
The president was clearly referring to the infamous New York Times Op-Ed piece written by Mitt Romney in Novmber 2008, “Let Detroit Go Bankrupt.”
That’s a headline that Romney probably would like to take back, in light of the success of Obama’s auto rescue, as well as the electoral importance of Michigan, a key swing state. You could argue that it sounds, you know, a little callous, along the lines of “I like firing people” or “I’m not concerned with the very poor.”
But this is Mitt Romney we are talking about, an absolute master at the facile reinvention of his own history. In fact, he’s been arguing ever since it became obvious that the White House strategy was working that what he had really been advocating in his Op-Ed was exactly the kind of managed bankruptcy approach that the Obama administration ended up pursuing.
Romney’s revisionist history, strictly speaking, doesn’t hold up. Romney wanted Chrysler and GM to go through a bankruptcy process that was organized out-of-court, by the private sector, and involved no new federal loans. The most he was willing to entertain, as far as government intervention was concerned, was a federal pledge to guarantee the debt of any new equity investors who might be willing to pump fresh cash into the troubled car companies. His criticism of the Obama strategy throughout 2009 was unremitting. As he wrote in the National Review’s The Corner blog, “What is proposed is even worse than bankruptcy – it would make GM the living dead.”
The problem, however, was that at the time, in the spring of 2009, credit markets were effectively frozen. There were no prospective new investors willing to take any risks at all, even with a government backstop. Instead, hovering over the quickly decaying corpses of the two automakers were a flock of GM and Chrysler bondholders and creditors all desperate to grab whatever cash they could from what would have been a very, very messy liquidation. And the downstream impact of liquidation on the automotive supply chain and Midwestern Rust Belt state economies would have been a catastrophe.
Without federal loans the automakers would not have survived. As Chrysler’s Marchionne told CNN when questioned about Romney’s critique:
Whoever told you that is smoking illegal material. That market had become absolutely dysfunctional in 2008 and 2009. There were attempts made by a variety of people to find strategic alliances with other car makers on a global scale and the government stepped in, as the actor of last resort. It had to do it because the consequences would have been just too large to deal with.”
It’ll be fun to see how all this plays out as Obama and Romney make their visits to Michigan in upcoming months. Obama will point, with justice, to his own record. Romney will try to pretend that Obama actually was following Romney’s advice. Voters will have to decide whom to trust: A president who took enormous political heat for saving the auto industry, or a former private equity wheeler and dealer who said government should have just let the market work its destructive magic.
Romney considers himself a “favorite son” in Michigan — his father was governor and the president of an auto manufacturer. But his position seems like a tough sell.
Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard.
Films in Progress: Detropia
Oscar-nominated directors are seeking help to release their new film independently. Check out this exclusive clip
No city has experienced the highs and lows of capitalism like Detroit. So what does it mean to the country when the most epic of epicenters of American industrial might falls to its knees? And can it rise again? “Detropia” is a haunting portrait of a city on the brink of collapse, told by a chorus of weary but optimistic citizens who have no plans to join the hundreds of thousands who have already defected for easier corners of the country. “Detropia,” which won the editing award at the 2012 Sundance Film Festival, will make its way into movie theaters this fall … with your help. Dissatisfied with the limitations of traditional distributors, award-winning filmmakers Heidi Ewing and Rachel Grady have launched their first-ever Kickstarter campaign to raise distribution funds to take the film far and wide in the fall.
Continue Reading CloseHow Ford built the ultimate lemon
A look at the design and promotion that went into the company's biggest flop: the Edsel

The purpose of this piece is less about the actual history of the Edsel and more about the design and promotion of the car. I’ve always thought that it was one of the most outrageous looking automobiles to ever roll off an assembly line, and the name “Edsel” (Henry Ford’s son) hardly does a lyrical dance off one’s lips… What also intrigues me is how much money and effort was spent on the beast and how terribly wrong everything seemed to go. To help put things in perspective, I’ve included a good postmortem analysis from a 1959 article in Business Week below.
“Revenge of the Electric Car”: Why the automakers went green
Former gadfly Chris Paine goes inside the car industry for the cutthroat drama of "Revenge of the Electric Car"
Never let it be said that activist documentaries don’t make a difference, even if the difference they make is never predictable. Filmmaker Chris Paine began as a gadfly outsider to the auto industry, capturing a distinctive strain of eco-grass-roots rage in his 2006 “Who Killed the Electric Car?,” which explored the short and unhappy life of the EV1, General Motors’ late-’90s all-electric vehicle. By 2004, G.M. had reclaimed and destroyed virtually all the EV1′s it had manufactured — they were leased to consumers, rather than sold — and the plug-in automobile, a long-cherished dream of environmentalists, seemed permanently entombed under parking lots full of Hummers and Escalades.
Continue Reading CloseToyota Venza’s anti-hipster commercials
After years of trying to sell us cars to make us feel younger, advertisers are trying to turn old into the new cool
Who wants to be a cool kid? Car commercials typically come in two types: those marketed to “family adults” and those marketed to “mid-life crisis adults.” The first type of commercial will usually show a mother and father smoothly careening down a country road in their SUV, their 2.5 kids placid and safe in the backseat. Maybe they end up on a beach and take out their surfboards? Or at home, climbing out of their four-door Sedan. And the tagline will be something along the lines of “Life is full of surprises. Your car shouldn’t be one of them.”
Continue Reading CloseDrew Grant is a staff writer for Salon. Follow her on Twitter at @videodrew. More Drew Grant.
Can an electric car save the American dream?
The Chevy Volt is cramped, overpriced -- and the best thing an American motor company has done in years
The first time I saw the Volt, Chevrolet’s new hybrid electric car, it was only a battery.
It was November 2008, the month that General Motors begged the government for a bailout. I was in a sterile testing room at the GM Tech Center, in Warren, Mich. Andrew Farah, the Volt’s chief engineer, handed me a lithium-ion battery, in a plastic sleeve. We both had the same hopes for that flat, rectangular fuel cell. That it was, at last, the technology that would end General Motors’ decades of decline.
Continue Reading CloseEdward McClelland is the author of "Young Mr. Obama: Chicago and the Making of a Black President." More Edward McClelland.
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