Friday, 19 December 2008

Car Industry Bail-out

Bush announced a plan to bail-out car industry major, popularly called Detroit - 3, today. $17.4 billion will be pumped in for saving of these falling giants. As of now $13.4 billion will be passed to General Motors (GM) and Chrysler. Ford is not to get anything right away as government do not think it is necessary.

Government has asked to make these firms viable by 31st March which is surely difficult. When the economy is down and all the industry looks weak, people are less interested in buying cars of course. Unemployment rose to pick in last two decades.

I have a question in my mind... if unemployment is at pick, even if these car makers survive for the time being by pumping billions of dollars, how will people afford to buy when they are not employed?

3 comments:

kiran said...

Primary reason for the bail out is to support the employment of about a million people directly dependent on the detroit auto industry and also hoping for a better market position soon.

Koushal said...

I know this reason... but I don't feel it is practical. With current market trend US doesn't look good. Millions of cars which are manufactured already have to be consumed first.....

Yogi said...

Yes, its partly due to lot of employees directly dependent on Detroit. There will also be a strong push towards exporting the cars to Asian countries, especially Chrysler's with their compact cars for such markets at lower costs. Nevertheless, this will raise hope in auto-industry... but there is still a possibility of the money to "sink" rather than become a buoy for the industry,