Even though the U.S. government is working very closely with both Chrysler and General Motors as it tries to help build profitable companies from the two struggling American automakers, the government will not tell the companies what to build.
There have been fears of the government mandating exactly what type of vehicles to build ever since GM received its first loan from the Bush administration. Admittedly, the rumors seem like they could be true, as the government may end up with approximately a 50 percent share of GM’s equity. But it turns out they have little basis in reality.
“The government is not going to prevent GM from making every type of vehicle it can sell profitably. The goal is to put the company in a position to succeed,” a source close to the task force told the Detroit Free Press on the condition of anonymity. “The government is not going to be in the business of telling GM what products they can build.”
GM’s future product lineup will contain more cars and fewer trucks, but that's partly a response to the changing automotive market and not because of government demands, insists the source. “Car companies across the industry are making a play for the small-car market because of rising fuel prices and fuel-economy standards,” said the source.
“The government wants to get its money back,” said Jim Hall, managing director of 2953 Analytics. “To do that, GM has to build vehicles that sell profitably,” which have typically been SUVs, trucks, and performance vehicles. To that end, GM says it is working on fuel-efficient technology for use across its lineup – from vehicles like the Chevrolet Volt and Cruze to SUVs like the Escalade Platinum Hybrid – as the company intends to still be a full-line vehicle manufacturer after its restructuring is over.
“The goal is to get the government out of this as quickly as possible,” said the government source. “The task force was told to behave as investors – to build the company’s value. Then it’s up to management to make decisions that are in the best interest of their stakeholders.”
Source: The Detroit Free Press