Barack Obama, car guy
The president-elect can do more for the auto industry than anyone since Henry Ford.
NEW YORK (Fortune) -- One of the least explored personal sides to our new president is the amount of gasoline in his veins. We know all about his affection for the basketball court and his tendency every now and then to sneak out for a cigarette. But we've heard very little about what drove him to acquire one of the least politically-correct cars on the planet: a Chrysler 300C.
With its high torque and horsepower, voracious appetite for fuel and gangsta-car persona, it is hardly the kind of vehicle you'd expect a consensus-building politician to drive. But those are Obama's wheels.
Or were. During the campaign he sold the 300C in favor of a hybrid Ford Escape, and as president of the United States, he won't be getting into the driver's seat very often - unless he's at a military base or some other secure location where he can let loose. He'll be spending all his time in the back seat of an armor-plated Cadillac.
But let's hope that he doesn't lose any of the love for automobiles that may have attracted him to the Chrysler. Because he's in a position to do more for the auto industry than anyone since Henry Ford or Daimler and Benz.
Now that General Motors (GM, Fortune 500) and Chrysler have been temporarily removed from intensive care, courtesy of a federal bailout, Obama will be in charge of the effort to permanently return them to financial health. As such, he could ensure their long-term survival - as long as the market cooperates - or doom them to some interminable government-regulated hell.
Here are some Dos and Don'ts:
- Do consider a kind of pre-packaged bankruptcy for the auto companies. It may be the only way to allow them to renegotiate their outstanding loans and work out better arrangements with their dealers and the United Auto Workers.
- Don't tell automakers how to run their businesses. The Detroit Three hasn't done a whole lot right lately, as evidenced by their multi-billion dollar losses. But they do know something about selling cars. Of course, it wouldn't hurt to curb some of their more self-destructive practices like fleet sales, sub-prime loans and premature lease buy-backs.
- But do make it easier for the auto companies to run their businesses by reducing some of the encumbrances that have strangled them. Fifty-state fuel economy and exhaust emission regulations would be a start, instead of allowing California and a dozen or so other states to go off in their own directions.
- Don't be swayed by every back-yard mechanic who claims he has a scheme to release America from the yoke of imported oil. Take a look at the troubles with Tesla's $100,000 electric car company. Then there's the scheme to convert the hybrid Toyota Prius into a plug-in with thousands of dollars of additional batteries. If this were remotely a good idea, don't you think Toyota (TM) would have already thought of it?
- Do remember that developing and manufacturing cars is a complicated business requiring thousands of parts, hundred of suppliers, and millions of educated guesses about what consumers want and will pay for. And by the way, that process takes about four years and requires the investment of about $1 billion for each model.
- Don't play favorites. Ford (F, Fortune 500) would like you to believe that it is stronger than the others, but its lead is likely to be a temporary one. And you'll be hearing that Chrysler is less deserving of aid because it is privately owned. But its real owners are pension funds and college endowments, and its failure would put real flesh-and blood people out of work, just as it would at the other two.
- Do impose a higher federal gasoline tax. This idea, once considered political suicide, is gaining currency. Even the New York Times endorsed it last week. With gasoline prices behaving irrationally, it is the smartest, most fool-proof way to get Americans into more fuel-efficient cars.
Challenging times create opportunities for greatness. Given the depths of America's economic morass, President Obama has an opportunity to become the greatest leader we've seen in more than half a century. Saving America's auto industry would be a significant addition to his legacy.