Tuesday, November 11, 2008

Joe's Auto Industry Bailout Plan

I didn't like the $700 Billion bailout for the financial institutions and banks. It helps them, but not the average Joe in America. Those institutions are being rewarded for stupid if not criminal behavior, they are kept afloat, but Joe Blow down the street is still out of his house.

Now we have the auto industry stepping up to the bowl wanting thier share of my paycheck. Well too bad I say. Those companies made bad decisions and continued to make big trucks and gas guzzlers even when all indications were that gas prices were going make them impractical eventually. Why just save the auto industry only while me, Joe Blow, am still sitting in a 4 gallon per mile SUV? Who's helping me?

So, I have my own bailout plan for the auto industry AND Joe Blow.

Take the $25 Billion dollars they're talking about and set up a car upgrade fund. Consumers like Joe Blow can take thier vehicle to any Ford, GM or Chrysler dealer and purchase ANY new vehicle and a percentage of the purchase price comes out of the fund. The percentage of the purchase price from the fund would be equal to the percent improvement in average MPG from a trade in vehicle to the new vehicle. Also, the purchase price of any of the new vehicle would be only $500 above dealer cost. The MSRP crap is out the window.

For example, I take my Ford Expedition to a Chrysler dealer and trade in on a more fuel efficient mini-van. By the numbers:
- Expedition - 18 mpg highway / 12 mpg city
- Mini-van - 24 mpg highway / 17 mpg city

So by upgrading to the mini-van I will improve my fuel economy by ~30%. (rounding up here).

Based on that info:
- Mini-van Dealer cost: $25,000 + $500 mark up.
- 30% Discount from fund. $7,650
- Price of mini-van for Joe, $17,850

Any amount owed on older vehicle would be handled as it is today by trade-in value and either the customer paying it off or left-over amount rolling into the amount of new loan.

I may be naive and this idea too simplistic, but it seems this type of arrangement would help both the auto-industry and the average consumer. Just giving the money to the auto-industry only helps them and the unions.

Anyway, thoughts are welcome. Criticism will be promptly ignored. :)


Drhea said...

Great idea Joe, how do you send this to the Powers That Be? Also, have you noticed that none of the people/companies asking for a bailout or HANDOUT have agreed that in exchange the CEO's and managers would receive the same salary as the average American? If these management people did not receive millions in salaries and bonuses they would not need to request what is basically Corporate Welfare.

JoeVic said...

I have floated the idea. Doubt anyone will bite. If you like it, send it to your local representatives. Remember, you heard it here first. :)