Lots of countries make cars, and they want to keep on making them. In China and India, they want to make even more. The result is
global overcapacity that automotive journalist John McElroy pegs at around 20 million units this year.
As the financial crisis threatens the companies that make all these cars, there's a strong political impulse to help them and preserve as many of the jobs they provide as possible. We're most aware of this in the U.S., where the Big Three are lobbying hard for government relief. But around the world, other governments are also being asked for help -- even as they warn that any U.S. subsidies better not violate World Trade Organization rules. Consider:
- Germany may lend to General Motors Corp.'s Opel unit.
- British carmakers want cheap loans for their finance subsidiaries, though Prime Minister Gordon Brown has warned that a U.S. bailout risks creating trade tensions.
- Chinese automakers want support for Chinese brands.
- France wants the European Union to ease bailout rules, and Luxembourg's prime minister told a German magazine that European governments can't abandon their carmakers if U.S. companies are getting help.
- South Korea's president gave tentative support to a U.S. bailout but asked that it not violate WTO rules.
The picture isn't simple. Japan's finance minister said his government
would not protest a rescue of General Motors because it fears the wider consequences of a GM collapse.
But that just points up the balancing act that lies ahead for all parties as the financial crisis brings some long-developing problems to a head.
Nobody wants a U.S. collapse, in autos or banking or anything else. We're too central to the global economy. On the other hand, even America's best friends will be keeping an eye on their own interests as we try to extricate ourselves from the various interconnected dilemmas we've gotten into. -
Kenneth Klee
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