Should the US auto industry be saved?

Can it be saved? That is the question that should be asked instead.  Probably not, is the likely answer. Spending money on a bail-out of the US auto industry will be like pouring water in a bottomless bucket.

US auto makers have created a market for themselves that allowed them to comfortably deliver 1950’s technology while being resonably successful, up until a few years ago. If you have owned a Ford Explorer or Jeep Grand Cherokee in recent years, you will have noticed that, except for some superficial design changes, these cars today are largely built on the same platform that has been in use for decades.

The US auto industry has been selling cars and trucks using “tough”, “rugged”, and other similarly silly attributes for half a century. All the while, the world has moved on. European and Asian car makers have invested in markets that value refined engineering, efficiency, and fuel economy. Europan and Asian auto makers are 20 to 30 years ahead of their US competition.

In the United States, once a successful company has gone public, shareholders and executives will squeeze the hell out of it until nothing is left. This is why there is not enough investment in R&D and technological advancement at large. Advancement comes only in the form of new innovative companies, and once these companies have become successful, the cycle starts over again.

The chances that any US car maker will be able to become competitive in a time of rapid change and innovation in the market place is small. Let’s not waste money on GM and Co. These companies will never be what they once were – the engines of the US economy. Pouring money into US auto makers today will prolong their certain demise and prolong the economic crisis. The money should be spent on companies that drive innovation. Only innovation will fuel economic growth. Suggesting that the US auto industry should be saved today is like suggesting that the US horse carriage industry needed to be saved in the early 1900’s.