Demand = 55 million.
Those are the statistics for global automobile production and demand in this discouraging Washington Post article on the GM bailout:
The stake will be worth enough to fully cover the government’s direct investment only if GM’s stock rises above $68 billion. Even at its recent 2000 peak, GM’s stock was worth only $56 billion.
“I don’t see GM hitting those benchmarks in a very long time,” said Maryann Keller, a veteran automotive analyst and author of “Rude Awakening: The Rise, Fall, and Struggle for Recovery of General Motors,” which was published in 1989.
She noted that global competition will continue to squeeze American automakers. Though the world’s factories can produce about 100 million vehicles a year, demand for them only stands at about 55 million, and the gap will push prices and profits down, she said.
And production capacity is growing, particularly in China and India with others itching to get into the game. The problem will only get worse. Is it any wonder I’ve been harping on this for so long?
IMO any shortfalls in amounts repaid to taxpayers for the GM bailouts should be taken from Congressional re-election and pension funds.
It’s definitely an issue for GM, but it’s not really a problem for us consumers. That kind of cutthroat competition, in the absence of massive trade barriers, might actually drive down automobile prices a lot in order to give me a better selection of cars.
Since I don’t believe that GM is salvageable, at least not in any recognizeable form, my concern is more that we’ll continue to throw money at GM with no hope of getting any of it back.