Bailout or Not, U.S. Auto Industry Will Change in 2009

Whether or not Congress decides to bail out the ailing auto industry, Dr. James E. Cashman, John R. Miller Professor of Management at The University of Alabama, expects substantial changes in the nation’s auto industry next year.

Cashman, who has worked extensively with the auto industry, especially the troubled General Motors, the largest and most vulnerable automaker, and Saturn, says any bailout plan will be hobbled by discussions on how to split the money.

“If there is a bailout in the auto industry we will go into a prolonged discussion – or dispute – between GM management and the UAW leadership about how the funds should be spent,” Cashman says. “That said, the American consumer will find that the new car market will become even more dominated by the transplant organizations.”

On the other hand, Cashman says, if there is no bailout, the U.S. auto industry will go about the business of re-inventing itself, which may be to the benefit of the consumer.

“If there is no bailout we will have a brief wailing along with weeping and gnashing of teeth about the end of the auto world as we know it,” Cashman says. “Then the Big Three (GM, Ford and Chrysler) will get down to the serious business of paring down their offerings and tightening their focus on fewer products that are valued by the U.S. consumer.”

“In the meanwhile, the 20,000-plus dealerships will scramble to sell these products, to switch to carry one or more of the transplant products, or to sell their dealerships and get out of the business.”