- The Washington Times - Monday, August 22, 2011

ANALYSIS/OPINION:

The U.S. auto industry wouldn’t exist today if it weren’t for President Obama, or so he says. According to the White House, the 2009 $80 billion auto bailout - of which at least $14 billion was lost - not only saved the American auto sector but preserved 1 million jobs. If you believe that one, he has a $45,000 electric Chevy to sell you.

Earlier this month, at a Ford Motor Co. plant in Chicago, Mr. Obama even argued that Ford, which didn’t take a federal handout, had him to thank for its success. “If [Ford‘s] competitors had gone down, they would have taken down a whole bunch of the suppliers you depend on,” he said. “The brand of American autos would have diminished. That would have had severe consequences for Ford, and that’s the challenge we faced when I took office.” This is an audacious claim. It’s also baloney. Had its competitors vanished, Ford’s greatest challenge would have been to see how quickly it could ramp up production to snap up their market share.

In Minnesota last week, Mr. Obama lectured car companies to start investing in smaller cars. “You can’t just make money on SUVs and trucks,” he declared. “There is a place for SUVs and trucks, but as gas prices keep on going up, you have got to understand the market. People are going to try to save money.” It’s the height of chutzpah for a wannabe executive with no business experience to think it’s his prerogative to tell carmakers that they need to “understand the market,” especially because it’s obvious Mr. Obama is the one who doesn’t understand consumer behavior.

In the first seven months of this year, Americans purchased 3,170,109 small and midsized cars, which is an increase of about 10 percent over 2010. Sales of pickup trucks, SUVs and minivans outpaced smaller cars by almost 500,000 vehicles and are up 11.5 percent over the previous year. The Ford F-series pickup is the most popular new vehicle of any class in 2011, outselling the most popular compact car, the Chevrolet Cruze, 2-1. Mr. Obama should be telling automakers to reinforce success, not to unilaterally downgrade expectations.

Meanwhile, General Motors, which was the principal beneficiary of the auto bailout, is fighting a lawsuit over warranty claims related to suspension problems affecting more than 400,000 Chevrolet Impalas sold in 2007 and 2008. GM, now a ward of the state, claims the warranties shouldn’t be honored because the flaw predated the company’s bankruptcy. Attorney Benjamin Jeffers argues, “New GM’s warranty obligations for vehicles sold by Old GM are limited to the express terms and conditions in the Old GM written warranties on a going-forward basis.” Owners are on the hook for other repairs because, Mr. Jeffers reasons, “New GM did not assume responsibility for Old GM’s design choices, conduct, or alleged breaches of liability under the warranty.”

Flash back to 2009, when the feds took control of GM and replaced its leadership with hand-picked cronies. At the time, Mr. Obama staked his reputation and that of the government on honoring the obligations of bankrupt automakers. “Let me say this as plainly as I can,” he promised. “If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired just like always. Your warranty will be safe. In fact, it will be safer than it has ever been. Because starting today, the United States will stand behind your warranty.” Mr. Obama and Government Motors have broken their word.

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