Obama’s new emission standards will only add to the woes of the already dying US auto industry
However, complying with current regulations will prove to be the Achilles’ heel for some of the beleaguered auto firms. Competitive foreign brands – particularly from Japan – already possess the technology and vehicles to match the new standards and as they are still on a stronger plank financially, this won’t be a cause of concern for them.
On the other hand, except for Ford, which possesses the EcoBoost Powertrain, other US automakers don’t have the latest technological capabilities to overhaul their production costs. Hence upfront investments would be high, which are estimated to be to the tune of $21.8 billion and funding options are near zero.
So we all agree that the Obama administration ‘can’ frame policies and enforce laws that are noble and game changing. But the complications with the Green law lie in its implementation. But can the auto makers? Obama may know soon enough, as it is, the US government may take ultimate control of GM in June!
However, complying with current regulations will prove to be the Achilles’ heel for some of the beleaguered auto firms. Competitive foreign brands – particularly from Japan – already possess the technology and vehicles to match the new standards and as they are still on a stronger plank financially, this won’t be a cause of concern for them.
On the other hand, except for Ford, which possesses the EcoBoost Powertrain, other US automakers don’t have the latest technological capabilities to overhaul their production costs. Hence upfront investments would be high, which are estimated to be to the tune of $21.8 billion and funding options are near zero.
So we all agree that the Obama administration ‘can’ frame policies and enforce laws that are noble and game changing. But the complications with the Green law lie in its implementation. But can the auto makers? Obama may know soon enough, as it is, the US government may take ultimate control of GM in June!
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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