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When car capitalism ate itself

Will Ford and GM exist next year?

The big question everyone is asking right now is not whether or not the $6.2 billion of taxpayer's money the Federal Government has stumped up for the local car industry is good value but whether the parent companies of Holden and Ford Australia in the US will be in existence next year.

If, as is looking increasingly likely, they go belly up, where does that leave Holden and Ford Australia? And what becomes of our $6.2 billion investment.

It's the subject of much speculation and calls into question the massive leg-up provided by us, the Australian taxpayer, to local subsidiaries of GM and Ford. And remember, both US parent companies have been in the poo for longer than a few months - their problems go right back to the start of the century when there was a lack of suitable development and poor forward planning. This resulted in both companies getting in a right pickle with the wrong vehicles at the wrong time, push sales driven by discounting and other ridiculous practices, zero per cent finance and a whole train crash of don'ts.

They were too focused on cranking out massive pick-up trucks and not the sort of cars they needed to stay ahead of the game.

A little crystal ball gazing is tempting in a situation like this, with a smattering of some hypothetical scenarios.

Locally, Toyota stands to benefit hugely in the event of the demise or sell-off of Holden and Ford. And rest assured, GM and Ford wouldn't hesitate to flick their non-core businesses to keep the US parent companies afloat at home.

That $6.2 billion earmarked for three companies would neatly go back to one, and Toyota has already moved solidly towards making a “green” hybrid car in Australia for which the funds are ostensibly provided. It's a fair old wad in the back pocket for Toyota.

But there are other delicious possibilities.

Could it be possible for Ford Australia and Holden to move to nationalised ownership and Australia take advantage of the wealth of talent and experience available there. It could be used to tap into a select market, manufacture cars locally and even start supplying technology and components to other carmakers. What red-blooded Aussie wouldn't buy a good car made here by a fair-dinkum Aussie company and not some quasi-Aussie company. It would be unthinkable, un-Australian.

And remember, we are the supplier of most raw materials that go into making a car.

Nationalisation has become a dirty word in the runaway capitalistic western world where most things are based on short term planning and the fast buck. Look where that led.

And with the current international economic problem unsolved, nationalisation is happening anyway even to the pillars of the capitalist system - they are begging for government money.

But I suspect the nationalisation pill would be too bitter for us to swallow so at a local level the second scenario probably has more weight _ foreign ownership for Holden and Ford Australia. And we are talking Tata for Ford (possibly Ford the world including Australia) and a Chinese manufacturer for Holden, possibly SAIC which is in an expansionist mood, has plenty of funds and recently took over SsangYong.

Tata has already shown its hand purchasing Land Rover and Jaguar - both formerly part of Ford's Premier Auto Group and the Indian company seems well provisioned with funds.

China already has a hand in our “local” cars as suppliers of components like windscreens, brakes, lights, switches, wipers and other bits and pieces. They know what's going on here and no doubt would like a car making foothold in an advanced, western economy like ours.

Then again, GM, Ford and Chrysler in the US could just shut up shop, hang up the gun and fade into the past. Vultures would be circling already and despite the worrying international situation, some have plenty of cash for a cheap buy-out - they only have to wait it out.

Look no further than Japan or Korea for the wherewithall to pick the prime cuts of GM, Ford and Chrysler. Hyundai probably has eyes for Jeep and some of the Europeans could also be in a buy-out position at the right price - Mercedes Benz for GM Opel for instance. We won't have to wait long to find out.....