Monday, April 6, 2009

Bankruptcy Good for Auto Makers

by Shu Zheng
(VatorNews) - The once vaunted car industry has been brought to its knees, partly because of the economy, and mainly because of self-inflicted bad management and lack of innovation. Now, the heads of the iconic auto institutions are being dethroned - well, at least at General Motors. While there's a bunch of talk about the government's double standards toward how it's treating Detroit and Wall Street, you won't hear much support to go easy on auto companies from Silicon Valley types.

In this segment, Zag's founder Scott Painter sits down with Bambi Francisco in the second-part interview to talk about why Washington - despite its tough love bailout ultimatum - shouldn't be bailing out the car companies. "It's horrible," he said, referring to government's bailout plans. "We have a protectionist system that prevents market forces from doing their job." The auto industry has to change, and it's not necessarily up to the tax payers to make sure that happens. Why are there 43,000 car dealerships? Painter asked. That's not rational. Bankruptcy would clean out the system and get the car industry operating rationally again.
Zag is a new online car-buying service. It's the second car startup in Painter's career as an entrepreneur. So, he's got a thing or two to say about the auto industry he's trying to modernize.


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