President Obama — not Treasury Secretary Geithner or car czar Rattner — made the announcement this morning that the U.S. government intends to reorganize Chrysler in bankruptcy under an alliance with Italian manufacturer Fiat (as I noted over on the Corner). The intent was clearly to establish that President Obama is taking personal responsibility for Chrysler’s survival, and as self-appointed CEO, he emphasized that the company’s future lies in making small, fuel-efficient cars.
“Fiat will (introduce) a vehicle produced at a Chrysler factory in the U.S. that performs at 40 mpg,” CEO Obama said in his first product roll-out.
Why? Because there is a market for a 40-mpg cars in the U.S.? Or because it will meet Washington’s CAFE rules? We know CEO Obama admires European market socialism, but as CEO of an American auto company he should know that 40-mpg small cars are a sliver of the U.S. market. Fiat is experienced at making 40-mpg vehicles because Euro-consumers demand them in a market with $6-a-gallon petrol.
Obama’s obsession with small cars demonstrates the perils of a politician running a for-profit auto company: He wants to make cars that meet regulatory needs, not consumer needs.