Future Government Aid for the Auto Industry Needs to Focus on Creating Sales, not Cutting Costs and Closing Plants

After emerging from bankruptcy, the American auto industry is no doubt going to need more government help in the form of loans in order to succeed.  If the government truly wants to see the industry get back on its feet, it needs to focus on the revenue stream of these companies—bringing money into these companies through sales of their products.  Instead of putting more money into the hands of incompetent auto executives, the government needs to put this money into the hands of the consumers.  Two friends of mine came up with the following plan to make this happen:

 

            For example, let’s say the federal government decided to allocate an additional $20 Billion in loans to help the auto industry.  Instead of giving the money directly to the auto executives, the government could offer a $10,000  cash back rebate to every consumer who buys a new GM, Chrysler or Ford (Ford should not be penalized for refusing to accept government help) car within six months.  This would create immediate sales of 2,000,000 new cars and give the auto industry the jump start it needs to succeed.  The same amount of revenue would still flow into the auto industry, but they would have to earn it by doing what they’re in the business to do—building and selling cars.  It would also help speed our nation out of this recession.

 

            This program would be easy to monitor, easy to implement, provide instant results and it would create an instant cash flow for the industry.  The details of this program are listed below:

 

            Implementation

  • One cash back rebate per tax payer with a valid social security number.
  • Must purchase (or order) a new car within six months, free to choose between General Motors, Ford, and Chrysler.
  • An application for the rebate is made to the federal government after the purchase with proof of purchase, copy of registration, and basic documentation proving residency and tax-paying status.
  • Rebate check would be direct deposited within two weeks into designated checking/savings account.
  • The rebate of $10,000 could be used for ANY purpose including paying down the car loan, buy another car (even an import), buying Christmas presents, paying down bills, or paying down an upside down mortgage. Anything at all.

Results

  • Creates competition between General Motors, Ford, and Chrysler to offer even deeper deals
  • Ordinary citizens would benefit directly.  Consumers who decided to participate would also feel a sense of patriotism for helping out one of our most American of industries.
  • The incentive would be to buy smaller cars… it buys more of a car, but they are free to buy any size car they want.
  • The cash rebate would help fuel our economic recovery by also allowing this capital to move directly into our economy.
  • Fraud should be easily monitored. 


This would give the auto industry the shot in the arm that it so desperately needs and would provide a much needed jolt for our economy.  What’s there not to get here?

 

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About Ross Reck

Who am I? I am the author of The Engagement Formula, Turning Your Customers into Your Sales Force, The X-Factor and my popular weekly newsletter: Ross Reck’s Weekly Reminder. I'm also the coauthor of Instant Turnaround!, REVVED! and the best selling The Win-Win Negotiator. I've also spoken at hundreds of meetings, conferences and conventions throughout the United States, Canada, Latin America, Europe and Asia. My consulting clients include Hewlett-Packard, John Deere, American Express, Janssen-Ortho, Inc., Shire Pharmaceuticals, Philip Morris International, the Chicago Cubs, Rolls-Royce and Xerox. I received my Ph.D. from Michigan State University in 1977. From 1975 to 1985 I served a Professor of Management at Arizona State University. During my career at ASU I was the only two-time recipient of the prestigious “Teaching Excellence in Continuing Education” award and was identified by the university as an “Outstanding Teacher.” In 1985 I left my position at ASU to search full-time for a new "Management Model" to replace the current model with it's emphasis on authority, control and formal communication channels. Last February, I found it (it's actually a leadership model) and it's featured in my new book, The Engagement Formula: Three Simple Steps that Guarantee Full Employee Engagement.

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