Detroit’s Newest Lifeboat: Exporting Cars From The US

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The Big Three reason that if they cannot sell enough cars in the US, they can make them here and send them overseas. There new agreement with the UAW and a weak dollar make the projects feasible.

According to The Wall Street Journal "General Motors Corp is looking to export U.S.-made vehicles to Europe as well as to China and Latin American markets such as Brazil."

The plan makes a great deal of sense, at least on the face of it. GM (GM), Ford (F), and Chrysler have people who want to work and plants that want to produce. The US auto market may be as low as 15 million units this year, down from 16.1 million in 2007. That takes as much as $40 billion in sales out of the domestic economy.

Detroit faces one obvious hurdle. Many countries charge tariffs on vehicles coming in from the US, making them so expensive that no one will buy them. Less obvious but still troublesome is that the dollar runs in cycles and will not stay down forever. At some point the economics of the currency market will turn against the car guys the same way that it has turned against Japan more recently.

The most difficult problem the Big Three face is that when they get to these foreign markets they will find that all of the Japanese and Korean car companies are already there. And, many of the locals have auto companies of their own.

Douglas A. McIntyre