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Barack Obama gets tough with the US automotive industry

Barack Obama has today administered some harsh medicine to the US automotive industry with a suggestion bankruptcy would be the best option for General Motors and Chrysler. The government appears unwilling to inject more capital into the industry at a time when car sales have fallen off a cliff and both companies are losing significant amount of cash on a daily basis. Indeed the Barack Obama government also forced out the chief executive at General Motors in exchange for the last round of funding.

The UK car industry is in a serious mess at the moment, although possibly not as bad as the US sector, and there are concerns that unless the UK authorities are willing to supply significant loans to the industry, we could see a number of UK car manufacturers go out of business. While the loss of an industry which has been prevalent in the UK for some time would be bad enough, as well as the tens of thousands of jobs at risk, there are substantial knock-on effects to suppliers and other businesses associated with the industry.

There have been serious accusations that the UK authorities are "dragging their heels" with regards to promised money and we will need to see some activity in the short term to make any difference.

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