Where’s The Outrage Over GM & Chrysler?

Closer than you think...

Closer than you think…

In my latest post at BloombergView, I look at Donald Trump and Hillary Clinton’s attempts to tap into the populist anger over the auto industry and am left wondering why neither is willing to attack the automakers who actually received bailout money. Trump has taken on Ford’s decision to double production capacity in Mexico and Clinton has attacked the supplier Johnson Controls for relocating to the UK in an “inversion” deal with Tyco, yet neither of these alleged automotive evildoers come close to matching the perfidy of the two bailed-out automakers. To wit:

General Motors, which received a $50 billion bailout, has received a net federal tax advantage of $52 million over the last three years in spite of billion-dollar profits, thanks to a controversial government decision allowing it to carry tens of billions of dollars in operating-loss credits through bankruptcy. GM is also leading the way on importing vehicles from China, and has focused its global export and R&D strategies around that huge potential market in the years since taxpayers bailed it out. Just like Ford, GM is doubling its Mexican production capacity, spending $5 billion on new assembly jobs south of the border.

Meanwhile, FCA isn’t even based in the U.S., having fled to a U.K. tax domicile after receiving more than $10 billion in bailout funds. Putting Fiat’s Italian plants in front of the line for new production, FCA anticipates that its North American production will remain flat through 2018 while imports from outside North America will expand to more than 10 times 2013 levels

This is at the heart of populist anger over the auto industry: Even if the bailout was necessary as an emergency measure, it’s failed to change the behavior of the firms who benefited from it or to deliver any reversal in the fortune for U.S. workers. Fiat-Chrysler survived to become a foreign firm by every possible metric, and GM became a tax-dodging Trojan horse for Chinese cars. And yet no American politician — Democrat or Republican, establishment or renegade — seems able to even identify these real culprits.

Not convinced that the automakers we bailed out are bad corporate citizens of the US? Read on…

[Continue Reading]

Dutch double dipping: EVs save taxes at home, and then again abroad

Car2Go_EV_in_the_Netherlands

Europe’s Netherlands used to be famous for a libertine approach to sex and drugs, recently, the country became Europe’s showcase for electric vehicles. Plugins hold a market share of around 5 percent in the country, EV Sales says. The true rate is a little lower. A lot of the (always imported) electric cars leave the low-country right after they are bought. [Continue Reading]

The New, New, New Chrysler: Half Time In A Dutch-based UK Tax Domicile

Go ahead... make my tax year.

Go ahead… make my tax year.

Immediately after the US government funded and brokered marriage of Fiat and Chrysler, the company’s advertising took an unmistakable turn towards themes of national identity and patriotism. From the over-saturated sincerity of Chrysler’s “Imported From Detroit” ads, Ram’s “So God Made A Farmer” sermon and Jeep’s  “The Things We Make Make Us” manifesto, to the dripping irony of Dodge’s “Freedom” spot, every brand in the new “Chrysler LLC” played up its American-ness in a different way. And when Fiat’s 500 was introduced to the US market it was marketed almost exclusively in ways that highlighted its Italian-ness, despite the fact that the car has never actually been built outside Poland and Mexico. Clearly Fiat-Chrysler’s Canadian-born CEO Fiat Marchionne and French-born marketing boss Olivier Francois believe quite strongly in the power of national identity as a marketing tool.

This was already a provocative choice, given that these US-based brands had come under the control of an Italian firm, at some cost to the US taxpayer. But with news breaking that the new Fiat Chrysler Automobiles (FCA henceforth) will be based in The Netherlands with a UK tax domicile and listed on the New York Stock Exchange, this patriotic marketing strategy becomes even more of a liability. FCA would love to have its cake and eat it too: benefit from national bailouts and nationalist marketing while enjoying every tax and banking advantage of new transnational corporate structures. The question is: can it?

[Continue Reading]

Repent, the end of the kei car is near

Honda's Nbox at Honda's Tokyo HQ

Honda’s Nbox at Honda’s Tokyo HQ

The kei car, a Japanese vehicular oddity, and a big part of its car culture, could be reaching its apogee.  If a Japanese government advisory panel gets its will, the mini vehicle will lose most, if not all of its unique tax advantage. [Continue Reading]