Bailed-Out Chrysler to Build Jeeps in China

ObamaAmerican taxpayers should prepare themselves for another slap in the face, courtesy of the much-ballyhooed Obama auto bailouts. After spending about $85 billion to bail out Chrysler, General Motors and Ally Financial (formerly known as GMAC), taxpayers are being rewarded by Chrysler’s parent company, Fiat, announcing that it is preparing to build its Jeep brand vehicles in China. In addition, according to a Bloomberg report, Fiat may end up building all of its vehicles in China, threatening the loss of more manufacturing jobs should the decision be carried out to move Chrysler manufacturing out of America.

Italian automaker, Fiat, was gifted an ownership interest in Chrysler during the Obama-orchestrated bankruptcy process. Fiat paid nothing for the ownership stake, other than agreeing to transfer some of its technology. The Italian company later purchased an additional stake, giving it majority ownership and officially making Chrysler a foreign-owned company. It now seems that American jobs will be lost as a result as Fiat appears to be trying to maximize profits by transferring Chrysler’s manufacturing operations to China.

This is not the first instance of China benefiting from the auto bailouts. GM has also made a commitment to expand production in China, even moving its electric vehicle manufacturing platform to that country. The Chinese job creation is coming at an expense to American taxpayers. The latest estimate of taxpayers’ losses for the auto bailouts, as recently reported by the Washington Post, is $25 billion. While President Obama campaigns on the “success” of the auto bailouts, the high price tag brings into question just how successful they were. The probability of future job losses in America as manufacturing moves to China adds to the argument that the bailouts were not optimally planned out.

The Jeep brand is arguably Chrysler’s (as well as Fiat’s) most valuable nameplate. A once venerable American brand is now owned by the Italians and apparently will soon be built in China. The losses to taxpayers on only the Chrysler portion of the auto bailouts are reported to be $1.5 billion. It is increasingly looking like the money was not well-spent if Fiat’s Jeep announcement is any indication.

Mark Modica is an NLPC Associate Fellow.