How Healthy is Auto Industry? – American Suzuki Goes Bankrupt

SuzukiNow that the election season is coming to an end, we may get a clearer picture in the near future as to just how “healthy” the auto industry really is. Another car company has just filed for bankruptcy as American Suzuki announced that it is filing for chapter 11 protection and will no longer be selling vehicles in America.

I’m sure few tears will be shed for American Suzuki and the workers at American Suzuki car dealerships that will lose their jobs. The company is a wholly-owned subsidiary of Japanese-owned Suzuki and the vehicles are built outside of America.

The more important takeaway from the bankruptcy filing is that the auto industry remains as competitive as ever, and those automakers that are not at the top of their game (or receive billions of taxpayer dollars to keep them afloat) will have trouble being profitable in the tough environment; despite the politically-based claims to the contrary.

Suzuki lagged the competition and rightfully needs to leave a market that does not have room for any automakers other than the strongest. It remains to be seen if bailed out companies like General Motors and Chrysler, which was given to Italian automaker Fiat, can maintain the momentum that about $80 billion of taxpayer funds tend to give the receiving corporations. Unfortunately for those who believe in free-market capitalism (as well as the rule of law), the auto bailouts set a precedent that was portrayed as a noble “saving” of the auto industry rather than what it was; a politically motivated wealth redistribution scheme by President Obama that favored unionized groups over less politically popular parties during a manipulated bankruptcy process. This precedent may end up costing Americans more money as the political gain from those in power that freely spend taxpayer dollars outweighs the monetary cost when large US corporations are mismanaged and need a handout to survive.

Mark Modica is an NLPC Associate Fellow.