Saturday, December 20, 2008

The Detroit Three -- Bail Outs or Bailing?

Can a $20+ billion bail out stop North American consumers from bailing on the Detroit Three? Over the last decade these companies have significantly damaged their relationships with their priority publics, resulting in a dramatic decrease in their overall reputational value. In two recent studies conducted with my MBA students, the Detroit Three ranked at least 30 points behind in corporate reputation scores than Toyota and Honda. So will the investment by both the governments of Canada and the United States impact consumer demand for these products? Rather than simply handing over $20 billion -- which will only be a short term fix to help them through the next quarter -- why not encourage both consumer confidence and spark retail sales by implementing a moratorium on both federal and provincial taxes -- in Ontario that would be a 13% savings for consumers. But on the other hand, this might just help Toyota and Honda continue to out pace the Detroit Three.

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