A Tale of Two Car Companies

Two announcements today put in sharp relief the difference between a brilliantly managed automotive manufacturer and a mismanaged one.

Magna, which has clearly won control of the European Opel division of GM, announced plans to build product in Canada. If successful, this will mean that in fifty years, Frank Stronach has taken an operation based in his garage to a world-class car manufacturer. Currently, Magna has a cash balance of $1.5 billion, making it one of the healthiest manufacturers on the planet.

Meanwhile, GM is apparently pinning many of its hopes on the Chevrolet Volt electric car. However, initial the initial price is slated to be twice that of Toyota's Prius. So this is a dim hope indeed. There are also seemingly vague plans to produce a new sub-compact.

In other words, Magna will prosper without the help of taxpayers, who will in turn sink $10 billion or more in a company whose future still seems hopeless. Perhaps it is time to at least think about putting this money into an automotive venture that has some chance of success.