Business

Chrysler and GM: Amerika's new Lada factories

When it comes to the future of Chrysler and General Motors, whether a company is government owned is not as important as the reason why it is government owned.
Don Pittis, senior producer of CBC News Business.
As Chrysler goes Cinquecento, is GM going Lada?

Cinquecento (rendered into English phonetics as something like CHIN-kweh-CHENT-o) is of course the much prettier Italian name for the stylish Fiat Five Hundred. And if we are lucky, we can go the way of the Italians: Wear smart clothes, kiss everyone goodbye, then bend into stylish and efficient Chryslers before swerving off into traffic while laughing and weeping simultaneously.

That stereotype is at least more agreeable than the one mooted this week for GM.

There are many fears that General Motors (and maybe even Chrysler too), will fall under long-term government control, becoming "Amerika's Lada," cranked out from spare parts at the Number One Ukrainian Tractor Factory in Oshawa, Ont.

But what do I know about cars made by government-owned companies? Well, actually, I must be a rare North American expert. I have owned and driven two of them.

My first encounter with socialist automotive manufacturing was in the 1980s. A bright yellow Lada, scooped up second-hand for a song from a Thunder Bay lawyer, stayed with me through three different Canadian cities. It was one of the first of the Russian Fiat knock-offs imported to this country. As a showpiece vehicle it had all the bells and whistles, at least for a Lada. As well as its vibrant yellow colour, it had a sunroof, radio, eight-track cassette player, and fancy hubcaps. It even had seats. (That's a Lada joke.) As a student newspaper editor in Montreal the leftist image of driving a Russian car gave me great prestige, but in truth I bought it because it was cheap.

Picking up my conservative future father-in-law at the airport added to the vehicle's charm. In general the car worked well. It was reputed to be as heavy as a Volvo, the joke being that the Soviets didn't yet have the technology to make metal thin. But the weight made it solid on the road. As you would expect with a Siberian taxi, it started reliably in the coldest weather. There was lots of room in the back seat and trunk.

Bad Lada jokes were lots of fun: How do you double the value of a Lada? Fill it up with gas.

Or, "I am a car," the Lada says to a donkey, "What are you?"

"Ha ha," says the donkey, "I am a stallion."

Deserved or not, the Lada's worst feature was its reputation. When mine finally conked out with an expensive-sounding rattle and clunk, I couldn't get rid of it. Finally a wrecker agreed to haul it out of my Ottawa driveway and pay me $25. After he had it hooked up to the tow truck, he lowered his offer to $10, "take it or leave it." I took it.

About a decade later, I bought my second government-made car in Oxford, England. A rust-coloured Austin Metro manufactured by British Leyland, the combination of all failed British carmakers that had been nationalized in 1975. The Metro was, notably, the worst car I've ever owned — 12 years old and smelling constantly of burnt oil, the nasty little beast was easy on gas but hard on repair bills. I made friends with a very nice garage man, but it was not worth the pain. When I got a more reasonable job, I traded the Horrible Metro in on a fully capitalist late-model Ford Fiesta. It was like climbing off a donkey and mounting a stallion.

These days, although they are pretty well gone from Canada, Ladas are still being made and are still popular in Russia. The company is 25 per cent owned by Renault. Metros, however, are mostly gone from this world. Surely they all rusted to piles of greasy brown dust. And the only remnant of British Leyland is a few brand names and concepts sold off to the highest bidder. Germany's BMW makes the Mini. India's Tata Motors owns the rights to the Land Rover brand. No one will ever again make the Austin Metro.

The lesson, if there is one, is this. Whether a company is government owned is not as important as the reason why it is government owned.

The Soviets, struggling to create an industrial economy out of pre-industrial feudalism, built cars because they were wanted. They were never able to satisfy demand. The British government's purpose was different. It wanted to preserve jobs and preserve tradition, making Metros when people would have preferred something else.

The reason that, over time, private business succeeds while government corporations linger near death for years, is that private businesses, when outgunned, are supposed to die. Government companies can be legislated into a living death and can continue to wander the earth as zombies for years after their best-before date. That's the way British Leyland went.

So are the American car companies like Lada? Or are they like British Leyland? The answer is obvious. There is no shortage of well-built cars in this world. My current 11-year-old Suzuki wagon still purrs like a kitten. And unlike the Japanese and Koreans who took decades to hit the international market, Chinese companies like Chery are already there.

Maybe Fiat's Canadian boss Sergio Marchionne, with a lot of luck and Italian flair, will turn Chrysler back into a useful business. But that still leaves General Motors. If it goes the way of British Leyland, in a few years all that may be left of GM will be a Chery Cadillac and a few bad jokes.

Don Pittis has reported on business for Radio Hong Kong, the BBC and the CBC. He is senior producer of CBC News Business.