Republican presidential frontrunner Mitt Romney has accused President Barack Obama of using the bailout of U.S. car manufacturers to enrich union supporters, impairing the auto industry's recovery. Romney wrote in op-ed column in The Detroit News that as part of Obama's plan to save Chrysler Group LLC, the company’s secured creditors were given “short shrift”, while UAW’s trust fund received a 55% stake in the firm.
Romney suggested in his column that the Obama administration should divest the government’s stake in General Motors Co. and turn the profit over to taxpayers. Romney further blasted Obama in the column, saying that he believes that without the President’s intervention on Detroit financial debacle in 2009, things would be better. Obama engineered the federal bailout of GM, now General Motors Co., and Chrysler, now owned by Italian carmaker Fiat S.p.A.
Obama is using his role in the successful bailout as the theme in his presidential re-election campaign. It was really a success, as both GM and Chrysler were in the brink of collapse in 2009 and now have a significant free cash flow. US carmakers are increasing their production as the US light-vehicle sales soared by at least 10% for two straight years in 2010 and 2011. GM recently announced that in 2011, it had stolen the crown as the world’s best-selling carmaker away from Toyota Motor Corp.
Chrysler, meanwhile, posted a 44% hike in sales in January 2012, surpassing the 32% average estimate of eight analysts surveyed by Bloomberg. The company reported earlier this month that its free cash flow was $1.9 billion in 2011 and expects $1 billion free cash flow for 2012. The article was Romney’s attempt to gain a foothold in the Michigan presidential primary. Two surveys had predicted him losing to former U.S. Sen. Rick Santorum. The Michigan primary is slated on Feb. 28.