Shaky Auto Market Could End NASCAR As We Know It

October 30, 2008

Brian Watkins


Gas in Kentucky is hovering around $2.25 a gallon. Talks seem to be moving towards a Sprint Cup race in Sparta (Kentucky Speedway) in 2010. The 2008 Chase is still anybody"s game. Life in NASCAR country is good, right?

Well, for now it might be. However, two to three years down the road, it is looking a bit cloudy.

The rumbling of thunder you hear over the horizon is not the sound of 43 cars fighting for the checkers, it"s the coming storm of mergers, bailouts and bankruptcies that threaten the very fabric of NASCAR; namely Ford, GM and Chrysler.

As I write this, the government is planning a $5 billion (with a ‘B’) loan to teetering-on-the-brink General Motors to help them fund a merger with teetering-just-past-the-brink, Chrysler. While I understand the government is prone to throw money at all problems great and small, funding a bailout/merger for GM and Chrysler is like putting an expensive band-aid on a severed limb. One need only look back nary 50 years to see an example of a similar merger that lasted all of four years before both companies were but a line in the automotive history books.

What the heck am I talking about?

I"m talking about the 1954 merger of Studebaker and Packard. Packard had the money and Studebaker had the dealer network. It was a match made in heaven, or so they thought. Their plans would have made them bigger than Chrysler but the plans fell through when reality hit. By 1956, things were bad; By 1958, things were over.

What does this have to do with Chrysler and GM getting together? A lot.

While things are certainly different with these two companies, Chrysler has been passed around as much as a mason jar in the parking lot, and GM, aside from a few nameplates, has a stable of vehicles it can"t unload, 100 years of legacy debt and stocks that are valued just above free.

While I do hope that both companies make it through this, I am more concerned about how a GM-Chrysler merger will affect NASCAR. Dodge has already pulled its truck sponsorship and is pretty much sounding the death knell for the other two series. Even with a GM merger, I suspect that Dodge will be out of the sport within two years.

Should the merger go through and then go south, what happens next? Well, Ford isn"t in any position to buy out GM or GM-Chrysler, and they"re the last domestic car maker around and that"s if they happen to survive the next few years unscathed.

Anyone looking to buy GM-Chrysler would have to be a foreign manufacturer. Toyota could buy them with their walking around money, but they are not that foolish. Daimler-Benz learned their lesson with Chrysler once before (and to a lesser extent with Studebaker-Packard) so don"t look to them to come running.

French carmaker Peugeot comes to mind as a possibility. While they have had mixed appeal in the states, they are a sturdy company with an eye on the future. They developed diesel engines for racing at LeMans and are now working on a hybrid version.

But regardless of who ends up buying a failed GM-Chrysler merger, you can rest assured that it will be most likely be a foreign automaker or a private equity firm that will piece GM and Chrysler out to foreign automakers. Either way, it will have an unprecedented impact on NASCAR.

Ford, if they survive, will be the lone domestic automaker in the series. The die-hard fans who despise Toyota for being a foreign entity in the Cup Series will have to either check their bias at the door, root solely for Ford, or move on to another sport.

NASCAR will stand to lose a number of fans if this happens so to expand its fan base Honda, Nissan and or Mazda will be invited to participate. Boy, won"t that go over well in the stands.

This of course, is all conjecture. It"s a pessimistic look at the future of the automotive and racing world and nothing more. In a few years someone will drag out this column and tell me how far off I was. I hope that happens. For now, I"ll hope for the best, plan for the worst and enjoy racing while it lasts.