They say history repeats itself. If you are like me and have lived two lives, you have a good chance of seeing the re-enactment with your own eyes. The current takeover of General Motors by the U.S. government and United Auto Workers makes me think back to Romania's catastrophic mismanagement of the car factories it built jointly with the French companies Renault and Citroen. I was Romania's car czar.
When the Romanian dictator Nicolae Ceausescu decided in the mid-1960s that he wanted to have a car industry, he chose me to start the project rolling. In the land of the blind, the one-eyed man is king. I knew nothing about manufacturing cars, but neither did anyone else among Ceausescu's top men. However, my father had spent most of his life running the service department of the General Motors affiliate in Bucharest.
My job at the time was as head of the Romanian industrial espionage program. Ceausescu tasked me to mediate the purchase of a minimum, basic license for a small car from a major Western manufacturer, and then to steal everything else needed to produce the car.
Three Western companies competed for the honor. Ceausescu decided on Renault, because it was owned by the French government (all Soviet bloc rulers distrusted private companies). We ended up with a license for an antiquated and about-to-be-discontinued Renault-12 car, because it was the cheapest. "Good enough for the idiots," Ceausescu decided, showing what he thought of the Romanian people. He baptized the car Dacia, to commemorate Romania's 2,000-year history going back to Dacia Felix, as the ancient Romans called that part of the world. In that government-run economy, symbolism was the most important consideration, especially when it came to things in short supply (such as food).
"Too luxurious for the idiots," Ceausescu decreed when he saw the first Dacia car made in Romania. Immediately, the radio, right side mirror and backseat heating were dropped. Other "unnecessary luxuries" were soon eliminated by the bureaucrats and their workers' union that were running the factory. The car that finally hit the market was a stripped-down version of the old, stripped-down Renault 12. "Perfect for the idiots," Ceausescu approved. Indeed, the Romanian people, who had never before had any car, came to cherish the Dacia.
For the Western market, however, the Dacia was a nightmare. To the best of my knowledge, no Dacia car was ever sold in the U.S.
Ceausescu, undaunted, was determined to see Romanian cars running around in every country in the world. He tasked me to buy another Western license, this time to produce a car tailored for export. Oltcit was the name of the new car -- an amalgam made from the words Oltenia, Ceausescu's native province, and the French car maker Citroen, which owned 49% of the shares. Oltcit was projected to produce between 90,000 and 150,000 compact cars designed by Citroen.
Ceausescu micromanaged Oltcit, but he didn't even know how to drive a car, much less run a car industry. To save the foreign currency he coveted, he decreed that the components for the Oltcit were to be manufactured at 166 existing Romanian factories. Coordinating 166 plants to have them deliver all the parts on time would be a monumental job even for an experienced car producer. It proved impossible for the Romanian bureaucracy, which pretended to work and was paid accordingly. The Oltcit factory could produce only 1% to 1.5% of its intended capacity owing to the lack of the parts that those 166 companies were supposed to furnish simultaneously. The Oltcit project lost billions.
Ceausescu was an extreme case, but automobile manufacturing and government were never a good mix in any socialist/communist country. In the late 1950s, when I headed Romania's foreign intelligence station in West Germany, I worked closely with the foreign branch of the East German Stasi. Its chief, Markus Wolf, rewarded me with a Trabant car -- the pride of East Germany -- when I left to return to Romania.
That ugly little car became famous in 1989 when thousands of East Germans used it to cross to the West. The Trabant originally derived from a well regarded West German car (the DKW) made by Audi, which today produces some of the most prestigious cars in the world. In the hands of the East German government, the unfortunate DKW became a farce of a car. The bureaucrats and the union that ran the Trabant factory made the car smaller and boxier, to give it a more proletarian look. To reduce production costs, they cut down on the size of the original, already small DKW engine, and they replaced the metal body with one made of plastic-covered cardboard. What rolled off the assembly line was a kind of horseless carriage that roared like a lawn mower and polluted the air worse than a whole city block full of big Western cars.
After German reunification, the plucky little "Trabi" that East Germans used to wait 10 years to buy became an embarrassment, and its production was stopped. Germany's junkyards are now piled high with Trabants, which cannot be recycled because burning their plastic-covered cardboard bodies would release poisonous dioxins. German scientists are now trying to develop a bacterium to devour the cardboard-and-plastic body.
Automobile manufacturing and government do not mix in capitalist countries either. In the spring of 1978 Ceausescu appointed me chief of his Presidential House, a new position supposed to be similar to that of the White House chief of staff. To go with it he gave me a big Jaguar car. That Jaguar, which at the time had been produced in a government-run British factory, was so bad that it spent more time in the garage being repaired than it did on the road.
"Apart from some Russian factories in Gorky, Jaguars were the worst," Ford executive Bill Hayden stated when Ford bought the nationalized British car maker in 1988. How did the famous Jaguar, one of the most prestigious cars in the world, become a joke?
In 1945, the British voters, tired of four years of war, kicked out Winston Churchill and elected a leftist parliament led by Labour's Clement Attlee. Attlee nationalized the automobile, trucking and coal industries, as well as communication facilities, civil aviation, electricity and steel. Britain was already saddled by crushing war debts. Now it was sapped of economic vigor. The old empire quickly passed into history. It would take decades until Margaret Thatcher's privatization reforms restored Britain's place among the world's top-tier economies.
The United States is far more powerful than Great Britain was then, and no American Attlee should be capable of destroying its solid economic and political base. I hope that the U.S. administration, Congress and the American voters will take a closer look at history and prevent our automotive industry from following down the Dacia, Oltcit or Jaguar path.

General Motors Corp. said Tuesday that it has signed a deal to sell its Hummer truck unit, just one day after filing for bankruptcy.

But GM (GMGMQ) would not identify the buyer nor name a price, saying only that the deal would close by the end of September.

GM had revealed in April that it was courting three serious offers for the Hummer brand. The automaker would not confirm Reuters' report that offers ranged from $100 million to $200 million.

"I'm confident that Hummer will thrive globally under its new ownership," said Troy Clarke, president of GM North America, in a press release. "And for GM, this sale continues to accelerate the reinvention of GM into a leaner, more focused, and more cost-competitive automaker."

As part of the deal, some GM plants will continue to build the Hummer brand for the new owner, at least for a while. The company said its Shreveport, La., plant will keep building Hummers for the new owner until at least 2010.

GM also said that the deal should protect more than 3,000 jobs in manufacturing and engineering, and at dealerships "around the country."

The Hummer and other large vehicles have been a drag on the U.S. auto industry since fuel prices spiked in 2008 and the recession deepened.

GM said it sold 5,013 Hummers worldwide in the first quarter, down 62% from the 13,050 that it sold in the same period the prior year.

Hummer isn't the only brand that GM is leaving behind. The automaker will also shed its Pontiac, Saturn and Saab brands and cut loose more than 2,000 of its 6,000 U.S. dealerships by next year.

That could result in more than 100,000 additional job losses if those dealerships are forced to close.

GM filed for bankruptcy Monday, just hours after Chrysler's bankruptcy process cleared a hurdle when a federal judge approved its asset sale.

The GM bankruptcy was hailed by President Obama, who wants a complete overhaul of the U.S. auto industry, even though the Chapter 11 filing is expected to result in the loss of 20,000 jobs and the closure of a dozen facilities.

Citigroup (C, Fortune 500) was financial adviser in GM's Hummer deal.

Magna International recently inked a contract to purchase Opel from General Motors, but the terms of that agreement will prevent the Canadian parts supplier from selling Opel vehicles in two of the world’s largest car markets.

According to Automotive News, GM’s agreement with Magna prevents Magna from selling Opel vehicles in the United States and China. “The agreement with General Motors does prevent us from selling Opel in the United States,” Magna founder Frank Stronach said.

Stronach added the deal also blocks Magna from selling Opels in China, but hinted that agreement might not be long-term. “If it makes economic sense you might persuade people to change something,” he said.

Magna was also in the running for GM’s Saturn brand – which currently stands as GM’s Opel import brand — but has since abandoned that plan.

Although Magna won’t be able to market Opels in the U.S., that doesn’t necessarily mean Opels won’t be sold in North America. It remains possible Magna could build and sell Opel vehicles in Canada. General Motors also retains a 35 percent stake in Opel, so we could still see Opels sold through one of GM’s four core brands.

According to Automotive News, GM’s agreement with Magna prevents Magna from selling Opel vehicles in the United States and China. “The agreement with General Motors does prevent us from selling Opel in the United States,” Magna founder Frank Stronach said.