Auto industry allies hope to secure up to $50 billion in government loans this month that would pay to modernize plants and help struggling car makers build more fuel-efficient vehicles.
With Congress returning this coming week from its summer break, the industry plans an aggressive lobbying campaign for the low-interest loans. The situation is growing dire after months of tumbling sales, high gasoline prices and consumers' abandoning profitable trucks and sport utility vehicles.
Lawmakers authorized $25 billion in loans in last year's energy bill to help the companies build fuel-efficient vehicles such as hybrids and electric vehicles. With credit tight, automakers and suppliers now want lawmakers to come up with the money for the program - and expand the pool of money available to $50 billion over three years.
Industry leaders have argued that the loan guarantees are not a government bailout because it would hasten production of fuel-efficient vehicles and reduce dependence on imported oil.
``This is not about benefiting Wall Street,'' said Ford Motor Co.'s President of the Americas Mark Fields, referencing recent federal support for the investment firm Bear Stearns and troubled mortgage companies Fannie Mae and Freddie Mac. ``This is benefiting Main Street, the working men and women. The auto industry is part of the backbone of the U.S. economy.''
The low-interest loans, at rates of about 4 percent to 5 percent, would pay for up to 30 percent of the cost of retooling plants to build hybrids, plug-in hybrids, electric cars and other alternatives.
Ford and General Motors Corp.'s credit ratings have fallen below investment grade, making it difficult for the companies to borrow money at affordable rates. Chrysler LLC, which has been heavily dependent upon truck sales, has been privately held since last year and faces similar problems getting access to capital.
``This industry could fall down, literally, or be absorbed if they don't get something in place very soon. I think it's that severe,'' said Rep. Joe Knollenberg, R-Mich. ``Something has to happen pretty quickly because they can't compete paying 15 to 20 percent (interest).''
Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Education Minute 12/04
WWJ's Pat Vitale gives education tips beyond the classroom. A joint production of Eastern Michigan University-Education First! and WWJ.
Buzz Out Loud 865: Solidarity, my ape-hands brother
Tom and Jason have an ape-like bonding moment on today's show, Brian Tong calls "bull" on rumors of a $99 iPhone 3G, we find out that Google went right up against the DOJ deadline before it finally yelled "chicken" and walked away from its ad deal with Ya
Auto Talks Part One 12/4
Senators Chris Dodd and Richard Shelby give opening remarks from Washington.
WWJ Newsradio 950 is Detroit's only all-news radio station and is the leader in Detroit radio news. Listen online to WWJ-AM 950 for live, local Detroit news, up-to-the-minute Detroit traffic, Detroit sports, Detroit business and Detroit community information. WWJ Newsradio 950 is an award winning radio station and you can listen online and podcast on demand Detroit news, Detroit Construction Alerts, Detroit School Closings, Winter Survival Guide and learn more about our Business Breakfasts. www.wwj.com.
