Automaker Loan: Opinions and Projections

[Dec 23, 2008.]

 

When GM and Chrysler first approached congress about their cash crisis and looking for financial support, Americans overwhelmingly opposed the idea.  Times have changed, Americans are now in full support of the idea and have a 63% approval rate on the $13.4 billion in aid and 65% think that a bankrupt automaker would further damage an already fragile US economy.

The big 3 automaker executives were also discussed within the poll and 82% of Americans have a negative viewpoint on the executive staffs. Private planes and asking for money don’t mix too well.

President Bush made it clear that he was not eager to lend federal money to General Motors and Chrysler. Unlike Senate Republicans, though, Bush saw that the alternative to an auto industry loan was a chaotic collapse that would cripple the national economy.

GM and Chrysler see the $13.4 billion in aid, with the potential for $4 billion more, as a pittance compared to what's been thrown at Wall Street.  This loan is there to be had and will have strings attached to it.  Each group will have a few months to plan on how the money will be spent.

The year 2008 has been a struggle for automakers with even more trouble looming on the horizon. And even as bad as 2008 has been, total sales are projected at around 13 million.  The Michigan Senate Fiscal Agency issued an overwhelming economic analysis for the state - and for automakers. SFA experts predict that in 2009, the total sales of vehicles in the U.S. - from both domestic and foreign brands - will reach only 10.5 million. In 2007, that figure was roughly 16 million.

So, for 2009, automakers must compete for a market with 3 million fewer sales. And while matters improve in 2010, the SFA projection is for sales to climb to only 12 million vehicles.  There is still a substantial hill to climb but there are hopes that this industry will turn around within a few years.

Source: Lansing State Journal, Detroit Free Press and Opinion Research Corporation

 

About Author:

Brent Lane is a Mortgage Consultant in Roseville, California. He helps homeowners in California with their mortgage financing and writes on his BLOG at www.thelanegroup.blogspot.com