December 7th, 2008
Auto industry moves into passing lane...maybe
Nothing is certain if you’re watching the Detroit drama. Will they, won’t they? Our lame duck Congress does not yet know its own will on this one. There is expected to be some bill offrinhg auto makers a loan drafted by tomorrow. Not even the usually voluble Senators will predict its fate.
One leading Senator has called for the General Motors CEO to be replaced. The same Senator pronounced Chrysler DOA. GM, of course, said its CEO has the corporation’s full support. That alone could be the kiss of death for the CEO. A Michigan Senator says he expects slome kind of loan law to get to the floor of Congress this week. The only kind of bill the White House has signalled it would sign would be to divert some of the $25 billion already earmarked for auto factory retooling and put that into simply keeping GM and Chrysler afloat for a little while longer. Thus giving the next President this situation to deal with.
Apparently a mere $15 billion would keep Chrysler and GM in operation at some level until the end of Q1, 2009. That’s well below the $34 billion the Detroit Shrinking Three automakers requested in their formal presentations to Congress just last week.
Today that next President, Obama, said he doesn’t want to see the auto industry disappear, but he wants to be certain the taxpayers are not wasting their money if there are loans. He made it clear he expects Detroit to come up with more fuel efficient vehicles and hybrid cars. The Chevy Volt is supposed to be one of the first plug-in cars from a major automaker when it launches in 2010…if the car survives.
It’s clear to all sides in this dispute there is little popular support for bailing out Detroit. There will be some harsh requirements for an industry that had successfully prevented tougher fuel efficiency standards for almost three decades. With gas down below $2 per gallon and maybe headed lower, should we expect oil companies to be presenting their plea for government loans so they can continue drilling? Stay tuned.
A newsman since 1969, Harry Fuller has worked for CBS, ABC, CNBC Europe, CNET and was founding news director at TechTV. See his full profile and disclosure of his industry affiliations.
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