Results tagged “autoindustry”

Guess the dealers who are opting out of the "cash for clunkers" program aren't missing that much: U.S. DOT Secretary Roy LaHood announced the program will end on Monday at 8 p.m. LaHood said, "This program has been a lifeline to the automobile industry, jump starting a major sector of the economy and putting people back to work. At the same time, we’ve been able to take old, polluting cars off the road and help consumers purchase fuel efficient vehicles," and added, "We don't want to run out of money. And I want to be able to substantiate what I'm saying here. If you do a deal with us, you submit the paperwork, you will be paid." The program was originally budgeted with $1 billion of government money, but was so successful that the government put another $2 billion into the program.

Car dealers in NY and around the country are frustrated with the federal government's "cash for clunkers" program and are opting out—because they haven't received reimbursements yet! According to the Post, "about half" of the Greater New York Automobile Association's 425 members "say they've dropped out because they've gotten only 2 percent of the millions of dollars owed them by Washington," leading the association's president Mark Schienberg to complain, "It's an administrative nightmare...Cash flow is extremely important," and point out that when dealers try to fill out the 13-pages of paperwork, "Their [computer system] crashes all the time and you can't talk to anyone. It's extremely frustrating." The feds say they have processed 37% of applications, but Bloomberg News reports the Department of Transportation "didn’t say how many of the processed transactions have been paid out and how many were rejected or sent back to dealers for further information."

According to Reuters, "Senate Majority Leader Harry Reid announced an agreement with Republicans to vote on Thursday on the popular 'cash for clunkers' auto sales incentive bill." The program, funded with $1 billion to offer people $3,500-4,500 to trade in gas guzzlers and buy more efficient vehicles, ran out of money in days (and spurred auto sales), prompting the government to put together another infusion. However, in some areas, clunkers are all people can afford: A Bronx car dealer told NY1, "People do come and say, 'I got $2,000 and what can you do for me? What car do you have in that range?" while the recent purchaser of a used SUV explained, "It was more convenient for me and it fit into my budget. I can't afford a new car. I can't. Not in this economy. I can't."

President Barack Obama suggested that "controlled bankruptcy" might be how automakers GM and Chrysler are saved. The Wall Street Journal explains the government could "divide their 'good' and 'bad' assets" and then "bankruptcy [would] purge their biggest problems." Chrsyler was given 30 days to try to restructure on its own, while GM was given 60 days; Obama said, "It will require unions and workers who have already made painful concessions to make even more. It will require creditors to recognize that they cannot hold out for the prospect of endless government bailouts." GM would prefer to avoid bankruptcy, but said it "will take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process." A Times editorial says Obama's auto team's plan seems like "the best shot we have at obtaining a viable auto industry." And the Detroit Free-Press looks at why Ford execs are smiling.

Unsurprisingly, the U.S. stock markets dropped sharply today, what with fears over auto industry bankruptcies and the possibility that banks made need aid. The Dow fell 254 points, to end at 7,522 points (-3.27%), while the S&P 500 dropped 3.48% and the Nasdaq went down 2.87%. But CNBC finds a bright side: "Still, the Dow is up 6.5 percent for the month to date, which would be its biggest monthly gain since September 2007 if it held through tomorrow's session. The S&P and Nasdaq are up 7.1 percent and 9 percent, respectively, which would be their biggest monthly gains since 2002."

In a move that "caught Detroit and Washington by surprise," the Obama administration asked GM CEO Rick Wagoner to resign. Edmunds.com CEO Jeremy Anwyl tells Bloomberg News, "The bailout loans aren’t hugely popular and that’s creating an issue for Obama. One way to make the loans more palatable is to be able to say the person responsible is no longer with GM." GM, which had losses of nearly $31 billion last year, received $13.4 billion last year and wants another $16.6 billion. Chrysler, which hopes for another $5 billion of aid, was told it must complete an alliance with Italian automaker Fiat in the next 30 days. The Wall Street Journal explains, "After over a month of analysis, the administration's auto task force determined that neither company had put forward viable plans to restructure and survive." With this news, stock futures have fallen over worries about auto industry bankruptcies.

President Bush just announced loans to the GM and Chrysler totaling $17.4 billion: $13.4 billion now and $4 billion in February, if they, according to Times, "undertak[e] sweeping reorganizations to show that they can return to profitability." The money will come from the TARP bailout.

While the White House signaled it would be ready to step in and help the auto industry after the Senate failed to pass a $14 billion bailout package for the Big Three, President Bush told reporters, "We're not quite ready to announce that yet." And when asked he would use money from the TARP (the earlier $700 billion financial industry) bailout, he added, "I signaled that that's a possibility." Stock futures are, according to CNBC, "uncertain...amid a dismal manufacturing report and" auto bailout anxiety. Still, lawmakers believe there will be relief for Detroit; Sen. Bob Corker says the Treasury Dept. was talking to automakers over the weekend.

The White House signaled it might use TARP money (the earlier $700 billion bailout) to help out the Big Three. White House spokeswoman Dana Perino said, "Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary — including use of the TARP program — to prevent a collapse of troubled automakers.” The Treasury Department also signaled it could help prop up the automakers, and that helped the Dow, Nasdaq and S&P 500 stay in positive territory. Also interesting: CNBC has a chart showing not just the one-day and one-week changes for stock market but the year-to-date change, too: The Dow is off by 35% for the year.

With the Senate's failure to pass the $14 billion auto industry bailout bill, world stock markets fell: Asian markets fell over 5% and European markets are down more than 3%. Futures suggest that Wall Street will open lower as well, also due to news from JPMorgan Chase (it had a "terrible" November and December) and Bank of America (cutting 35,000 jobs over three years).

of cash left to keep operating. However, it's now a "race against the clock," because it appears it may fall short of the 60 votes needed to pass it as Senate Republicans have voiced opposition to the plan (they think the "Car Czar," appointed to oversee the plan, doesn't have enough authority). Rep. John Dingell (D-Michigan) said, "Without this bridge, we’re going to fall into the biggest calamity this country has known since the Great Depression. A terrible disaster looms."

U.S. stock futures were up, thanks to the belief lawmakers will approve the $15 billion bailout plan for the Big Three automakers. The vote will be held today; the deal reportedly includes bridge loans (from money originally for the Energy Dept..) and having a "Car Czar" who will oversee negotiation of a restructuring by 3/31/09. Sen. Carl Levin (D-Michigan) said, "Bipartisan hard work has paid off. I understand an agreement has been reached." However, Donald Trump told CNBC the U.S. should save the auto industry but put them through Chapter 11 bankruptcy.

The Dow Jones went over 9,000 but ended the day at 8,930 points, gaining almost 300 points (+3.46%). The Nasdaq rose over 4% and S&P 500 ended 3.84% up, as investors were hopeful about the government bailing out automakers to the tune of $15 billion. The White House has reportedly received a draft of a bill from Congress, and the Senate Majority Leader Harry Reid said passage would be possible if "senators are willing to work together in the next few days." The bill would help the Big Three automakers stay in business for a few months; Rep. Barney Frank said $15 billion was not enough but "It's better than nothing."

The heads of the big three automakers are in D.C., pleading their case for a bailout for a second day (earlier this morning, Rep. Barney Frank, head of the Financial Services Committee, said, "I hope we will do something"). And as Detroit hurts, so do NYC's dealerships. Crain's New York reports, "Business at dealerships here dropped nearly 50% in November compared with last year, thanks to the credit crunch and consumers’ reluctance to spend on large purchases." Dealerships have been closing in recent months, and the Greater New York Automobile Dealers Association expects more to come--in fact, the GNYADA has a PSA telling people that they should buy cars now! And while all kinds of car sales are being affected, the Wall Street downturn really hurts luxury car sales: The head of a Porsche dealership said, “The Wall Street guys, it was their dream to come in and buy a Porsche 911, but not anymore."

David Axelrod, senior adviser to President-elect Barack Obama, tells George Stephanopoulos on This Week that before U.S. automakers can get a federal bailout, the companies must deliver a plan on how the money will be used. Axelrod said, "We all have a stake in the survival of the auto industry in order to do that they have to retool," and says Obama hopes the Big Three will return to D.C. next month with a plan. "If they can't do that then there is very little tax payers can do... [Obama] has said from the beginning that we need to help but we can't give a blank check." Axelrod added, "I hope automakers come back to Congress, hopefully on commercial flights," referring to how GM, Ford, and Chrysler CEOs flew to DC this past week on separate private planes.

The Dow Jones fell 5.56%, losing 444.99 points to close at 7,552 points; the Nasdaq fell 5% and the S&P 500 plummeted 6.71%. The NY Times reports, "Wall Street doubled down on its losses on Thursday, just a day after financial markets closed at their lowest point in nearly six years." And the Wall Street Journal says, "Stocks' sharp slide continued Thursday, pushing both the Dow Jones Industrial Average and the S&P 500 to lows not seen since before the dot-com bubble."

General Motors released its third quarter results and announced it lost $4.2 billion. The NY Times says the automaker is "closer to running out of cash," as GM said, "G.M.’s estimated liquidity during the remainder of 2008 will approach the minimal level necessary to operate its business.” GM has suspended merger talks with Chrysler and will concentrate on ways to stop the bleeding, like cutting white-collar jobs and other restructuring. The Big Three automakers--GM, Ford, and Chrysler--and the United Auto Workers union are hoping the federal government will help bail out the auto industry. In other auto-related news, gas prices are down in the region.