By Mark Huffman
ConsumerAffairs.com
November 6, 2008
General Motors and Chrysler, both of whom were struggling before
September's credit seize-up, are desperately trying to merge to avoid
bankruptcy, but say they need help from the U.S. Government.
Executives from the firms are eyeing some of the $700 billion Congress approved for a bailout of banks, but so far there hasn't been much progress on a plan to offer the carmakers a lifeline. Former Treasury Secretary Roger Altman, who serves as an advisor to GM, has publicly warned that time may be running out.
In an interview with Bloomberg News, Altman said G.M. has little time left to head off a collapse, which he said would be very severe for the U.S. economy. He also said it would be a tough way for a new administration to take office.
President-elect Barack Obama has voiced support for a deal to save G.M. and Chrysler. In fact, while campaigning last week he said helping the auto industry would be one of his administration's top priorities. Some, however, wonder whether the carmakers can hang on until January.
Members of the Michigan Congressional Delegation have asked the Treasury Department and Federal Reserve to use their broad regulatory authority, including the powers granted to them by the Emergency Economic Stabilization Act, to take the necessary steps to promote liquidity in the U.S. auto industry in order to protect this critical sector of the economy.
"The domestic automobile manufacturers face the most difficult conditions they have faced in decades," said Rep. John D. Dingell (D-MI). "We need to do something to help unfreeze the credit markets for that industry, as well as all others."
The most recent car sales figures add new urgency to the issue. U.S. car and light truck sales fell by 32 percent in October, recording the lowest monthly sales since January 1991. G.M. led the sales decline, with sales off a staggering 45 percent. The nation's largest carmaker sold only 166,744 vehicles for the month.
"The market has been shrinking for three years, but in October we saw a dramatic decline for the industry and GM," said Mark LaNeve, vice president, GM North America Vehicle Sales, Service and Marketing. " We are obviously disappointed in our results which reflect a difficult comparison with a strong year-ago October performance. More importantly, it also reflects an unprecedented credit crunch that is dramatically impacting the entire U.S. economy from the housing market to big and small companies to banks to family run businesses. The credit freeze has also had a very negative impact on consumers' confidence and their purchase behavior across America."
G.M.'s dismal October sales performance was only slightly worse than potential merger partner Chrysler, which saw sales plunge 35 percent. Ford sales were off 30 percent and even Toyota suffered a 23 percent sales decline.
