US: Automakers want federal loan doubled
Automotive companies in the US plan to petition Congress to support a US$50bn government low-interest loan programme to help them modernise plants to build more fuel-efficient vehicles.
Automakers are seeking a significant rise in the $25bn government loan programme approved last year. As Ford and General Motors report billions of dollars in losses due to weak sales, the energy bill has become a top priority for the government.
The loan programme would provide low-interest credit for up to 30% of the cost of retooling facilities to build hybrids, plug-in hybrids, electric cars and other alternatives.
The loans were approved in an energy bill in December to help automotive companies meet with stricter fuel efficiency regulations. However, as situations worsened considerably with the credit crisis and high fuel costs, automakers have got together to demand a revision.
Automakers do not see the loan programme as a bailout, however. Low-interest loans are seen more as support from the federal government to ride out the current US downturn, similar to the help provided to beleaguered Wall Street investment banks and struggling mortgage firms.
With new fuel economy regulations planned auto companies face tens of billions of dollars in costs.
Despite, initial differences, both presidential candidates -Senator John McCain and Senator Barack Obama, seem to approve of low interest loans for beleaguered US automakers.
John Bozzella, Chrysler's vice president of external affairs and public policy, is attending both Democrat and Republican national conventions, hoping to win over congressional support for the increased funding.
"This partnership will drive forward advanced and alternative propulsion systems at a time when it's particularly important to deliver improved fuel economy in our vehicles, while reducing greenhouse gases," he said.
"We hope to build some momentum to get this technology partnership funded before next year."
He added that the automakers' ability to develop and produce this technology in the US would produce value across the economy.
"A home grown solution for batteries and other advanced technologies will impact far more than automotive manufacturers. It could also provide a much needed financial shot in the arm to the millions of others who are involved in the development and marketing of the technologies. That means jobs and a boost to our economy."