The US auto industry stands to gain from the stimulus package now going through the US Congress, a top Ford executive has said.
“If you look at the results from January, it was the tale of two different months,” Ford president for the Americas, Mark Field, said at a media gathering at the company’s headquarters in Detroit.
“The headline number was the drop in sales,” Fields was quoted as saying by Agence France-Presse (AFP). The automaker’s sales dropped 40% last month after an 80% plunge in sales to fleet buyers such as rental companies.
“When you strip away the fleet portion of that and you just look at the retail side of it, the retail (annualised rate) in January was about 8.4m or 8.5m units.
“If you look at the last three or four months, it’s been in that range so I think we’ve found some level of stabilisation on the retail side of the business,” said Fields, adding he was encouraged by Ford’s market increasing for the fourth consecutive month.
“You’re seeing all the action that Treasury and the Fed have taken in the past six months to put liquidity into the market place,” said Fields, noting that the administration of President Barack Obama is also pushing ahead a major stimulus bill to boost the economy.
“That’s up to US$900bn and there’s obviously going to be something in there for construction and consumer spending and that’s encouraging,” he said.
Echoing calls here in Europe, Fields added that some form of tax break for consumers purchasing new vehicles would also help, AFP said.
The US Congress is currently looking at different approaches to stimulate car sales on the consumer level, including allowing buyers the opportunity to deduct interest on car loans as they can do on mortgages.
Another approach would be to give consumers tax credits for trading in old, less efficient vehicles for new models. The tax credits could be as much as $1,500.
The National Association of Automobile Dealers has been promoting the tax breaks for consumers since sales started dropping to a 25-year-low four months ago, AFP noted.
“Though Ford estimates that it again gained retail marketshare, if 20%-30% retail declines persist, it would be more difficult, in our view, for it to avoid accepting government loans,” analysts from Standard & Poors said.
“Even with a boost from the anticipated Federal stimulus plan, we see consumers taking a cautious approach to large ticket discretionary purchases,” AFP quoted the Standard & Poors note as saying.