Local auto dealers welcome proposed bailout deal
Posted December 10, 2008 4:51 p.m. EST
Updated December 12, 2008 5:38 p.m. EST
Cary, N.C. — Local automotive dealers say they hope the government's tentative rescue of the nation's biggest automakers will spark consumer confidence at a time when sales for dealers are down.
Congress and the White House found common ground Wednesday on how to dole out up to $15 million in low-interest emergency loans for General Motors Corp. and Chrysler LLC. Money could be disbursed within days to the companies, while Ford Motor Co. would be eligible for federal aid.
Auto retailers are hopeful that a decision on Capitol Hill will help boost business.
"It's a trying time for everybody," said Eric Kaplan, who sells for Crossroads Ford in Cary. "I think it's good, because it gives consumers the confidence to come in and buy automobiles and know there is a car company that will take care of them later."
Automotive sales account for 20 percent of all retail sales in North Carolina, and across the state last month, they were 50 percent lower than the state average, according to the North Carolina Automobile Dealers Association.
Bankruptcy would be more unpredictable, says Professor Roy Weintraub, an economics professor at Duke University. He believes the loans will not only help the auto industry but also North Carolina jobs.
"Certainly, lots of jobs in North Carolina rely on the auto industry, from suppliers to tire makers and so on," Weintraub said.
The North Carolina Automobile Dealers Association estimates that about 100,000 employees, families and dependents are tied to the state's 700 dealerships and that another 140,000 work for auto suppliers in the state.
Both GM and Chrysler will have to show Congress a plan to restructure by March 31 – if not, they would have to re-pay the loans in 30 days. Overseeing the rescue would be an industry czar, appointed by President Bush, who would monitor the progress of the auto companies as they cut costs.
Some Republicans, however, think the current plan to give the loans before the companies restructure would be like throwing away money.
"Republicans will not allow taxpayers to subsidize failure," said Senate Minority Leader Mitch McConnell, R-Ky, who said Tuesday he was concerned that Democrats were proposing a package that "fails to require the kind of serious reform that will ensure long-term viability for struggling automobile companies."
Other conservatives threatened to block the bill.
With Republicans balking and many senators absent from the emergency, post-election debate, mustering the 60 votes needed to advance the measure in the Senate was proving tricky.