By Neal E. Boudette and John D. Stoll
Of THE WALL STREET JOURNAL
General Motors Corp. (GM) and Chrysler LLC would face an easier path to recovery if the U.S. Treasury Department and the Federal Reserve can find a way to free up consumer credit, the head of the nation's largest chain of auto dealerships said on Friday.
Although the Treasury has spent $335 billion in hopes of making credit more readily available for businesses and consumers, it has made little headway and the continued tight credit is choking off auto sales, Michael J. Jackson, chairman and chief executive of AutoNation Inc. (AN), said in a telephone interview.
In the current situation where loans are hard to get, "it's like trying to run an airline without jet fuel," he said. "In the auto business, consumer credit is the jet fuel."
(This story and related background material will be available on The Wall Street Journal Web site, WSJ.com.)
The Bush administration's plan to provide up to $17.4 billion in loans to GM and Chrysler will keep the two companies in business but pushes the problem on to President-elect Barack Obama and the next Congress, Jackson said.
"This is a punt. The Congress punted to the president and the president punted it to Obama. But at least we got something. Without it [a bailout], it's lights out for these companies."
The difficulty of getting auto loans is a big reason auto sales have fallen so dramatically in the last two months and pushed GM and Chrysler into such deep financial holes, Jackson said. Many dealers around the country confirmed they are losing sales because even consumers with good credit aren't being approved for loans.
"The fundamental problem is the lack of credit. Buying a car is the second-largest consumer purchase after a home," Jackson said. "The vast majority of people can't buy a car without a loan of some kind."
Both GM and Chrysler would have a far greater chance of becoming viable companies if the Treasury and the Fed can find a way to loosen up credit, Jackson said. "The issue of viability is in the hands of the Treasury and the Fed," he said. "If they restore a semblance of normal credit, the question of viability falls away."
New-vehicle sales in November ran at an annualized pace of just over 10 million vehicles a year, a dramatic fall from the year-ago level of 16 million, and dealers said they have seen little improvement in December. They could get a shot in the arm during the week between Christmas and New Year's; that's the industry's biggest week of the year.
If auto sales bounce back to 12 million or 13 million, the amount of cash auto makers are using up would change "dramatically," Jackson said.
Through November, U.S. light-vehicle sales declined 16.3% compared with the same period in 2007, and in recent months the seasonally adjusted rate of annual auto sales has plunged below 11 million vehicles, compared with a rate of between 16 million and 17 million vehicles in years past.
The current rate of sales has fallen to the lowest point since 1982, and some analysts expect results in 2009 to be even weaker due to tight credit conditions and growing concerns over the economy.
Domestic auto makers and some Asian and European car companies are planning deep production cuts in the first quarter, as overall industry output is expected to plunge 16% compared with the prior year, according to Ward's Automotive Group. GM and Ford are planning cuts of more than 30%, with GM plants closing down for most of the month of January.
"The financial institutions in the car business have been pulling back week after week, and we haven't seen any impact from the actions the Treasury has taken," Jackson said. "It's ironic. The Treasury has been pushing for a viability test and it's the one that can make the most impact on viability."
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Publié le 19 Décembre 2008 Copyright © 2008 Dowjones