The federal government recently passed legislation that would give automakers and suppliers access to $25 billion in loans, but the recent economic downturn could open the door for further automotive bailout packages. Unlike the first package, the second round of federal funding would act more as a life raft to get automakers through these turbulent times.
Last month Congress and President Bush approved a $25 billion loan package for automakers and suppliers, but that package had plenty of restrictions. Under the terms of the federal aid, those dollars could only be used toward the production of more fuel-efficient vehicles, not for general business expenses. The new round of funding “would just be flat out in order to survive an extended recession,” Alan Reuther, the UAW’s legislative director told Automotive News.
It still remains to be seen what form the next round of federal aid would take, but talks will likely take place during the lame-duck session after next month’s presidential election, with a decision to follow soon after.
With the automotive industry in shambles, a less restrictive loan package could go a long way to helping Detroit. All three domestic automakers have seen double digit sales declines this year, with sales expected to fall even farther in 2009. Although many view Detroit’s problems as its own fault, millions of jobs and the U.S.’ economy is on the line, so it’s imperative the Big Three make it through this rocky time by any means necessary – even if that means more bailouts.
