Although most of the hoopla surrounding the Energy Independence and Security Act of 2007 involved increased CAFE standards, the act also included a provision to make Federal loans more accessible to automakers. Now that small cars are in high demand, securing such loans has become a ‘top priority’ as domestic automakers are scrambling to boost their small car production.
Even before the recent economic downturn hit, the domestic automakers struggled to secure low interest loans as their credit ratings were in the basement. Since $4 gas hit the use, those ratings have dropped through the floor, making it nearly impossible to raise the capital necessary to convert truck and SUV plants to produce more efficient vehicles.
However, the Federal loan section of the Energy Independence and Security Act of 2007 could be the automakers’ life raft. The provision calls for as much as $25 billion to be doled out in loans, with an interest rate of just 5 percent or less – that compared to the double-digit interest rates that domestic automakers are now facing. That means the federally run program could save the automakers hundreds of millions – if not billions – in interest payments each year.
The only catch is that the automakers have to use the loans to build vehicles that get at least 25 percent better fuel economy than the average of similar vehicles, all while meeting emissions standards, according to Automotive News.
However, the loans are not reserved solely for the domestic automakers. The loans extend to foreign automakers in the U.S. as well as U.S.-based suppliers. It remains unclear if foreign automakers will take advantage of the loans, but most suppliers likely will. That means all automakers in the U.S.—domestic and foreign — should benefit from the program as they share the same supplier base.



08/22, 12:30 PM
posted by:
F451
Yes, let’s make damn sure that failure executives—like Lutz—get their pay increases, increased perks, and bonuses.
08/22, 12:43 PM
posted by:
casualobserver
We need a government bailout so we can put more solar panels on our factories!
08/22, 12:52 PM
posted by:
RaineMan
Great… the taxpayers bail out the car companies who sold us the vehicles that increased fuel demand and caused this whole gas crisis in the first place. Yeah… that’s how the free market economy works right there.
Detroit made this filthy mess by not producing enough responcibly sized vehicles… I say let them sit in it.
08/22, 12:54 PM
posted by:
Quite Swag28
I still think that this won’t bail them out completely. The Domestics still don’t make a high enough quality car.
08/22, 12:58 PM
posted by:
Madcapp
Making higher quality, desirable cars would bail out the domestic automakers too.
08/22, 1:00 PM
posted by:
400horseSS
As much as the big 3 has done for the U.S. this is owed to them.
08/22, 1:01 PM
posted by:
400horseSS
You know the old saying if “GM catches a cold the U.S. gets sick”.
08/22, 1:07 PM
posted by:
crackerhemi
Just let them go out of business already. Let 400 Honkies get out of work. Then maybe there won’t be anymore of them trying to build ramps and do dukes of hazzard stuff in my neighborhood.
08/22, 1:15 PM
posted by:
brassmonkey
^^^ Honkies? If you are going to insult us, please do so properly. You can begin by spelling the slur correctly. It is ‘honky’, you jobless, uneducated spear chucking porch monkey. See how I spelled that correctly? That’s better. Now, do you know WHERE the slur ‘honky’ came from? Because that’s the last thing you jungle bunnies hear before we run your ass over!
-
NObama ‘08!
08/22, 1:16 PM
posted by:
brassmonkey
Peace out.
08/22, 1:19 PM
posted by:
hateful83
Yeah, let them go out of business, keep buying these f****** foreign cars and support their economy. Piss on the country we live in, we don’t need jobs or GDP. I’ve turned into one of the “honkies” I suppose.
08/22, 1:21 PM
posted by:
Scarface03
RaineMan,
The car companies built and sold us the cars we wanted to buy. If the half million yearly Ford F-series buyers decided they didn’t want to spend their money on a P/U, but wanted a gas-electric hybrid, we’d have a hybrid trim option for the Focus today….
08/22, 1:26 PM
posted by:
F451
Hey, I am all for supporting my country—I am not for supporting deadbeat executives who milk the system to the nth degree. Peter Drucker was against, I am against it. I will happily support the Big 3 contingent on some big changes. Those changes include what I mentioned above along with some very stringent performance based milestones. But if is going to be the same of ole crap then let them go under and others replace them.
08/22, 1:32 PM
posted by:
inline6
RaineMan,
GM, Ford, and Chrysler didn’t produce enough responsibly-sized vehicles?
They built PLENTY of them! But when gas was cheap, NO ONE BOUGHT THEM. So they canned ‘em and built more of what people were buying…pickups and SUVs.
And read the damn article, everyone! These loans don’t go to pay raises…they go to producing cars with 25% better economy than the competition.
And MY GOD, you people keep beating the old “not a high enough quality car/not desirable enough” drum. The Malibu has been excellent out of the gate! Not even Toyota got the new Camry right in its launch year (2007), which is why the V6 got taken off of CR’s recommended list. GM and Ford DO build quality cars. But fewer people are BUYING them because it takes awhile to win public perception back from when they really did build garbage. You guys are enthusiasts, though. I’d expect a more circumspect assessment from you guys, versus uneducated common buyers.
It only makes sense that if they’re going to increase fuel economy standards AND vehicle safety standards as much as they are (and the weight added from the latter penalizes the former) in the mid-term, they give relief to the manufacturers in another way. This ISN’T a free-market economy. Our government is creating synthetic factors, which are hampering the auto industry. If they insist on doing this, it’s only fair they help the automakers get there.
And, once again, if you READ THE ARTICLE, you’d notice that these loans are available to FOREIGN OEMs THAT BUILD HERE, TOO.
08/22, 1:33 PM
posted by:
crackerhemi
Hey honkey monkey,
Honkies is the plural form of honkey, you dumb hick!
08/22, 1:50 PM
posted by:
RaineMan
Scarface… actually it’s a bit of both. Car companies produce what we want to buy… but at the same time we buy only what the car companies produce. Why do you think the cheap-o fuel miser cars are selling like hotcakes right now? B/c that’s all there is available to purchase. If any company made a reasonably priced 50MPG Hybrid that looked like a normal car today the public would be on it like ants at a picnic. Economists and environmentalists alike have been screaming for the past 10 years that our current rate of fuel consumption was not sustainable… but nobody wanted to hear that. Have any of you read the press realeases or interviews given out by the knuckleheads at GM and Ford in the past several years? Lutz doesn’t even think global warming is real! What does that say about the company that he runs?
08/22, 2:09 PM
posted by:
yarddog82abn
WHAT THE ****!!!!!!!!!!!! “However, the loans are not reserved solely for the domestic automakers. The loans extend to foreign automakers in the U.S. as well as U.S.-based suppliers.” YOU ARE GOING TO TELL THAT “TOYOTA” WILL SPEND EVER PENNY OF $25 billion IN THE U.S.!!! IF YOU BELIVE THAT FOREIGN AUTO MAKERS WILL SEND EVEY PENNY IN THE U.S. FOR R&D, TESTING, DESIGN AND BUILT EVERY PART OF A CAR IN THE U.S…. IF YOU BELIVE THAT YOU ARE JUST STUPID!!!!!! IT’S THE TAX MONEY YOU AND I PAY, SO THAT A DUMM-**** IN JAPAN CAN LIVE THE THE BIG LIFE…. ****-THAT-****!!!!!!
08/22, 2:10 PM
posted by:
ktulu
Y loan $ 2 peopele with bad cfedit? Or companies? That’s Y were in trouble now!
I think LLN meant” Since $4 gas hit the US.”
The loans should not extend 2 4n automakers.
I’m agin this, but asa reqwuitrementm I would say they have 2 nhget rid of the poor leaders.
I need a government bailout so I cab buyb the Broncos!
If they want 2 encourage fuel, economy, offer a tacx credit 2 everyone who buys an Aveo. If they want to stimulate the real economy, make a requitement that the car has 2 B built in the USA 2 qualify 4 the cretdit.
I am a genius!
Making higher quality, desirable cars would easily bail out the domestic automakers .. Chrysler needs it
dukes of hazzard is gr8 stuff.
slurs do us no good. That’s Y idiotes R trying 2 pread lies agin the Obamster, but his time has cum!
The slur “hounky” came as an insult 2 bohemians. Plural has the ‘ies.’
I also am not 4 supporting deadbeat executives who milk the system to the nth degree.
The Malibu is excellent, the new Camry is pure crud.
CR is stoupid.
GM and Ford DO build quality cars!!. but takes awhile to win public perception back from when they really did build garbage.
This is not a free-market economy.
“Car companies produce what we want to buy… but at the same time we buy only what the car companies produce.” What came first, the chikn or the egg?
The rooster!
08/22, 2:26 PM
posted by:
johnnycanuck
It’s still hard to believe it has come to this because the decline of the ‘big 3′ really started in the ’70s. It didn’t take a genius to be able to follow the business practices of the Japanese over 4 decades and see that their concept was working. You can come up with any excuses you want for the domestics, from being tied down by the unions to bad leadership at the top but it’s irrelevant. The product is what matters and for too many years Detroit gave us junk. Sure they’ve made great strides recently, but they a lost a lot of customers who need more proof than some spokesperson on TV or JD Powerless to convince them that they’re worth another shot.
08/22, 2:34 PM
posted by:
yarddog82abn
^^^^^ STILL I’LL BE DAMM!!! IF MORE U.S. TAX DOLLARS IS GIVEN OUT LIKE CANDY TO BE SPENT OUT OF THE U.S….
08/22, 3:49 PM
posted by:
RaineMan
We’re spending billions of it in Iraq every week. At least the Japanese aren’t trying to kill us.
08/22, 4:13 PM
posted by:
Bremen_Koenigsegg
There is a yard dog off its leash. Can someone get it to stop bitching?
08/22, 6:58 PM
posted by:
deutschetouring1337
Wow, when did I vote to bailout car companies who don’t listen to their customers except Ford?
08/23, 12:45 AM
posted by:
bigp
well thank for the help
08/23, 11:39 AM
posted by:
Bubs Solo
did anyone actually read the words LOAN and CHARGED INTEREST??? This is NOT a bail out.
For how ever many years we have been in Iraq the government has been throwing (billions) money(no bid contracts) to the likes of the Carlyle Group and Haliburtin, and the public does not give a ****. Offer some LOANS to some US companies and lets all **** on them.
08/24, 6:05 PM
posted by:
bigtime
Let them die. They have had since the 70’s to get there “S” in order. Screw them. The most American thing we can do is let the market sort this out.
Where is my special loan? Where are the loans to the thousands of truckers who went belly up due to high gas prices for example? Or any other small business owner who is getting F’ed right now?
They can take there special loans and shove them up there butt. Especially when dipsh#ts like wagoner and lutz continue to take there huge salaries and bonuses. I was a GM man, but a person can only take so much crap. I am tired of waiting years for product, I am tired of the low resale values, I am tired of everything new and decent being 30 grand or higher. I refuse to pay 45 grand for a volt – 15 grand worth of car for 45? Yeah, what a deal. Cruz in 2010. Beat in 2011. Boeing can design a new aircraft faster than that!
Honda, kia, mercedes, toyota ALL build cars in this country sucessfully. They ALL build cars and trucks that are relevant to today’s market. Why is it they were smart enough and GM, ford and chysler were too stupid to see the trends? Since the 1970s japan has been building fuel efficient cars and detroit has refused to! They insisted on building SUVs and pickups because there was 15 grand worth of profit in each one. The amazing thing is half of you reading this own one of these pickup trucks and paid 45 grand for it! Stttaaaauuuuupppid. Put a dvd player in a truck and sell it for 45k? It was brilliant! Ha! I still can’t believe they pulled it off.
My next car will be a honda built in america. At least the damn thing will get great gas mileage, be put together well, and last forever. Plus I might get more than $500 for it at trade in time. I have had it!
Detroit – too little too late. R.I.P.
08/24, 9:01 PM
posted by:
400horseSS
^ Eat **** dickmunch.