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Ford speaks out on government ownership of Chrysler, GM
By Drew JohnsonFord has been relatively quiet on the topic of bankruptcy over the last few weeks, but General Motors’ recent Chapter 11 filing has the Blue Oval finally speaking out. Although Ford was the only of the Big Three able to sidestep bankruptcy in recent weeks, some top Ford executives are concerned that that seeming advantage could quickly turn into a market disadvantage.
Ford’s biggest concern stems from Chrysler and General Motors now being partially government owned. “The reality is, if you’re competing against a company that’s majority owned by the U.S. government, that does raise certain concerns about what the competitive dynamic will be for the industry,” Ford spokesman Mark Truby told Automotive News. “So we’re hoping we can work with the administration and the task force to be heard on those issues as this progresses.”Since the economic fallout of 2008, the federal government has granted GMAC – the lending arm of both Chrysler and GM – bank holding status. That, in tandem with billions in taxpayer dollars, has allowed GMAC to lower its cost of capital. Meanwhile, Ford Credit is still waiting to hear back from the government on its 2006 request to become a bank holding company, all the while paying much higher interest rates.
The Blue Oval is also concerned that the billions loaned the Chrysler and General Motors could impact the retail market in the short-term. Ford believes both automakers are using their emergency bailout funds to offer higher incentives to customers, thereby taking away sales from Ford dealers.
Although Ford posted some better-than-expected sales figures for the month of May, it does seem as though the company could be at a disadvantage for not filing for bankruptcy. Unless the federal government can find a way to level the playing field for all of the Big Three, it appears as though Ford could be at a significant disadvantage in the near term.
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Related News
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