Stimulus plan to benefit auto industry: Ford exec
The auto industry stands to gain from the stimulus package now pending in the US Congress, a top Ford Motor Co executive said on Wednesday.business Updated: Feb 05, 2009 11:05 IST
The auto industry stands to gain from the stimulus package now pending in the US Congress, a top Ford Motor Co executive said on Wednesday.
"If you look at the results from January, it was the tale of two different months," said Mark Field, Ford president for the Americas.
"The headline number was the drop in sales," Fields told reporters at the company's headquarter. Ford sales dropped 40 per cent last month after an 80 per cent plunge in sales to fleet buyers such as rental companies.
"When you strip away the fleet portion of that and you just look at the retail side of it, the retail (annualized rate) in January was about 8.4 million or 8.5 million units.
"If you look at the last three or four months, it's been in that range so I think we've found some level of stabilization on the retail side of the business," said Fields, who added he was encouraged by the fact that Ford's market share had increased for the fourth consecutive month.
"You're seeing all the action that Treasury and the Fed have taken in the past six months to put liquidity into the market place," said Fields, noting that the administration of President Barack Obama is also pushing ahead a major stimulus bill to jump start the economy.
"That's up to 900 billion dollars and there obviously going to be something in there for construction and consumer spending and that's encouraging," he said.
Fields added that some form of tax break for consumers purchasing new vehicles would also help.
The US Congress is currently looking at different approaches to stimulate car sales on the consumer level, including allowing buyers the opportunity to deduct interest on car loans just like they do on mortgages.
Another approach would be to give consumers tax credits for trading in old, less efficient vehicles for new models. The tax credits could be as much as 1,500 dollars.
The National Association of Automobile Dealers has been promoting the tax breaks for consumers since sales started dropping to a 25-year-low four months ago.
An uptick in sales also could allow Ford to scrape through the recession without seeking federal aid, as General Motors Corp and Chrysler LLC have been forced to do.
"Though Ford estimates that it again gained retail marketshare, if 20 per cent-30 per cent retail declines persist, it would be more difficult, in our view, for it to avoid accepting government loans," analysts from Standard & Poors said.
"Even with a boost from the anticipated Federal stimulus plan, we see consumers taking a cautious approach to large ticket discretionary purchases," the Standard & Poors note said.