The auto industry continues to wait for the specific terms of a trillion-dollar economic stimulus package, but the sector could get a slice of the pie through a $500 billion fund from the U.S. Department of Treasury, according to the Alliance for Automotive Innovation’s top executive.
“It is fairly clear to me — again having been through 2008-09 and also in my conversations on Capitol Hill and with the administration — that there is definitely a focus on the auto sector. No question about it,” John Bozzella, CEO of the Alliance for Automotive Innovation, said during a webinar Tuesday organized by the Center for Automotive Research.
Bozzella was joined by CAR’s Kristin Dziczek, vice president of industry, labor and economics.
“In terms of what the actual prioritization is and the use of the facilities would be is really going to be up to individual companies working with the Treasury and with the Fed,” he said.
Also Tuesday, senators continued to debate the third phase of an economic relief package in response to the coronavirus outbreak. Efforts to advance a $1.8 trillion plan failed Monday, with Democrats pointing to a lack of transparency and oversight within the plan’s loan program.
Significant progress was reported Tuesday as negotiations continued — and stock markets surged throughout the day. The Dow Jones industrial average posted its greatest single day point gain in history, up 2,093 points or 11.3 percent, to close at 20,685.
While legislative language is evolving, the $500 billion chunk of the bill could be used for loans to businesses in severely distressed sectors of the economy.
“There’s some that is specifically allocated for airlines and for air cargo,” Bozzella said. “And so, when you move that out — there’s a specific allocation for them — there’s $425 billion that’s left for affected industries in general. That’s how the legislation is read.”
He called the coronavirus outbreak and economic shutdown an “impossible scenario for the auto industry over a long period of time.”
“First and foremost, we’re focused on liquidity,” Bozzella said. “And what you see in the packages that are being discussed now — especially the Senate bill that’s being negotiated — is an economic stabilization fund that has a combination of loans and loan guarantees, and leverage that manufacturers really of all sizes would be able to access in order to maintain liquidity during this period.”
