Ailing Auto Industry Sends in Its Pitchman
Friday, September 12, 2008
General Motors chief executive G. Richard Wagoner Jr. has been selling cars for a long time, but his pitch today in Washington will be one of his most urgent. He will try to convince lawmakers that the country's homegrown automakers deserve help from the government as they prepare to build more hybrids and other fuel-efficient cars for a radically different market.
Among other priorities, Wagoner and fellow Detroit executives are seeking as much as $50 billion in loans over the next two years to help retool factories. But automakers say that they are not seeking a bailout and that circumstances today are far different from nearly 30 years ago when Lee Iacocca, then Chrysler's chief executive, got $1.5 billion in loans from Washington to stave off bankruptcy.
Wagoner is scheduled to address a Senate energy summit today. In addition to the loans, he is expected to ask lawmakers to approve new drilling, streamline emissions regulations and subsidize alternative-fuel development, according to those familiar with Wagoner's remarks.
He and other Detroit executives wrap up a week of lobbying Washington at a time when the landscape of the U.S. auto industry is far different from three decades ago and even a few years ago.
Today, the Big Three is no longer an America-only club.
By U.S. sales through the first eight months of this year, today's Big Three are GM, Toyota and Ford, in that order. Chrysler? No. 5 by sales.
More bracingly, by company value, none of yesterday's Big Three would be anywhere near today's Big Three.
Toyota's market capitalization, or the value of its outstanding shares, stands at $158.6 billion. Honda's is $61.9 billion. By comparison, Ford is the highest-valued U.S. automaker, at $10.6 billion. GM is worth $7.2 billion. Shares of GM and Ford rose in yesterday's trading, while shares of Toyota and Honda were flat.
In his remarks to the Senate Energy committee today, Wagoner is expected to outline a 10-point plan to help U.S. automakers. He plans to tell lawmakers that GM is committed to raising the fuel economy of its cars and light trucks by 40 percent, as required by last year's energy bill.
At the same time, Wagoner is expected to ask lawmakers and regulators to spread the pain, pointing out that automobiles are only one source of emissions and that other polluters need to be targeted, as well.
The final point of Wagoner's pitch is the biggest: A request for $25 billion in loans right away and as much as $25 billion more over the next two years.
Automakers would use the loans to speed the conversion of plants that make pickup trucks and sport-utility vehicles into ones that make high-fuel-efficiency vehicles, such as small hybrid cars.