Obama Auto Industry Plan
Obama Administration Auto Industry Plan
GENERAL MOTORS CORP.
- President Barack Obama's auto task force determined that General Motors has not presented a viable plan that would succeed.
- Top executive Rick Wagoner will step down as chairman and chief executive. Kent Kresa, a GM board member, will serve as interim chairman and current president Fritz Henderson will serve as chief executive.
- The administration is willing to give GM adequate working capital for 60 days to develop a more aggressive restructuring plan.
- The company's stakeholders - unions, bondholders and others - will need to make sacrifices.
- Using the bankruptcy code "in a quick and surgical way" could be employed to help revitalize General Motors.
CHRYSLER
- The task force has concluded that Chrysler is not viable as a standalone company.
- The administration will provide Chrysler with working capital for 30 days to conclude an alliance with Fiat SpA, an Italian automaker.
- If successful, the government will consider investing up to $6 billion to help the partnership between Chrysler and Fiat succeed.
- If the agreement is not reached, the government will not invest any additional taxpayer funds in Chrysler.
- The company's stakeholders - unions, bondholders and others - will need to make sacrifices.
- Employing the bankruptcy code "in a quick and surgical way" could be used to help revitalize Chrysler.
CONSUMERS
- The administration will protect consumer warranties from General Motors and Chrysler vehicles.
- The plan includes an incentive program meant to increase car sales. Obama will work with Congress to use parts of the economic stimulus package to fund a program that would give consumers a "generous credit" when they replace an older, less fuel-efficient car and buy a new, cleaner vehicle.
- The Internal Revenue Service will launch a campaign to alert consumers of a new tax benefit for auto purchases between Feb. 16 and the end of the year. Consumers may be able to deduct the cost of any sales and excise taxes, a provision that could lead to has many as 100,000 new car sales.