NADA: Give us tax incentives, dealer loan guarantees

WASHINGTON — The National Automobile Dealers Association wants an economic stimulus bill to boost showroom traffic and vehicle sales. Dealers also need loan guarantees to keep their doors open, NADA says.

Among the incentives the dealer group suggests are refundable tax credits for car and truck buyers and restored tax deductibility for auto loans.

"Now it is time to give families an extra financial incentive to buy a new car or truck and to provide dealers the access to capital they need to keep their small businesses open and their work forces employed," NADA Chairman Annette Sykora said in a letter to the White House last week.

NADA warns that as many as 700 dealerships will close this year, out of a total of about 20,000.

Providing refundable tax credits for vehicle purchases would make them available to low- and moderate-income Americans even if they pay little or no income tax. Such consumers now tend to buy used vehicles.

Dealer wish list
Among NADA’s proposals for helping dealerships and boosting the economy. The feds should
• Provide refundable tax credits to vehicle buyers
• Restore the tax deduction for interest on auto loans
• Expand business tax breaks for vehicle purchases
• Fund state programs to buy clunkers
• Guarantee loans for dealership operating capital

'Broad efforts'

David Regan, NADA's vice president for legislative affairs, told Automotive News the group's focus is on new cars and trucks, but it does not seek to exclude used-vehicle buyers. NADA believes "broad efforts" are needed to stimulate sales, he added.

Regan declined to specify the size of tax credits NADA seeks, but said it "has to be a sufficient number to get the buying public's attention."

NADA also proposed federal aid to state programs that take air-polluting clunkers off the roads, and giving businesses more tax breaks for vehicle purchases.

Congressional Democratic leaders say they want to consider a stimulus bill by year end. Some economists told lawmakers last week that up to $300 billion in new government spending is needed to combat a recession. UAW legislative director Alan Reuther has said the stimulus bill could be a vehicle for more aid to the industry.

Seeking a piece of the pie

Automakers and suppliers are lining up for $25 billion in low-interest federal loans, approved in September to help with retooling for more fuel-efficient vehicles. But industry leaders warn the money may come too late and with too many restrictions.

Automakers, auto lenders and others in the industry continue to seek shares of the $700 billion in federal aid to the nation's financial system enacted last month, and for help under the Federal Reserve's broad powers to lend money.

Sykora, a multifranchise Texas dealer, said in her letter that the government's "rescue plan has begun to show its promise by freeing up credit for corporations, and banks to start lending again."

But NADA says more must be done to help consumers and dealers. NADA's plan includes a request for Small Business Administration loan guarantees to help dealers get operating capital.

NADA President Phil Brady, a former White House staffer, and Andrew Koblenz, NADA's vice president and general counsel, delivered the letter to the White House. David Hyatt, NADA's vice president for public affairs, said the association's legislative staff will pitch the plan to Congress.

Hyatt said franchised dealers face a "crisis situation."

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