Lawmakers may seek auto aid; no Cash for Clunkers, Dingell says

Some House Democrats and Republicans representing hard-hit auto states such as Michigan and Ohio are asking Congress to support aid for the automotive industry in upcoming legislative proposals related to the coronavirus pandemic.

U.S. representatives including Michigan Republican Fred Upton, Michigan Democrat Debbie Dingell, Ohio Democrat Marcy Kaptur and others are gathering signatures on a draft letter that was circulated among lawmakers Tuesday.

"The projected economic fallout for the industry is grave," the lawmakers wrote in a copy of the letter obtained by Automotive News.

"Manufacturers moved swiftly to fill the desperate call for additional personal protective equipment and ventilators where they could," the letter said. "But sales are projected to drop as much as 30 percent for the year, from over 17 million cars sold in 2019."

All parts of the auto industry have been upended by the COVID-19 crisis and resulting economic downturn, with many automakers, suppliers and dealer groups reporting quarterly declines this week as they face an ongoing sales slump caused by the pandemic.

President Donald Trump last month signed a $484 billion spending package that provided more money for small businesses, including $320 billion to make new loans under the Paycheck Protection Program — a top priority for dealers seeking financial relief — but no coronavirus relief bills have included federal rescue money specifically for the auto industry.

Several industry and government officials also have said it will take a shot of economic incentives to get customers back into showrooms once automakers and suppliers restart production. But it won't necessarily look like the $2.85 billion Cash for Clunkers program from 2009.

"Many businesses in the industry face a cash crunch even as they prepare to ramp back up," the letter said. "Liquidity is challenging, particularly for suppliers, and it will be necessary to support demand for some time to ensure a meaningful recovery."

Not a handout

Rep. Dingell emphasized the auto industry is not asking for handout. While there are no proposals on the table right now, she said, “there are a lot of ideas and people are talking.”

“The first focus of everybody is how to make sure the worker is safe, and how do you educate the workers about new protocols and that they practice them and that we keep them safe,” she said in an interview Wednesday with Automotive News.

Dingell said high priorities are making sure automakers and suppliers have access to personal protection equipment as they bring workers back into their factories, in addition to suppliers’ access to liquidity so they can buy the materials needed to produce parts.

No 'Cash for Clunkers'

In response to any sort of federal program that might coax customers to make new-vehicle purchases, Dingell said “Cash for Clunkers is gone.”

“There is a lot of discussion and zero agreement about what might be needed to drive demand down the road,” she said.

John Bozzella, CEO of the Alliance for Automotive Innovation, which represents most major automakers in the U.S., said the industry’s initial focus was on liquidity, as seen in the $2.2 trillion coronavirus aid bill that established credit facilities to help small, medium and large businesses.

But as the pandemic and economic crisis continue, it remains an “incredibly challenging environment,” he told Automotive News in an interview Wednesday.

“This is a demand shock of enormous proportions,” Bozzella said.

He said it is possible that support for demand to help get Americans moving again and to help auto workers could be needed. Congress should consider the impact of federal programs that support vehicle sales and American employment, he explained.

“Some pump priming might be appropriate given the extent of the challenges we’re facing,” Bozzella said.