U.S. Auto Industry Gets Boost from New Owner: The U.S. Government

Transportation Secretary Ray LaHood says industry is manufacturing products people want to drive.

A new salesman showed up at the Detroit auto show on Jan. 11 to make a pitch on behalf of the new owners of General Motors and Chrysler: Transportation Secretary Ray LaHood. "Today is a new beginning for the automotive industry," LaHood told reporters at an early morning press conference ahead of the show's opening. "When people have an opportunity to see the kind of products that are now being manufactured and will be on display, they will realize the auto industry is manufacturing products people want to drive."

The U.S. government, which had long held a hands-off approach to the automotive industry, became a major stakeholder last year after loaning GM and Chrysler more than $50 billion to keep them afloat during the economic crisis and finance their restructuring under bankruptcy protection.

LaHood insisted that the products on display and in development, and the fact that GM has begun to repay its loans, will show American taxpayers that it was a good investment that will also pay dividends by helping to revive the flagging economy. "This industry is one of the pillars of our economy," LaHood said.

"As this industry comes back, the economy will come back, jobs will come back and we'll be on the way to the kind of recovery we're all hoping for."

Speaking in front of a tree-lined track where some 20 electric vehicles were on hand for a test drive, LaHood also expressed his appreciation for the industry's willingness to move forward on developing more fuel efficient vehicles after years of fighting tighter standards.

"We have made progress that was never possible before thanks to the industry and thanks to the leadership of President (Barack) Obama," he said.

A congressional delegation led by House Speaker Nancy Pelosi was also expected to tour the show on Jan. 11 and a host of new electric, hybrid and small cars were to be among the highlights.

But while the new vehicles are impressive, they still represent only a tiny fraction of the actual industry, cautioned IHS Global Insight analyst Rebecca Lindland. "They're going to try to show the visiting dignitaries -- the people from Washington who are going and the journalists and American consumer -- that they are quote unquote listening so they're bringing out more green cars," Lindland said. "But if you look at the sales numbers, hybrid vehicles went from 2.4% to 2.7% of the market last year."

While there's a lot of talk about green cars, consumers simply do not want hyper hybrids and the industry will have to focus on improving the fuel efficiency of their standard offerings, she said.

GM vice chairman Bob Lutz, who has long railed against the fact that Washington did not offer the auto industry the same kind of support received by rivals in Asia and Europe, welcomed the newfound attention. "Since they basically own two U.S. automobile companies, they probably would logically think that it's a good thing to see how their investment is doing," Lutz said on Jan. 10.

"It took the financial failure of the American automobile industry to make the whole country aware of the importance of the American automobile industry... but I personally very much welcome where we are at."

GM chairman Ed Whitacre last week acknowledged that the automaker had a lot of work to do to repair its "strained" relations in Washington.

Copyright Agence France-Presse, 2010

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