Providing Economic Assistance to the Automobile Industry

The American automobile industry is facing a time of unique and extraordinary challenges, with a potentially devastating outcome.  Close to three million jobs are tied to the big three automakers when including 250,000 direct employees, approximately 500,000 jobs with suppliers and several million additional jobs that support both the industry and the suppliers.  

The challenges that the industry is facing include consumers switching away from highly profitable SUVs to more efficient vehicles, the precipitous drop in automobile purchases from approximately 16 million vehicles per year to 12 million per year, the abrupt change in capital markets, and high cost structures related to a variety of agreements in place.

Our purpose is to put America back to work while encouraging innovation that creates sustainable commercial opportunities for all Americans, and strengthens our collective economic well being.   In Germany, as part of the economic recovery plan, the government has provided incentives to consumers to purchase automobiles.  This type of market and consumer driven financial incentives would contribute the fastest towards supporting the industry and encouraging commercial transactions.  

One approach is to provide a direct financial rebate of $1,000 for each American manufactured vehicle purchased that exceeds 30 mpg highway, with an additional incentive of $400 per mpg highway over 30 mpg, to a maximum of $5,000 total combined rebate amount per vehicle.  If this constitutes 4 million vehicles per year, the rebate amounts would add up to approximately $10 billion per year.