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Seven Days: Vermont Car Blog

September 06, 2008

Big 3 Bailout is Being Pushed Hard on Campaign Trail

GM, Ford and Chrysler are working hard to get the government to provide a $50 billion loan package. The money would primarily be used for converting truck plants over to producing smaller and more energy efficient vehicles.

For the first time in 23 years the mantle for best-selling vehicle in the country fell from Ford's F-150 to the Honda Civic. Previously the Ford F-150 had been the best-selling vehicle in the country for, yes you heard me right, 23 years! and the best-selling truck for 31 years! Profits for the F-150 were estimated to be half or more of Ford's overall profit... until now. With gas prices climbing the truck market has tanked, dramatically effecting all 3 companies.

Foreign car makers have better balance sheets and can get cheaper loans for Q&A projects and re-tooling. The US auto industry is a bigger credit risk and without the loan package would be looking at loans in the 10% range.

So the Big 3 are out on the campaign trail trying to seize the political opportunity to get the loan package through before a new congress takes over. McCain, Obama and the current Bush administration are all said to be in favor of the plan. The actual cost to tax payers would be approximately $8 billion. The cost of one of the Big 3 failing could be far worse... or would it?

What do you think? Is it a good use of our Federal budget or is it just being pushed through because of the number of lobbyists they have on the case?

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