Why The Worst Is Over For The Auto Industry
With all the talk about bailing out Detroit's auto makers, there is one part of the equation people seem to gloss over. What will it take to get people buying cars/trucks/SUVs again?
I've had some of you e-mail suggestions that the government should give auto companies a stipend they would apply to the cost of a new vehicle, so the price they charge customers could be cut. That ain't gonna happen for a whole host of reasons.
Others have told me we're over stating the problem of people not buying because they can't get financing. Tell that to dealers I have talked with who have lost sales because they couldn't get a customer a loan.
Now comes a proposal from Sen. Barbara Mikulski, D-Md. to allow buyers to write off the interest on a new vehicle loan. Will that be enough to spur people into visiting a dealership and buying? In my opinion it will help. Depending on the vehicle and how much is financed, buyers could win up with a decent tax break.
- Pershing's Ackman Says GM Should Reorganize
But beyond that, the public is waiting for some reason to develop confidence in our economy and where it's headed. One dealer told me the lack of optimism among buyers reminds him of what it was like back in the early 80's. In other words, people would rather stay behind the wheel of their current car than slide into an all new model.
This auto tax proposal along with the bailout of auto makers, and low gas prices are three reasons I think we are at bottom for the auto industry. I'm not expecting a rebound right away, but I also do NOT think it will get any worse.
There, I buried the lead, as Albert Brooks said in Broadcast News.
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