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Confidence is the Key for Automakers: CEOs

Top executives at Ford Motor and General Motors stressed on Monday that the fortunes of automakers will depend on a turnaround in the economy.

GM auto dealership with sign.
GM auto dealership with sign.

A greater availability of credit is a big factor in the auto industry's recovery, GM Chairman and CEO Richard Wagoner, Jr. told CNBC, but the essential turnaround must come in consumer confidence.

And Ford Chairman and CEO Alan Mulally said believes economic revival is the key to the future of America's auto industry, and conceded that if the economy gets worse, Ford may need the kind of help the government is offering GM and Chrysler.

"The cost of credit is coming down, the availability is still not what we would like," Wagoner said. "Credit will help; I don't think it's going to solve the whole issue; consumer confidence is key for us."

Record oil prices moved GM and its competitors in the direction of hybrid and pure-electric vehicles, but, as Wagoner said, the even more rapid plunge in oil in recent months has clouded the picture.

"There will be some people who want to buy the new technology because they want the latest," he said. "That's great, and we need that kind of people to drive these technologies to higher volumes, but ultimately, if we want to get to be a significant portion of the market, we are going to need consumers to see the economic value in the new technologies."

He sees fuel economy as a major long-term factor in the industry's recovery.

"It's our bet that energy prices, and oil prices, once we get through this economic down cycle, are going to begin to rise again," he said.

Wagoner also addressed GM's chances for survival.

"Hopefully, we have the worst behind us, but, given the uncertainty in the economy...it's going to continue to be tough from an economic perspective for awhile, through `09, at least," he said.

Ford Still Banking on '09 Recovery

Ford CEO Mulally also stressed the need for economic resurgence.

"Clearly, the economy, the job market, the unemployment, the consumer confidence, all of that is weighing in, so the most important thing—which everybody's working on—is to get the economy going again," Mulally told CNBC.

Ford's current strategy assumes a recovery in the second half of 2009 and a resurgence of the economy in 2010.

"We're well along on our transformational restructuring plan," he said. "Having said that, it's all going to be tied this year to the economy. Clearly, if things degrade significantly, we're going to have to think about how we're financing our transformational plan."

For the first time in a decade, Ford gained market share during the last quarter. Mulally credits his company's new product line.

Much of that lineup is pegged to energy conservation. Ford plans to introduce a battery electric commercial van in 2010, a new battery electric small car in 2011, and four next-generation hybrid vehicles, including a plug-in version by 2012.

Recently, though, gas prices have not been co-operating, even as Ford introduces a hybrid version of its Fusion.

"The demand is very much tied to the gas price, and right now, it's a little bit lower, so the dmand is less," Mulally conceded. "But remember, we have a point of view that over time, we're all going to be paying more for energy, and so, this is the car for the future, we think."

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