The $13.4 billion in federal loans announced by President Bush Friday morning should be enough to get the automakers through the next few months. Then the fate of Detroit will become a problem for President-elect Obama and the newly-elected, much more Democratic Congress to tackle.
But this lifeline won’t solve the immediate problems dogging the entire U.S. auto industry. Tight credit and a weakening U.S. economy have left industrywide auto sales at their weakest point in 26 years.
The expected total price for the bailout?
But even then, the $17.4 billion to GM and Chrysler is only about half of the $34 billion the automakers had requested from Congress at the start of this month.
Once the new Congress and administration are in place, it is likely automakers will be back to ask for the rest of that $34 billion, barring a sudden improvement in auto sales that few are forecasting.
And that $34 billion figure doesn’t include $20 billion approved by Congress before the credit crisis to help GM, Chrysler and Ford revamp their plants to produce more fuel efficient vehicles. What’s more, the automakers have already requested that this fund be increased to $50 billion.
Hey, it’s only money.