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EU carmakers want $55 billion loan package

 
1,333 views Oct 3, 2008
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The European Commission now faces the same decision the White House faced in September

The European Commission now faces the same decision the White House faced in September

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American carmakers recently secured a $25 billion loan guarantee from the federal government, and now their European counterparts are seeking the same sort of deal from the European Commission. Asking for a somewhat more significant $55 billion in loans, the industry has the money earmarked for development of ecologically improved products and vehicles.

The charge is being led by Sergio Marchionne, CEO of Fiat, though he claims there is unanimous support for the proposal among vehicle manufacturers throughout the European Union, reports Reuters. The value of the loan package is significantly higher than that sought by U.S. carmakers, but both the costs of development and the standards to be met are likewise higher in Europe.

"You can't pile on regulation on an industry during its worst time in the last 10 years," said Marchionne at the Paris Motor Show. "It's nonsense."

It's not yet clear if the loans are being sought due to a lack of ability to secure private credit (as was the case in the U.S., as the credit market crumbled) or if the carmakers are simply seeking a form of subsidy to meet new legislative requirements. Whichever reason underpins their effort, with a troubled global economy, extremely weak sales in the U.S. and incredibly stringent emissions standards - with stiff penalties for failure - in the wings, the manufacturers are not being unreasonable in their request.

Europe's somewhat more pro-taxation political atmosphere and acceptance of governmental spending should also soften the landing, politically speaking, especially since the motivation is to produce more environmentally sound cars.



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