Bridge Loan to Detroit Provides Relief to the Embattled Auto Industry

Mike Jackson Chairman and CEO  joined by Mike Maroone President of AutoNation, the largest car dealership in the United States, responded to the good news from Washington as a result of the Bush administration providing a 17.5 billion dollars in a bridge loan, with "tough" conditions, to the Detroit automakers; General Motors, Ford, and Chrysler.  On CNBC and Bloomberg Television Mr. Jackson reiterated the circumstances which precipitated the dramatic plunge in auto sales in the United States in the past six months. 'The auto industry actually deserves this relief as auto loan secutitization has been cut off since September 15th of this year.'

Mike Maroone expressed similar concerns on the Fox Business network. 'The issue is "available credit to the auto customer"  and currently this is a huge problem in the showroom. 'The bridge loan gives Detroit time to create their plans for viability, but the credit issues need to be addressed with similar urgency.'  Mr. Maroone goes on to say that the sales slump goes across the board with all car sales in the U. S. both import and domestic; and loan approval rates previously in the 90% range are now at the 60% rate and we are now seeing the current sales slump across all brands. What is needed are avenues to be created to securitize auto loans by funding the finance companies allowing them to provide the necessary credit to customers.

Mike Jackson spoke in support of this in that "Credit to the auto industry is as jet fuel is to the airlines," and with the “overnight” freezing of credit, as a result of the Wall Street crisis, much damage was done to all auto producers within the country. Mr. Jackson went on to say that ‘we have had an extraordinary event stemming from this credit crisis. 'With the restoration of credit we could have a 25-30% improvement in car sales quickly. Until auto loans can be securitized again, times will continue to be difficult and we hope that Secretary Paulson and the Treasury can find avenues to assist in relieving the constrictions on the securitization of loans.'

Mike Jackson went on to say that the U.S. automakers do have to pay for the "sins" that have been made over the past decades, but they have been making very good progress in the recent years with major improvements manufacturing quality, manufacturing efficiencies and engineering innovations; and during the next four years much innovative progress will continue to be seen.

Click on video icon to view Mike Maroone on Fox Business

Click on video icon to view Mike Jackson on Bloomberg Television