A Proposition to Save our Auto Industry - Andrew Gross, Chairman & CEO, Automotive Consulting Services

The following post was left as a comment regarding the previous NC post "GM Uses bailout money ." NC isn't offering this as our opinion, and doesn't necesarrily represent our views, we are simply posting it for your consideration.

Let the politicians decide re: GM Bailout. That's why we voted for them.

On the matter of what's needed now to unclog inventories of existing new vehicles on-ground at dealerships and factory lots in the US set to put people back to work at US company owned factories ASAP, I propose:

1. Offer direct federal access to funds to franchised new vehicle dealers for the purpose of accelerating loans for qualified consumers and fleet operators.

Franchised new vehicle dealerships sales actualization requirements must also be taken into account in this matter as they are an integral part of the new vehicle sales "food chain."

If traditional funding sources don't want to, or find they simply can't sufficiently underwrite this business, let's seek out and provide motivated lenders who would then be provided access to special funds set aside by the Fed under special circumstances or rules established for this purpose.

2. Accelerate Special Offers for Fleet Operators to cycle their vehicles

This would include all private as well as public fleets not as yet contemplated by the present plan (i.e., non- Federal Fleet vehicles), to ensure fleets replace their vehicles as they would normally cycle them.

These offers should seek to balance alleviating inventories of existing new vehicles on-ground at dealerships and factory lots in the US, while phasing in offers for more fuel efficient vehicles as the existing inventories of new vehicles are more rationalized.

The offers could include everything from accelerated depreciation, cash incentives to guaranteed residual values.

3. Auto Manufacturer and Parts Supplier Shareholders' Guaranteed Value Plan
This proposal would reward long term stockholders of companies who pass similar, so-called stress tests now planned for the banking sector. For this purpose, "long term stockholders" could be defined as those who retain the stock for an agreed-to period of time.

The plan would contemplate developing a formula which would guarantee a certain "floor price" for qualified stock.

The benefits of such a plan would include taking a great deal of uncertainty out of the value of companies who remain in this space by virtue of a larger group of shareholders who, in effect, have been encouraged through this guarantee to hold onto their stock. These companies, in turn, would benefit from access to funds from the stock purchases as well as other financial benefits associated with increased stability.

4. National US Auto Industry "Super Sale"

Designate a short, specific time period where consumers would benefit from the acquisition of a new vehicle through any number of offerings (i.e., large cash incentives, pre-paid maintenance, extended warranties, accelerated tax incentives beyond those passed in the stimulus bill, etc.) all set to, again, unclog existing inventories and get people back to work.

Andrew Gross
Chairman & CEO
Automotive Consulting Services
(An Oregon Corporation)



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