2 analysts Share ideas to help save the industry

 

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Copyright 2009 Gannett Company, Inc.All Rights Reserved USA TODAY

11 March 2009 Wednesday FIRST EDITION

SECTION: MONEY; Pg 3B

LENGTH: 561 words


TITLE: Analyst part 2 ideas to help save the industry experts have called for good buyers of cars or a federal insurance

Signature: James R. Healey



Two auto analysts suggest that some government spending to aid money directly to consumers auto incentives could boost sales and benefit the entire industry.

They say that the government could provide coupons for new car buyers, as is done successfully in Europe, or could support the costs of a federal South Korean car Hyundai assurance of success Plan.

The main advantage of the plan: "The government would support funding the entire industry, enabling customers to buy what they want," says Itay Michaeli, automotive analyst at Citi Investment Research.

It would also be cost-effective, "he says. A federal program similar to Hyundai of incitement would be what could exploit pent-up demand for buyers of new cars numbering in the millions of $ 5 billion or less, he said.

General Motors and Chrysler have survived to $ 17.4 billion in federal funds and a government task force Obama is weighing whether they will get $ 21.6 billion more than they seek.

Under the plan, Hyundai, you can return the car if you lose your income because you are laid off or other specific reasons. Hyundai will cancel the loan, even if you need more than the car is worth and not putting a black mark on your credit file. He also currently forgive three payments while you look for work before the car back.

"We eat the negative equity, rising to $ 7500, which covers most of our business," said Dave Zuchowski, Vice President of the sale of Hyundai Motor America.

Hyundai said it bought the insurance for each car sold to cover potential losses.

Michaeli proposes a government program to cover the negative equity of $ 10,000.

Another plan called for scrapping the government offers rebates for new car buyers, whether they trade in old cars to be scrapped. It is currently underway in several European countries, and its value is considered not only improve sales of cars - to help automotive dealers, parts suppliers and lenders - but also to retire the older vehicles which pollute more, use more fuel and are less safe.

The plan "could make the (U.S.) around the automotive industry during a year," said Joseph Barker, sales consultant at forecaster CSM Worldwide. "It would immediately stimulate sales of automobiles. "

MSC sales figures of new vehicles in European countries with such plans will be more than 400,000 this year than they would without the incentives.

Barker says a plan for scrapping discussed but not included in the proposed U.S. law would have given stimulus rebates up to $ 4500. "In addition to the incentives by automobiles, which (is) powerful" and could boost sales of one million in the second half of this year and 1.5 million to 3 million next year, said he says.

This year, auto sales are running at an annualized rate of less than 9.5 million. Automobiles need $ 9.5 million or 10 million to survive, said Stephanie Brinley, an analyst at consultant AutoPacific.

Barker thinks a Hyundai-style plan could also help, but not as much or as quickly.

The only direct-to-consumer in the U.S. economy, part of the stimulus bill, can deduct the new car buyers of the state sales tax on purchases of the next year when they file their 2009 federal taxes. It is the value in states that have no sales tax - such as Delaware, Oregon and New Hampshire - and the value does not exceed a few hundred dollars elsewhere.

Representatives of the White House did not respond to e-mail requests for comment on the proposals.

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