Chrysler See Tax Breaks on Loans as Sales Aid
Toyota Motor Corp. and Chrysler LLC said federal income-tax deductions for interest on car loans could help stem the slide that sent U.S. sales to their lowest monthly total since 1991.
General Motors Corp., the biggest U.S. automaker, also said today it had studied the idea of boosting auto demand through a government-backed program to encourage scrapping older vehicles.
The companies floated the ideas after posting October sales totals that GM called the worst since 1945. While the automakers said they hadn't actively lobbied for such changes, the calls added to mounting pressure for government aid as GM pursues a merger with Chrysler.
``It's really critical for the governments and the banks to aggressively help us to revive the credit market and facilitate consumer lending activities,'' Mike DiGiovanni, a GM sales analyst, said on a conference call.
Industrywide sales plunged 32 percent to 838,156 in October, according to research firm Autodata Corp. The last smaller monthly tally was 822,200 units in January 1991. The annual sales rate in October was 10.6 million, the lowest since 1983, the Woodcliff Lake, New Jersey-based firm said.
Toyota would ``be supportive'' of moves such as ``tax deductibility of auto loans,'' Irv Miller, Toyota's U.S. vice president for corporate affairs, said on a conference call.
Chrysler, owned by Cerberus Capital Management LP, said the idea of tax-deductible loans came up in October in a meeting with the National Automobile Dealers Association. Toyota is No. 2 in U.S. sales behind GM, while Chrysler is No. 4.
``Any kind of incentive that would encourage a customer or consumer would be a good one,'' said Steve Landry, U.S. sales chief for Auburn Hills, Michigan-based Chrysler.
GM has considered advocating a program in which the government would sponsor scrapping older vehicles to stimulate demand for new ones, DiGiovanni said. He didn't provide details. GM, Chrysler and Cerberus have declined to comment on any discussions about a merger, for which Detroit-based GM is seeking federal aid, people familiar with the talks have said.
Six U.S. governors urged the Bush administration last week to speed financial aid to automakers and auto lenders, amplifying a plea by members of Congress, including lawmakers from Michigan.
LINK: Bloomberg.com: U.S.
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