A day after the U.S. automobile industry reported its worst sales since 1982, Ford Motor Co. executives said they were encouraged by moves in Washington to bolster car and truck sales, but added that the government needs to do more to give consumers the confidence to return to their showrooms.
"I see some real exciting developments in the stimulus package," said Jim Farley, head of sales, marketing and service at the Dearborn automaker.
Congress is considering a number of incentives to boost the sale of more efficient vehicles as part of the federal government's $900 billion stimulus package. On Tuesday, the Senate approved a provision by Sen. Barbara Mikulski, D-Md., on a 71-26 vote to allow car buyers to deduct sales tax and interest payments on new cars. The $11 billion tax break would save a buyer $1,500 on a $25,000 vehicle.
The deduction would expire Dec. 31, and apply to vehicles up to $49,500 and to buyers with incomes of $125,000 for individuals and $250,000 for couples.
Late Wednesday, Sens. Tom Harkin, D-Iowa, and Debbie Stabenow, D-Lansing, said they will introduce an amendment dubbed the "Sell Fuel Efficient Cars Amendment" that would provide a rebate of $10,000 to buyers who trade in a car more than 10 years old for a new car assembled in the United States. The amendment provides $16 billion which would cover more than 1.5 million purchases. The program would end once the funds ran out, but no later than Sept. 30, 2010.
Farley also said the government could do more to stimulate purchases of greener vehicles.
The Senate bill doubles the number of plug-in electric vehicles that could qualify for a tax credit. A related House bill provides $600 million for the federal government to buy advanced vehicles that are at least 10 percent more efficient than the vehicles being replaced, among other provisions.
"The recovery bill's $600 million provision to fund the purchase of fuel-efficient vehicles is both good economic policy and good energy policy," said Ross Eisenbrey, vice president at the Economic Policy Institute, a Washington think tank. "As the automakers launch new electric vehicles, plug-in hybrids and other high-mileage vehicles, the government can guarantee a market for them even if cheap gasoline dampens the enthusiasm of individual consumers.
Ford Americas President Mark Fields said the move to make interest on new car loans tax deductible is "a big deal," but said consumers need to have faith in their economic future for big purchases.
"People are going to need to see actions on the government's part to stimulate the economy," he said.