Coronavirus Bailouts Could Extend to Auto Industry

Plans were recently announced to provide economic assistance to U.S. businesses hit hardest by the Coronavirus pandemic. Many anticipate this will extend into the auto industry.

Groups representing major automakers and suppliers asked U.S. lawmakers to consider new tax relief and delay a new trade deal as automotive sales have declined due to the virus. The proposals are due to many automakers closing plants and cutting production, including BMW AG.

The Alliance for Automotive Innovation joined forces with the Motor and Equipment Manufacturers Association to draft a letter urging lawmakers to help ensure sufficient liquidity remains available to them.  General Motors, Volkswagen, BMW and Toyota all endorsed the proposal to create credit facilities that provide loans and loan guarantees to employers with more than 500 employees experiencing loss of revenue due to COVID-19.

Automakers and suppliers have backed a series of actions to help the industry, and warn the fast approaching date for the new USMCA North American trade deal puts compliance pressures on them.  The letter notes support to lawmakers giving tax deductions or credit to maintain workforce and delay quarterly federal tax payments.

Honda Motor Co has sent their own letters to Congress in support of tax proposals. “The auto industry, like so many industries is going to be severely harmed by the dramatic economic downturn over the coming months,” Honda executive vice president Rick Schostek wrote, adding that companies based outside the United States but with significant American operations should not be “arbitrarily barred from any federal assistance or regulatory relief.”