US Government Likely to Support Automaker Rescue

Outgoing president George Bush’s administration has reportedly reached a tentative agreement with democratic leaders to help carmakers GM and Chrysler stay afloat. The announcement follows the news that 533,000 jobs were lost in November and president-elect Obama’s announcement of the US’s biggest infrastructure investment since the US highway system in the 1950s. Obama has not to put a full cost on his plan advisers estimate it will be over $700 billion (£477 billion) and could even top to $1 trillion.

Deutsche Bank analysts suggested the LTFVUSA Act (Long term Financial Viability of US Automakers) would be comprised of two rounds of financing: “Short term bridge financing that would carry the automakers through 31 March and longer term funding that would be predicated on the plans for long term viability, which will be assessed by an auto industry financial viability advisor.” The effect the latest plans will have on declining OE tyre orders is far from clear.