G.M.'s Wagoner: Credit still flowing for car loans
Despite tough economy, GM's CEO sees hopeful signs in rate cuts and sales of some models.
While the housing industry has been hit hard by a credit crunch, automakers are not seeing a similar dramatic slowdown in car loans.
That's one of the encouraging signs that Richard Wagoner, chairman and CEO of General Motors, is seeing as he steers the giant company through choppy seas.
"We observe credit standards are tightening by providers of credit, but the ability to offer credit has remained and we hope that continues because that is critical and will be a part of how quickly auto industry sales come back," he said at a Monitor breakfast Tuesday.
Mr. Wagoner represents a change of pace for the Monitor breakfasts, normally a venue for politicians. But he arguably wields greater power than many members of Congress. GM is the nation's third largest corporation when ranked by sales, according to Fortune Magazine. The company operates in 33 states and multiple international locations.
Wagoner is tall and trim, looking very much like the former Duke University basketball player he is. "We're a big player in society," he said, while picking at a fruit plate.
He declined to say whether the company would be profitable in 2008 – it lost $38.7 billion last year – Wagoner said the stimulus package Congress passed earlier this year would have a helpful effect on the economy "relatively soon ... probably more in June than May."
New models with greater consumer appeal, like the Chevrolet Malibu and Cadillac CTS, are adding "good momentum" to sales, Wagoner said. But he added, "frankly we look for a time period when we are not selling against a pretty tough economy."
Wagoner defended the North American Free Trade Agreement, which has come under attack in the presidential campaign. Democratic hopefuls Hillary Rodham Clinton and Barack Obama say it has harmed American workers. "The data is absolutely irrefutable that relatively more open trade is good for consumers and societies and long-term economic growth," he said. A move away "from what I think has been a fairly progressive position on trade ... would be long term not good for the US economy and would send a tough message to the rest of the world, too," the auto executive said.
The call for fair trade to accompany free trade is one Wagoner echoed. "Where we have gotten killed in this trade area is specifically with regard to Japan," he said. "The fair trade there has been an ongoing practice of controlling the value of the yen and keeping it artificially weak. And the cost to the US domestic auto industry is incalculable."
The US has the ability to make major progress in reducing its dependence on imported oil, Wagoner said. "If we wanted to very seriously go after the amount of oil the US consumes, the amount we import, we could address this surprisingly rapidly at a relatively low cost." While saying he was reluctant to call for an industrial policy, Wagoner noted that in trying to reduce its dependence on foreign oil the US needed, "some degree of coordination rather than just 'Hey, everybody go at it.' "
Wagoner disassociated himself from widely publicized comments by GM's vice chairman calling global warming "a crock." "The data is pretty clear that the temperature on the earth is rising," Wagoner said. He noted that the auto industry has had a protocol to reduce CO2 emissions for years "and other industries haven't. So we do understand the economics of how this works. And that suggests to me we can really contribute to this debate."
In the future, most of the growth in auto sales will come overseas, Wagoner said. "Our industry is a global one and every piece of data we look at suggests most of the growth will be outside the US.... Our guess is that in 2012, 85 million units [will be] sold globally ... probably about 80 percent of that in the emerging, developing markets."