Former Car Czar predicts light vehicle sales increase in 2011

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File photo of Steven Rattner (left) speaking at a function addressing the automotive industry.

Steven Rattner, left, believes that TARP saved the U.S. auto industry. (Photo Credit: CC BY-ND/Dow Jones Events/Flickr)

Former Obama Car Czar and author of tell-all book “Overhaul” Steven Rattner recently told the International Motor Press Association that he is optimistic about light-vehicle sales in 2011, reports Wards Auto. Rattner foresees 14 million units sold this year, and 15 million in 2012. In the long term, this trend should continue until U.S. automakers return to the level of 15 to 17 million units sold annually, which was common during normal economics times, said Rattner.

Rattner believes signs that TARP worked are here

The Trouble Asset Relief Program (TARP) is credited with saving 1 million U.S. auto industry jobs, while the $82 billion bailout of Chrysler and General Motors has paved the way for the automakers’ current resurgence. Wall Street has responded with buy reports, although Chrysler current is not offering stock to the public. Rattner sees these as positive signs of a total economic recovery in the works for the U.S., although unemployment still remains high. Without TARP, Rattner believes the U.S. economy would be in worse shape today.

A leaner GM can now turn a profit

Before the collapse that pushed CEO Rick Wagoner out the door, General Motors had to sell 16 million light vehicles per year to make money, Rattner says. With corporate reorganization and reduced production goals, that number has dropped by several million units. Now the main thing on GM’s plate will be simply producing good cars.

“What I worry most about GM and Chrysler is product. So much else has been fixed,” Rattner told the International Motor Press Association.

Discipline is needed

Inventory and financing are key areas where U.S. automakers must exercise restraint, says Rattner. Setting realistic sales and financing goals will enable big automakers to learn once more how to stand independently. The same principle applies to the ever-stringent fuel economy standard. Rather than accepting government subsidies, Rattner believes each automaker must chart the course alone.

Discipline on the U.S. Government’s part will also be beneficial to automakers like GM and Chrysler. Rather than dumping shares in a rush, the government should be patient. Rattner sees at least 90 percent of bailout funds headed back into federal coffers, provided the government stays the course.

Sources:

WardsAuto.com

Steven Rattner’s views on reducing the federal deficit

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