New $825 billion bill includes help for automakers

The massive American Recovery and Reinvestment Bill of 2009 has been presented to Congress for its consideration. The bill combines $275 billion in tax cuts with $550 billion worth of what Rep. Dave Obey of Wisconsin, chairman of the House Appropriations Committee, calls “thoughtful and carefully targeted investments” in technology and infrastructure.

Among the programs included is the Advanced Battery Loan Guarantee and Grants Program that provides $2 billion to support domestic manufacturing of batteries and battery systems for electric and hybrid vehicles. Congress wants to “onshore” production that is now largely sourced from Asia.

Additional programs, totaling about $1.2 billion, provide funds to help federal, state and local governments transition their fleets to alternative-fuel vehicles. This could be a major boon to auto, bus and truck manufacturers as the money is to buy new vehicles.

An indirect benefit of the bill is the billions of dollars earmarked for new infrastructure construction and modernization projects. The programs total nearly $100 billion and could revitalize the market for vocational and work trucks, especially the pickups that have been hit the hardest by the downturn in the vehicle market. It’s this last that could have the largest short-term impact on the health of Chrysler, Ford and General Motors as these include actual sales of the existing light and medium-duty trucks that are Detroit’s forte. As such, they represent revenue that does not have to be repaid and could put thousands of people back to work in the industry at the automakers and their suppliers.

While Congressional dickering, tweaking and infighting mean the bill has a rocky road ahead of it, it is likely some version of it will be enacted in time to have an impact on light vehicle sales in the second half of 2009.

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