Inspecciones y ensayos

Government support for the automotive industry has been provided in a variety of forms, including subsidies to firms and direct involvement in industry restructuring plans.

However, government interference is always a controversial topic.

The US Government committed nearly $40 billion to assist the automotive industry (half of which was in the form of direct loans to Chrysler and GM) and another

$5 billion to supplier support programs, and also set up community assistance programs to intervene in regions that were subject to difficulties as a result of the restructuring of the industry. The debate remains whether this was too much or too little support. Given the way the governments were getting involved, they were also assuming responsibility for the outcomes of their actions. The risk that therefore arises from government support is that companies will continue to build cars for a market where there is no demand for what is being produced.

In France, there was restricted room for politicians. The government had an implicit collaboration with the companies not to close any plants in exchange for public funds. Other types of long-term commitment, such as agreements on the types of cars to be produced in the future, would possibly be more useful. These actions are regarded as protectionism.

In the case of Italy, the government was highly restricted when it came to giving money to the automotive industry. The general policy was that while no plant would be shut down, only a crisis putting a company at severe risk would constitute a valid reason for government support.

The action taken by Chinese Government included a cut in sales tax on smaller cars, from 10% to 5%, a policy which was valid only in 2009. Another policy was the increased consumption tax on vehicles with larger engines. Also, China published regulations for passenger cars stating the need to achieve fuel efficiency standards. A number of national companies have since grown into strong players so the external multinationals are no longer threatening the domestic industry.

The cultural differences between the US, European, Chinese, Japanese, Indian, etc. automotive industries are a fact. However, global competitiveness applies to all, and needs to be faced and dealt with. As a result of the crisis, the trend towards further consolidation of car manufacturers will be accelerated. About 18 global car

manufacturers in the three old core automotive regions – the United States, Western Europe and Japan/Korea – will be significantly reduced in number over the next five years. They will be challenged by car manufacturers based in China and India.

Many countries introduced car scrapping schemes (CARS or “cash for clunkers”

in the US) to cushion the overall downturn in economic activity, boosting sales in the short term. As these programs were temporary and consisted mostly in a shift of purchases from the future to the present, the surge in sales is likely to be reversed after the schemes end. Evidence on the timing and magnitude of this “payback effect” varies but suggests that over the short term, car sales may be temporarily depressed by the termination of scrapping programs in many countries.

[Table 7-1 below shows that most of the countries’ governments would reduce or exempt the automobile requisition tax on small to medium-sized cars, and/or on

eco/environmentally-friendly cars. ]

Table 7-1 Principle measure to support the automobile sector1 Principle measure to support the automobile sector1 Principle measure to support the automobile sector

To summarize, the government stimulus included the following methods:

1. Direct loans to automotive manufacturers, w

effective method to rescue auto companies in most of the countries during the crisis. The US government’s bailout of GM and Chrysler is one of the biggest economic headlines dating back to the 2007 economic crisis.

2. Scrapping schemes, which were promote

proved to be an efficient way to boost auto sales in the short quite controversial due to their long

3. Tax schemes which included tax reductions and exemptions were a very popular method adopted b

automotive markets.

4. Incentives for investment in R&D and training was an indirect but long method to help the auto industry via better technology and better employers.

To summarize, the government stimulus included the following methods:

Direct loans to automotive manufacturers, which proved the most direct effective method to rescue auto companies in most of the countries during the crisis. The US government’s bailout of GM and Chrysler is one of the biggest economic headlines dating back to the 2007 economic crisis.

Scrapping schemes, which were promoted by most countries’ governments, proved to be an efficient way to boost auto sales in the short-term but were quite controversial due to their long-term impact.

Tax schemes which included tax reductions and exemptions were a very popular method adopted by almost all governments to spur consumption in automotive markets.

Incentives for investment in R&D and training was an indirect but long method to help the auto industry via better technology and better To summarize, the government stimulus included the following methods:

hich proved the most direct and effective method to rescue auto companies in most of the countries during the crisis. The US government’s bailout of GM and Chrysler is one of the biggest

d by most countries’ governments, term but were

Tax schemes which included tax reductions and exemptions were a very y almost all governments to spur consumption in

Incentives for investment in R&D and training was an indirect but long-term method to help the auto industry via better technology and better-trained

5. Targeted “green” incentives to promote electric, hybrid, and other

environmental-friendly vehicles were one of the most important long-term methods, which clearly show the trend of the automotive industry’s future.

6. Other liquidity help for firms, like subsidies for manufacturers’ financing operations, also showed obvious effects with regards to assisting

manufacturers.

7. Exchange-rate management was put on the agenda in countries like the US, China, Japan, and South Korea in order to enhance the competitiveness of domestic suppliers since exchange volatility can influence the volume of potential gains during trading on an international level.

8. Tariffs or quantitative limits on trade were, for example, adopted by the Russian government to increase tariffs on imported cars and by the US government to level up the tariffs on Chinese tires. All protected their domestic manufacturers who benefitted to a certain degree.

9. Other domestic content rules & practices, like the EU temporarily suspending free trade agreements with their Asian counterparts, had a certain effect on aiding their domestic markets during crisis.