One Year Later: Five Ways the President Changed the Auto Industry

It's been approximately one year since President Obama was sworn into the oval office. While everyone is taking time out to examine the President's first year in office, we've decided to do the same, looking at the five ways he's altered the auto industry. And no he had no intentions of becoming the automotive industry's first black CEO as depicted in this cartoon.

Five ways President Obama has altered the auto industry:

1. President Obama formed an automotive task force, which is made up of non automotive folks that were responsible for the restructuring of GM and Chrysler. As a result of the task force, both GM and Chrysler replaced several ineffective CEOs, renegotiated benefit plans with the unions, scrapped several brands, eliminated slow-selling vehicles and kept both operations from going under. Had the two operations gone under it would have affected corporate employees, suppliers dealers and communites that depend on the auto industry. It would have been devastating to the auto industry and the businesses that depend on GM and Chrysler. Furthermore, we can't fathom to estimate how many more homes would have gone into foreclosure.

2. Obama provided government loans to encourage electric vehicles. Ford, Nissan and Telsa Motors received $5.9 billion, $2.1 billion and $165 million, respectively. Yes, the government provided money to non bankrupt automotive companies, too!

3. Obama instituted the controversial Cash for Clunkers incentive, which encouraged consumers to trade out of non fuel-efficient vehicles for fuel-efficient vehicles. The government allocated $3 billion toward the program, which in turn put approximately 700,000 new vehicles on the road. While some critics believed this program pulled ahead sales, other industry analysts believed that many of the consumers who took advantage of the Cash for Clunkers program would have stayed out of the market without the incentive.

However, a quick analysis of the sales numbers for last year revealed that the extra sales from the program put the U. S. over the 10 million mark for the year. Although this is still dismal, sales were only down 21 percent last year, after getting off to a rough start. Without the extra 700,000 sales, new-vehicle sales could have been off as much as 28 percent for the year, when comparing to the previous year.

And, as a result of the program's overwhelming success, automakers and dealers reduced the average discount and incentives typically needed to incite sales and reduce inventory. Moreover, in many cases, dealers refrained from offering large discounts, since most consumers were getting anywhere between a $3,500 to $4,500 incentive. During this sales program, a number of dealers turned a profit in the new-vehicle department for the first time in 2009. Furthermore, a number of automakers were forced to crank up their plants again to build more cars. Thus, this put a number of folks and suppliers back to work.

4. In addition to the government funded Cash for Clunkers program, President Obama introduced the American Recovery and Reinvestment Act, which permitted taxpayers to take a deduction for state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. The deduction was available on new vehicles purchased from Feb. 17, 2009 through Dec. 31, 2009.

5. Overall the U.S. government gave General Motors about $50 billion in taxpayer loans starting in December 2008 and going through July 2009. At the end of their bankruptcy, the government gave the automaker $16 billion in exit financing, too. On the other hand Chrysler received about $12.5 billion in financing from the government during the same time period. (As a side note GM quietly made its first loan payment to the government in December and is expected to pay the loan back early). The government also offered loans to GMAC and Chrysler Financial, too!

So, while a lot of money was infused into the auto industry over the past year, the alternative was to increase the number of folks on the unemployment rolls! Go figure: If you were running the country, what would you have done to jump-start the auto industry?