John Reed, FT.com, 12th January, 2009
BMW on Monday lambasted the state aid offered to carmakers in the US and Europe, saying that it “distorted competition” in the industry and that it should be offered to more companies. The warning by the world’s largest luxury carmaker comes as Canada, Sweden, Germany and other countries follow the US in bailing out carmakers and while the UK Government considers aid measures.
General Motors and Chrysler are receiving $17.4bn of emergency federal aid, in addition to $25bn in low-interest loans for carmakers’ investments in greener vehicle technology. “If funds are made available to American domestic manufacturers, the same programmes should be made available to other manufacturers in the US,” Ian Robertson, BMW’s Head of Sales and Marketing, told the Financial Times. “Otherwise you distort competition, and that’s not reasonable.”
Mr Robertson also criticised the notion of one-off Government loans being offered to carmakers such as Jaguar/Land Rover. “If there are offers on the table, they should be offered to everyone. If the Government wants to support Jaguar/Land Rover, they should support everyone,” Mr Robertson said.
“That is part of the level playing field.” The British Government is considering a request for emergency loans and other financial aid made by the industry through the Society of Motor Manufacturers and Traders industry lobby group to keep their carmaking, dealership, and retail finance operations afloat.
However, carmakers including GM and India’s Tata Motors, owner of Jaguar/Land Rover, have also approached the Government individually about loans or guarantees. Mr Robertson said that BMW employed more people in the UK at its plants in Swindon, Goodwood and Oxford than did Jaguar/ Land Rover.
A second industry executive said on Monday that growing state handouts to carmakers could lead to “warfare” and competition among countries. “If the French government had given $25bn to Renault and Peugeot, everybody would have been outraged, but this was America,” said Shai Agassi, Chief Executive of Better Place, a Palo Alto, California-based company building infrastructure for electric cars. “Once America does it, everyone has to do it.”
GM is also discussing the possibility of €1bn-€2bn ($1.35bn-$2.7bn) of guarantees from the German government for its Opel subsidiary, and “up to $1bn” from Sweden’s Skr20bn ($2.5bn) fund for car and truckmakers, according to Carl-Peter Forster, head of GM Europe.
However, Mr Forster denied that GM was seeking special treatment. He said the company was seeking Government guarantees to access €16bn of European Investment Bank aid for carmakers, which he said was limited to companies with investment-grade credit ratings. “The German and Swedish money is mostly a guarantee to put us on a level playing field,” he said.
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