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November 5, 2008 > Ailing US auto industry a concern for candidates

Ailing US auto industry a concern for candidates

Submitted By AP Wire Service, By Ken Thomas, Associated Press Writer

WASHINGTON (AP), Oct 31 _ Both Democrat Barack Obama and Republican John McCain, trying to earn votes from U.S. autoworkers, offer plans to develop advanced vehicles key to rebuilding struggling American automakers.

Tuesday's election comes during one of the worst years for the auto industry in more than a decade. Auto sales have dropped sharply, the credit freeze has made it difficult for car shoppers to get loans, and the Detroit Three automakers _ General Motors Corp., Chrysler LLC and Ford Motor Co. _ face uncertainty.

General Motors has been discussing a potential acquisition of Chrysler and is seeking billions of dollars in federal aid to help keep the company running or to facilitate a merger. The automaker is in talks with Chrysler majority owner Cerberus Capital Management LP about a consolidation, but a person briefed on the talks said Friday it's unlikely any deal will be reached before Tuesday.

Although GM and the Bush administration are still talking about GM somehow accessing part of the $700 billion Wall Street bailout program, the person said government aid could come more quickly from the $25 billion in loans that Congress approved in September to develop more fuel-efficient vehicles. The person asked not to be identified because the talks are confidential.

The Obama and McCain campaigns have declined to take specific stands on the auto talks, but they have vowed to help the industry build a green economy and reduce its dependence upon imported oil, in part by providing money to develop plug-in hybrid vehicles and advanced batteries.

The auto industry's hardships could play into the minds of voters throughout the Midwest. The UAW has targeted voters in Michigan, Ohio, Indiana and Pennsylvania, where more than half its 1 million active and retired members live.

Obama and McCain supported the $25 billion loan program, and both campaigns have urged the Energy Department to get the funding into the pipeline as the first step to helping the industry rebound.

Obama has expressed an intention to get quickly and personally involved in the industry's effort to develop fuel-efficient cars. He told NBC News' Brian Williams on Thursday that if elected he hoped to immediately meet with heads of the Detroit Three automakers and the United Auto Workers to craft a strategy.

``I would do whatever I think needs to be done to help out the auto industry,'' McCain said Friday in an interview with ``Good Morning America'' on ABC. ``We need to keep this industry alive.''

Obama, who has supported doubling the loan to $50 billion, wants to keep ``every option on the table,'' said Jason Furman, his economic adviser.

Auto industry supporters see the presidential candidates as future allies. Michigan Gov. Jennifer Granholm, an Obama supporter, said the Illinois senator's support for the low-interest loans and additional funding indicates ``he does not want to see this auto industry go under.''

Rep. Fred Upton, a Michigan Republican, meanwhile, credits McCain with helping convince wavering Republicans and the White House that the retooling loans were needed.

Obama has set an ambitious goal to get 1 million plug-in vehicles on the roads by 2015 and expressed interest in converting the White House fleet to plug-ins, if security allows. He has promised $4 billion in loans and tax credits to U.S. automakers to modernize older assembly plants to produce advanced vehicles. For consumers, he's discussed a $7,000 tax credit for buyers of early model plug-ins, similar to a measure approved by Congress last month.

McCain has proposed a $300 million prize for researchers trying to develop a better automobile battery, and he would also offer $5,000 tax credits for consumers who buy new zero-emission vehicles.

On fuel efficiency, Obama has urged a 4 percent annual increase in the standards so the fleet of new cars and trucks would reach 40 mpg (17.01 kpl) by 2022. That's more aggressive than a plan adopted by Congress last year requiring the fleet to hit 35 mpg (14.88 kpl) by 2020.

McCain has not proposed raising the requirements beyond last year's plan and has a mixed record on fuel economy standards. In 2002 he proposed raising fleetwide standards to 36 mpg (15.31 kpl) by 2016, but opposed increasing the standards in 2003 and 2005.

David Cole, president and CEO of the Center for Automotive Research, said both candidates have recognized the trouble facing the auto industry, leaving few major differences between the two senators.

``We're in a period where the politics are almost irrelevant when you're looking at this kind of an economic challenge,'' Cole said.

___

Associated Press Writer Tom Krisher in Detroit contributed to this report.

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