U.S. auto suppliers seek government aid to deal with coronavirus crisis

New York Chrysler Building Manhattan

The trade group for U.S. auto parts makers on Thursday made calls to the government for emergency grants in order to “keep the doors open,” tariff relief and other assistance to cope with increasing pressures from the coronavirus crisis.

The Motor Equipment Manufacturers Association (MEMA) asked congressional leaders to form a “Manufacturing Emergency Assistance” grant program “to keep the doors open, preserve jobs, and avoid bankruptcies in the vital manufacturing sector”.

The grants could offset the expenses of medical testing, the group stated. The group also asked for subsidies to relocate operations to the US.

Relief from the Trump administration’s tariffs on Chinese products and imported steel became one of the first in the list of requests MEMA made in a letter to top Democratic and Republican congressional leaders, who are thinking about different packages of aid that could impact a broad swath of the U.S. economy.

On Wednesday, President Donald Trump declined the idea of extending tariff relief.

Auto suppliers have seen unfavorable outcome as automakers postpone production in North America and Europe because of the spread of COVID-19.

Estimates for how deeply U.S. and worldwide vehicle sales could decline vary widely. Morgan Stanley analysts said in a note Thursday they were reviewing the impact of as much as a 90% drop in U.S. sales during three months. Sales in China dropped by over 90% in February compared to a year ago as the coronavirus crisis intensified.

Ford Motor on Thursday drew down $15.4 billion from two credit lines and said it was postponing its dividend.

On Thursday, Volkswagen AG stated it would halt production at its assembly plant located in Chattanooga, Tennessee, until March 29, after similar moves by the Detroit Three automakers (Ford, General Motors, Fiat Chrysler), Honda Motor and other automakers.

Toyota Motor also announced Thursday would expand a planned two-day shutdown next week through April 3.

Automakers are not presently asking any immediate assistance as part of a $1 trillion government bailout and rescue package expected to soon move through Congress but instead they have asked for broad economic measures in order to keep the economy on track.

About 19,522 people in the United States have been confirmed as being infected with the coronavirus. The virus has killed about 262 people in the country.

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