U.S. to be more selective with carmakers

By John Crawley

WASHINGTON (Reuters) - Automakers can expect the U.S. government to be attentive to its multibillion-dollar stake in their businesses next year and selective in its efforts to reshape the industry.

Government emphasis has shifted from bailouts and bankruptcy to investment oversight and innovation, with congressional and White House demands for greater fuel-efficiency driving the agenda.

"There's not much appetite for further support to the auto industry," U.S. Representative Gary Peters, a Michigan Democrat whose district includes Chrysler headquarters, told Reuters in an interview. "You can still make the case for strategic (help) but you have to make it in a more thoughtful way."

Taxpayers own a majority stake in General Motors GM.UL and a 9 percent interest in Chrysler after government-led rescues totaling more than $64 billion. The administration pledges a hands-off approach as the companies seek to remake themselves in an improving but still uncertain sales market.

"Any huge shareholder, like in the case of General Motors, inevitably is going to keep an eye on things," Jerry York, a former Detroit executive and industry adviser, told the Reuters Autos Summit this week. "As long as things are going reasonably well, they'll likely stay in the background."

The ability of GM and Chrysler to stand on their own and repay at least some of the colossal loans hinges on a rebound in American housing and employment, industry executives and consultants say.

Mike Jackson, chief executive of the leading U.S. auto retailer AutoNation Inc (AN.N), applauded the government rescue of automakers this year. But he stressed policymakers and Congress need to think more broadly in future applications.

"American industry has been dramatically disadvantaged by not having a coherent energy and industry policy where there is an alignment of goals," Jackson told the Reuters summit.

He said the fragile auto industry "cannot handle" swings in gasoline prices and called cost volatility "the killer."

Jackson, York and others have suggested a novel but politically unpalatable approach -- a gradual, predictable increase in federal gasoline taxes. This would push consumers permanently toward the most fuel-efficient technologies and give manufacturers the proper lead time to roll them out.

ELECTRIC CARS, TECHNOLOGY

The Obama administration has proposed increasing fuel efficiency of U.S. cars and trucks by 40 percent by 2016, the most ambitious target ever set. Obama wants to see more than 1 million electric vehicles on the road by the middle of next decade.

This area is where the administration and some in Congress, like Peters, are now focusing attention with policy and legislation. They seek job-creating breakthroughs in battery development and other technology for developing electric cars.

Ford Motor Co (F.N) received $5.9 billion from the Energy Department to retool factories for making more efficient vehicles. GM and Chrysler also applied for loans and hope to hear soon.

Signaling a shift in thinking beyond just the domestic industry, U.S. Energy Secretary Steven Chu told Reuters in a recent interview that "there are other car companies in America" which the government must consider for assistance.