NEW YORK – Former government car-czar Steven Rattner and author of the recent tell-all book “Overhaul,” tells the International Motor Press Assn. here he's optimistic U.S. light-vehicle sales will climb to 14 million units this year, jumping to 15 million in 2012.
The total U.S. vehicle fleet has been shrinking for the last few years because more older-model cars have been scrapped than new cars sold, he says. “We're going to get back to 15 million-17 million units in normal (economic) times. That's my long-term forecast.”
Rattner headed the Obama Admin.’s automotive task force until July of last year, which he credits with preserving 1 million industry jobs through the $82 billion federal bailout of Chrysler Group LLC and General Motors Co. using loans from the government’s Troubled Asset Relief Program.
Rebounding business conditions at Detroit’s Big Three has pleased Wall Street, which has responded with positive reports and recommendations to buy automotive stock, albeit Chrysler’s stock is not yet available to the public.
The former investment banker says the economy now is undergoing a sustained recovery, despite the fact unemployment is not dropping as fast as he’d like.
But the auto industry’s comeback would not have happened without the White House bailout of GM and Chrysler, Rattner reiterates from his past statements. Ford Motor Co., and even the foreign transplants, likely would have collapsed from a total shutdown of the troubled car companies, which would have forced many parts suppliers to cease operations.
“My view is the stimulus and measures Obama took brought us to this stage,” he says. “I don't believe I could have made these (positive sales predictions today) without TARP. Without the auto rescue, it would not have been possible.”
Today, Rattner sees both GM and Chrysler well on their way to recovery.
Before former CEO Rick Wagoner was ousted, GM only could make money only in a 16 million-unit market, Rattner says. But he now is confident the auto maker can prosper with sales at 10 million-11 million annually.
“(GM) will be making good money at 12 million units,” Rattner says.
However, he admits his disappointment when handpicked Ed Whitacre, the former AT&T chairman, retired after only seven months as CEO of GM. Still, Rattner says Whitacre accomplished a great deal during his short tenure to restructure the company so it could make money with greatly reduced production.
And Rattner is confident current GM management will not revert to the mistakes of the past. “What I worry most about GM and Chrysler is product. So much else has been fixed.”
The question remains whether people are going to buy their vehicles, he says. “They (the sales executives) have to get up every morning and tell themselves, ‘We have to sell cars.’”
Rattner also warns that the recovering auto makers have to be disciplined about inventory and financing, noting, “The fundamentals have changed.” However, current Chrysler and GM management is acting on a more rational basis today, he says. “I believe the discipline is there.”
At the same time, Rattner does not think the government should contribute more money to the domestic auto makers to help them meet upcoming stringent fuel-economy standards. “My general instinct is the companies should have to do this on their own.”
GM, in particular, has no current net debt and a lot of cash, he says.
Nor should the federal government be in a hurry to shed its GM and Chrysler stock. “I think the government should be patient,” Rattner says, predicting it will recover at least 90% of the bailout money.
Taxpayers could recover even more if the government waits to unload its remaining 25% stake in GM, he adds. “In the public's mind, the government has moved on.”
Rattner says total government compensation for his toil as car czar falls well below $100,000. However, he declines to reveal to Ward's what his usual rate is for such work.
Rattner’s personal net worth is reported to be as much as $600 million.
