U.S. auto industry backs tax relief, delaying USMCA
start after coronavirus
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[March 21, 2020] By
WASHINGTON (Reuters) - Groups representing
major automakers and suppliers asked U.S. lawmakers on Friday to
consider new tax relief and delay the start of a new trade deal as auto
sales decline as a result of the coronavirus pandemic.
The proposals come as major automakers are temporarily closing plants
and cutting production. On Friday, BMW AG became the latest to announce
a production halt.
The Alliance for Automotive Innovation -- representing General Motors
Co, Volkswagen AG <VOWG_p.DE>, BMW, Toyota Motor Corp and others -- and
the Motor & Equipment Manufacturers Association (MEMA) in a joint letter
seen by Reuters backed "key actions" by U.S. lawmakers to help "ensure
that sufficient liquidity remains available in the markets."
The auto groups endorsed proposals supported by the U.S. Chamber of
Commerce and others to create "credit facilities to provide loans and
loan guarantees to employers with more than 500 employees experiencing
loss of revenue due to COVID-19."
Automakers and suppliers back a series of actions to boost the industry
including delaying the planned June 1 entry into force date for the new
USMCA North American trade deal. Automakers warn the fast approaching
date puts undue compliance pressures on them to comply with new rules of
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The GM logo is seen at the General Motors Assembly Plant in Ramos
Arizpe, state of Coahuila, Mexico October 7, 2019. REUTERS/Daniel
The letter supports lawmakers giving large companies a tax deduction or credit
to maintain workforce, delay or defer 2020 quarterly federal tax payments, a
temporary employer payroll tax holiday and to expand or extend expensing for
equipment and machinery.
In a separate letter to Congress on Friday seen by Reuters, Japanese automaker
Honda Motor Co also supported the industry tax proposals.
"The auto industry, like so many industries is going to be severely harmed by
the dramatic economic downturn over the coming months," Honda executive vice
president Rick Schostek wrote, adding that companies based outside the United
States but with significant American operations should not be "arbitrarily
barred from any federal assistance or regulatory relief."
On Thursday, MEMA asked lawmakers for emergency grants "to keep the doors open,"
tariff relief and other assistance to "prevent bankruptcies in the vital
Estimates for how deeply U.S. and global vehicle sales could drop vary widely.
Morgan Stanley analysts said in a note Thursday they were evaluating the impact
of as much as a 90% drop in U.S. sales over three months. The industry letter
said automakers had seen a "steep drop in retail sales over the last 10 days."
(Reporting by David Shepardson; editing by Diane Craft)
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