The Obama administration is giving slumping domestic auto sales a small shot in the arm.
The administration announced Thursday it is buying 17,600 fuel-efficient vehicles from Detroit’s Big Three by June 1, using $285 million from the $787 billion stimulus bill.
The government will order 2,500 hybrid sedans by April 15 as part of the purchase. Hybrid sales have collapsed as gas prices have hovered around $2 a gallon. Overall U.S. auto sales have fallen 36 percent in the first three months of the year.
“The problems that caused this economic crisis weren’t created in a day, and it will take time and hard work to get our economy back on track,” President Barack Obama said in a statement. “But I am 100 percent committed to a strong American auto industry, and we will stand with America’s auto workers and their families during these difficult times.”
All of the vehicles will be purchased from General Motors Corp., Ford Motor Co. and Chrysler LLC.
The effort comes after the government has loaned GM and Chrysler $17.4 billion in the past four months to stay afloat. The administration rejected their viability plans on March 30, giving Chrysler 30 days to complete a merger with Fiat SpA and GM 60 days to revise and toughen its viability plan. Obama also forced out GM Chairman and CEO Rick Wagoner on March 30.
Ford has not sought any federal assistance.
“By swapping out less efficient federal vehicles for new hybrid and fuel-efficient ones, this strategy will reduce gasoline consumption by 1.3 million gallons per year and prevent 26 million pounds of carbon dioxide from entering the atmosphere,” the White House said in a statement.
The government will use $15 million of the money for advanced technology vehicles for the government’s fleet. “Pilot programs will focus on commercially available compressed natural gas and hybrid buses, and all-electric vehicles,” the White House said, with those vehicles to be ordered by Sept. 30.
The law sets as a goal buying vehicles that are at least 10 percent more efficient on average than those being replaced.
“With cars like the Fusion Hybrid, Ford can deliver exceptional vehicle quality and fuel-efficiency to the U.S. government fleet through this initiative,” said Ford spokesman Mike Moran. “We appreciate the accelerated actions by President Obama.”
Michigan Gov. Jennifer Granholm welcomed the federal effort.
“This is good news for the American auto companies and the hundreds of thousands of families who rely on those companies for their livelihoods. Bolstering sales at these companies is the best way to protect jobs,” Granholm said.
In mid-December, Granholm called for accelerated purchase of American-made, fuel-efficient vehicles for the Michigan government auto fleet. Since that time, 1,435 orders have been placed.
Michigan lawmakers also praised the announcement.
“This is a welcome and important step that reflects the president’s commitment to the survival and revitalization of the domestic auto industry,” said Rep. Sander Levin, D-Royal Oak. “The federal government’s purchase of thousands of hybrids and other fuel-efficient vehicles from the Big Three shows that our domestic auto industry will weather this current crisis and build the cars of the future.”