The Other Auto Bailout: Ford, Toyota, … and Harley Davidson?

As I noted yesterday, Bloomberg has made some really cool visual tools showing the lending the Fed did over the years.

So I wanted to use it to show the other auto bailout: lending to Ford and Toyota at a time when the auto market was fragile and credit was scarce.

Showing them side-by-side makes it clear that at the same time the government was discounting GM and Chrysler’s claim that unavailability of credit was a big part of their woes (and making them beg harder to get credit from the government), the Fed was providing credit to both Ford and Toyota.

Though you need to go further to see why the companies were taking the loans. The Ford image shows that it took the loans at a time when its market capitalization was in the toilet (remember its stock mirrored that of GM, and ostensibly to help GM out Ford participated in the testimony to Congress).So at the peak (and also around the time Chrysler was going into bankruptcy) the loans were worth almost 175% of Ford’s market value.

Note these loans were to Ford Credit: most likely, this reflects Ford relying on government loans to extend credit to its dealers to keep product moving.

Toyota’s loans, however, represented a much smaller percentage of its market value (which never fell as much as the others) and were significantly smaller than the loans Ford took out. But the loans also came during the period when Chrysler and GM were under the greatest stress.

Not surprisingly, Toyota paid off these loans more quickly than Ford did, in 148 days as compared to 323.

Ford and Toyota weren’t the only auto industry companies getting loans. BMW also had over $4B in loans, at times up to 27% of its value. There’s a $1.7B loan to Chrysler Financial (AKA Cerberus).

Perhaps the biggest surprise of all of this are Harley-Davidson’s $1.3B loans, at times over half its market value.

Now, I’m no expert on the motorcycle business. But like the auto business, it depends on moving product (both vehicles and parts) to independently operated dealers, which in turn rely on credit. So like the auto industry, the credit crunch resulting from the crash must have devastated it.

Add in the fact that, like GM, H-D ended up restructuring. It was also revamping its manufacture; it was also restructuring its labor agreements. It also had had profit woes which hit its stock price. Which made fall 2008 a shitty time to lose access to credit.

But unlike GM, it got Fed lending, which appears to have helped it weather the crisis.

Now, don’t get me wrong. In the long run, GM will be far better off having gone through its restructuring. But there was a time in 2008 when the folks in DC refused to believe that the auto business’ woes were, in significant part, credit-driven.

But it appears the Fed was well aware of that fact.

Tweet about this on Twitter5Share on Reddit0Share on Facebook45Google+0Email to someone

7 Responses to The Other Auto Bailout: Ford, Toyota, … and Harley Davidson?

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7

Emptywheel Twitterverse
emptywheel RT @TimothyS: BAE buys IN-Q-TEL funded imagery and analytic company, firming up its intel ops. http://t.co/onrzEPCYpt
34mreplyretweetfavorite
emptywheel RT @mollyknefel: Misdemeanor arrests under de Blasio are higher than Bloomberg, with same racial disparity (86% black or Latino) http://t.c…
45mreplyretweetfavorite
emptywheel According to CIA Inspector General David Buckley, David Buckley didn't mean David Buckley's criminal referral to DOJ http://t.co/ThMsontX2z
46mreplyretweetfavorite
emptywheel @nickmanes1 It? You can get them all in one place without having to walk between gorges?
47mreplyretweetfavorite
emptywheel @nickmanes1 You gonna do it? It'd make a great storify if we cut it off before you exploded.
50mreplyretweetfavorite
emptywheel @sanasaleem "can" someone? Yup. But it'll get you branded a terrorist and jailed for decades.
1hreplyretweetfavorite
emptywheel RT @SAI: Google is taking apart its mystery barge that was going to be used for selling Google Glass http://t.co/OPlWfXt9wl
1hreplyretweetfavorite
JimWhiteGNV @bmaz @trog69 GNP had three versions when we bought. These were mid-price. Cat included for size reference. http://t.co/HOyOcpxLFE
1hreplyretweetfavorite
emptywheel Paul Ryan is lucky Eric Cantor exists to distract people from the fact he's almost as big of a clown.
1hreplyretweetfavorite
bmaz @JimWhiteGNV @trog69 Huh, just did little reading on GNP. Interesting! Looks interesting. Send me a picture of them, curious what look like
2hreplyretweetfavorite
emptywheel I learn from this Daily Beast article that John McCain is a Democrat. http://t.co/a9gGJYABms
2hreplyretweetfavorite
August 2011
S M T W T F S
« Jul   Sep »
 123456
78910111213
14151617181920
21222324252627
28293031