European Carmakers Can Get Government Loans

The Financial Times (FT) reports that car manufacturers’ finance arms are eligible for huge French and German bank loans approved in the past two weeks. While this isn’t a bailout per se, it does give the manufacturers’ credit operations access to some €40b worth of cash to make loans to shoppers. The FT claims that as much as 15 percent of European car manufacturer profits come from the financing divisions. Car sales in the UK and Spain are taking an old world battering, and while the loans are unlikely to affect lending in the U.S. (i.e. Mercedes will not be using the money to make loans to American buyers); this will be a major component affecting European sales and manufacturer profitability. The most frustrating part? You just know they’re going to make the money available overnight, while we’re still sitting and waiting to see what, if anything, companies like GMAC can actually get from the $700B bailout passed weeks ago. Question: is that a good thing or a bad thing?