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Auto Industry Generating $135 bil in Annual Taxes

“A massive economic driver.”

by on Apr.11, 2012

It's that time of year, again.

Before fretting over the check you might have to write Uncle Sam in the coming days consider the hefty tax payout the auto industry makes each year – about $135 billion annually, according to a new study by the Center for Automotive Research.

In fact, the industry generates about 13% of all state tax revenues, according to the CAR study which was commissioned by the trade group the Alliance of Automobile Manufacturers, or AAM.

If anything, “As economic conditions continue to improve, auto companies could see an increase in sales and employment that would generate additional state and federal tax revenues,” said Kim Hill, director of the Sustainability and Economic Development Strategies group at CAR and the study’s lead researcher.

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About $43 billion of those taxes go to the U.S. Treasury — $14 billion in the form of income taxes and another $29 billion from federal motor fuel taxes.

The study found that $91.5 billion went into various state coffers, equaling about 13% of what the 50 states take in from taxes.  Of that, $30 billion comes from taxes and fees on the sale and service of automobiles – half of that from new vehicle sales.  The rest, more than $60 billion, is generated from state fuel taxes, licensing and registration fees, according to CAR.


U.S. Automobile Industry Makes $500 Billion Dollar Contribution to the Economy

Latest study shows more than eight million jobs created.

by on Apr.22, 2010

There are sound economic reasons why all industrialized nations, except the U.S., protect their auto industry.

The U.S. auto industry provides a substantial contribution to U.S. economic health, according to the latest study released this morning by the Sustainable Transportation and Communities group at the Center for Automotive Research (CAR).

The non-profit research organization looked at the economic and employment impact of automakers, parts suppliers, and dealerships in contributing to the economies of all 50 states.

The automotive industry spends $16 to $18 billion dollars a year on research and product development, half a trillion dollars on employee compensation, and is the major leader of the overall manufacturing contribution to the gross domestic product.

“It is difficult to imagine manufacturing surviving in this country without the automotive Sector, said Kim Hill, director of the Sustainable Transportation and Communities group at CAR, and the study’s lead.

“The industry’s impact is huge on a host of other sectors as diverse as raw materials, construction, machinery, legal, computers and semiconductors, financial, advertising, health care and education. In this time of national introspection concerning the value of the U.S.-based auto industry, it is clear the value is quite high,” Hill said.


Q&A: Hummer’s Jim Taylor

How do you translate, “The brand environmentalists love to hate,” into Chinese?

by on Jun.02, 2009

Hummer at the crossorads.  GM has signed a preliminary deal with a Chinese maker which hopes to take over the controversial SUV brand later this year.

Hummer at the crossroads: GM has signed a deal with Chinese maker Tengzhong. It hopes to take over the controversial SUV brand later this year.

Life — and business — can take some strange turns.  Jim Taylor is a great example.  He was trained as an engineer, yet somehow wound up taking over General Motors’ flagship Cadillac division and, as general manager, leading it through its “renaissance” project, with the launch of products like the well-acclaimed CTS sedan.

But a year ago, Taylor was unexpectedly reassigned to GM’s Hummer brand, a division that serves as public enemy number one for environmentalists.  Taylor’s primary job was to oversee the spinoff of the once-popular brand, one of the four divisions GM will shed as part of his Chapter 11 reorganization.

Early Tuesday morning, the automaker announced it had found a buyer.  Initial intentions to keep details secret didn’t last long, as the folks at Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd, in Chengdu, China, were quick to start crowing about their new acquisition.  From one of the symbols of American prowess to the latest Chinese toy, Jim Taylor talked with’s Bureau Chief Paul A. Eisenstein about the sale and what’s to come at Hummer, which he has agreed to stay on with when the sale is formalized, in the coming months.

Subscribe to TheDetroitBureau.comTDB: Hummer’s sale surprised some folks, who thought the brand was damaged beyond repair.

Taylor: The first thing investors look at it is cash: does it make money?  We’re peddling an asset capable of turning a profit.  We had to find someone willing to make a serious investment.  This is not for the faint-of-heart.  This is an expensive date and goes on for a long time.  In the auto industry, as we’ve all seen, you can chew through a lot of cash, fast, so we were looking for a select group of investors with very deep pockets and a long-term vision. (more…)

Decision Day in Court for Fiat Takeover of Chrysler

Hearing set for tomorrow on whether a sale proceeds as judge refuses stay. Precedent set will likely determine GM’s fate.

by on May.26, 2009

Chrysler LLC Vice Chairman Jim Press and then Senator Barack Obama

The political momentum and legal logic of the Chrysler case argues for going forward.

Judge Arthur Gonzales sitting in the U.S. Bankruptcy Court for the Southern District of New York will determine starting tomorrow morning if the sale of virtually all of the good assets of bankrupt Chrysler LLC to Fiat SpA will proceed. If he doesn’t approve, the company will liquidate, taking with it any hope of preserving U.S. manufacturing jobs at the once proud Michigan automaker.

Chrysler’s largest creditors, 98% of them, support the plan. The United Auto Workers Union and the Canadian Auto Workers Union have made once unthinkable concessions to support the plan. And the judge, thus far, has moved the case along the lines that members the U.S. Treasury’s Auto Task Force outlined in a background briefing to media on the morning that President Obama made the restructuring announcement and Chrysler LLC filed for court protection. Pundits who said it couldn’t be done swiftly have, thus far, been proven wrong.

Political momentum and legal logic for Chrysler and GM

With Treasury and President Obama supporting the latest version of a restructuring plan that Chrysler has put together, it is my bet that a new Chrysler Group will emerge from court protection soon. Then the really hard work begins. It is by no means certain that Chrysler and its Dodge and Jeep brands can generate enough sales to remain viable in the toughest global car market since the Great Depression. And the Fiat small cars and engines that are its $10 billion contribution to the plan are years away from production reality.

Some creditors and dealers remain the only significant objectors to the Chrysler sale. However, the political momentum and legal logic of the Chrysler case argues for going forward. Yes, it is a bet, and yes we might just be prolonging the agony, but dissolution right now appears to be a worse choice.  

The same political push and legal logic are also directly applicable to a pending GM bankruptcy filing, which could come at any time.  GM’s debt-for-equity swap for $27 billion worth of bonds expires this midnight, and its bondholders taking the same “no-way” approach that Chrysler’s did.   (more…)