The Detroit auto industry is facing a moment of historic challenge. Many have hastily jumped to the conclusion that the industry has no future. While the auto companies in Detroit face deep and complicated problems, there is fundamental strength in these companies that will allow them to rally back from the crisis of today and return to their positions as symbols of America's economic might.
JPMorgan Chase believes in the Detroit auto industry not on the basis of simple patriotic pride, but because of three core facts that inform our thinking:
- JPMorgan Chase knows the auto industry because we have been a key player in financing the operations of Detroit for almost as long as America has been producing cars. Our decades of experience have shown us the resilience of this industry, as well as the central importance of it in our nation's economy.
- JPMorgan Chase is at the center of efforts to help the auto companies restructure in a manner that will transform them into efficient, sustainable, and profitable enterprises well into the 21st century. We were proud to play a key role in restructuring Chrysler's debt in order to avoid liquidation and are confident that the same spirit of shared sacrifice and basic optimism that got that deal done will drive Chrysler and the entire industry forward.
- JPMorgan Chase is also among the nation's largest financial service providers to American auto consumers, dealerships, suppliers and the communities where the auto industry operates. Our daily interaction with the producers, sellers and purchasers of cars demonstrate to us the robust consumer demand that exists for high-quality cars and trucks, as well as the commitment to meeting the demand that exists among the dealers and carmakers. The communities that drive this vigorous auto market, from Michigan to Kentucky and from Ohio to Indiana are all founded on a spirit that will simply not allow this great industry to go down without a fight.
Our History with the Detroit Auto Industry:
JPMorgan Chase has been providing financial services to Detroit for almost as long as automobiles have been produced in the U.S. For nearly 100 years, we have been bankers to the major U.S. automakers, providing the financing and support necessary to build the industry into the world leader.
We have stood by the Detroit auto industry in good times, as well as bad. In 1979 and in 1991 when Chrysler had to undergo restructuring, JPMorgan Chase played a leadership role in helping the automaker manage the process without hindering its ability to continue producing vehicles, employing people and competing in the global marketplace."
Our Role in the 2009 Restructuring:
Over the past several months, JPMorgan Chase has been part of an extraordinary effort by the global auto industry, the U.S. and Canadian governments, Chrysler's labor unions and numerous financial institutions to create a framework that will help Chrysler survive its current challenges. As Chrysler contested seemingly insurmountable hardships, JPMorgan Chase worked with other stakeholders to structure a transaction that would reduce the company's debt burden and facilitate a partnership with Fiat.
JPMorgan Chase participated in the concessions, because we believed it was the responsible thing to do for our company, our stakeholders, and the country. The failure of a great American automaker would have been vastly detrimental to the U.S. auto industry as well as the overall economy. Instead, leading the way to a fair agreement in which all sides – company management, unions, federal governments, owners, and lenders – participated in necessary sacrifices, we were able to help keep the company going, save tens of thousands of jobs and set the stage for a great comeback for the Detroit auto industry.
Our Role in the U.S. Auto Market and Automaker Communities:
Beyond the support we have provided directly to the automakers over the decades, JPMorgan Chase's commitment to a vibrant auto industry in Detroit and throughout the United States is also reflected in the work we do with consumers and the communities that produce America's vehicles.
JPMorgan Chase is proud to be the largest non-captive auto lender in the nation, providing over $19 billion in auto loans in 2008 alone. Even during this current recession, with auto sales declining at a rapid pace (a 35% drop-off in the fourth quarter of 2008), we continued lending, providing over 140,000 consumers with $2.8 billion to finance new and used vehicle purchases during the fourth quarter of 2008. We are committed to meeting the car-buying needs of the public by offering our financing programs through a network of over 13,000 dealers located in every state as well as through our branches and over the internet.
As we are helping put more Americans behind the wheel of American-made cars and trucks, we are also providing support for the communities where these vehicles are built. JPMorgan Chase funded and currently services $142 billion mortgage and home equity loans to families who live in the surrounding ZIP codes of America's automotive production facilities. JPMorgan Chase also has $8.5 billion in loans financing the municipal governments, educational institutions and healthcare facilities of Michigan, Indiana, Ohio and Kentucky.
Conclusion:
For over a century, the Detroit auto industry has been a pillar of America's industrial might. The challenges of the 21st century have put new strains on these companies. But JPMorgan Chase has been standing shoulder-to-shoulder with the industry, America's auto consumers and the communities where American vehicles are built for over 100 years. We know the industry, the market and these communities, and our experience and our analysis tell us that despite today's challenges the Detroit auto industry will survive and with the right decisions return to its past strength.
6:00 PM November 10, 2009 | Lending
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