US carmakers ask for $34bn

Financial Times
02-Dec-2008
By Bernard Simon in Toronto and John Reed in London

Detroit's beleaguered carmakers on Tuesday sought to present themselves as lean, innovative and environmentally aware companies as they appealed to Congress for up to $34bn (£22.4bn) of emergency loans.

In their second appeal to Washington in less than a month, General Motors (NYSE: GM - News) , Ford Motor (NYSE: F - News) and Chrysler outlined plans to become more competitive, emphasising their attempts to transform themselves from high-cost behemoths focused on gas-guzzling sport utility vehicles.

"As a company and as an industry, we readily admit that we have made our share of mistakes and miscalculations," Ford said in a 36-page plan submitted to Congress. But, it added, "Ford recognised that our business model needed to change, and we are changing it".

After being lambasted by critics last month for arriving in Washington in corporate jets, Ford and GM on Tuesday vowed to sell their corporate aircraft.

Rick Wagoner, GM's chief executive and Alan Mulally, his Ford counterpart, said they would be willing to draw a $1 salary. Mr Mulally's offer is conditional on Ford drawing its proposed $9bn share of the bridge financing.

Mr Mulally, Mr Wagoner and Chrysler's CEO, Bob Nardelli, were all set to drive to Washington in hybrid cars for appearances before Congress on Thursday and Friday.

GM said it would ask Congress for $12bn in bridge loans, as well as a hitherto-undisclosed $6bn line of credit "to provide liquidity should a severe market downturn persist". Ford has asked for access to up to $9bn, and Chrysler $7bn.

Data published on Tuesday showed another deep slump in the US car market, with all six leading companies reporting year-on-year declines of more than 30 per cent in November.

GM ascribed part of its 41 per cent slide to widespread speculation that it might be forced to file for bankruptcy. Ford set a 2011 target for breaking even or returning to profitability, on a pre-tax basis, in its submission. Earlier this year, it abandoned its target of returning to profitability by 2009 in the face of the unexpectedly severe slump in the US vehicle market.

In an accelerated drive to produce more fuel-efficient vehicles, the company announced plans to develop a battery-powered van by 2010 and an electric passenger sedan by 2011. GM aims to offer 15 hybrid models by 2012.

Companies: Ford Motor Co ;General Motors Corp ;Ford Motor Co ;General Motors Corp ;

Ticker Symbols: us:F; us:GM; NYSE:F; NYSE:GM;

Subjects: Company News; Government News;

Countries: United States of America;

FT.com
Copyright The Financial Times Ltd. All rights reserved.