General Motors and Chrysler will collapse before the end of the year if the giant manufacturers don’t receive massive US government aid now.
That was the stark message delivered to Congress yesterday in reports from GM, Chrysler and Ford, which set out drastic new business strategies and requested a combined total of $34bn to stay solvent.
GM needs $4bn immediately and at least $10bn more before the end of March to stay afloat.
In all, America’s biggest car manufacturer has asked for $18bn, made up of $12bn in soft loans and a $6bn credit line.
"Absent such assistance, the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the U.S. economy," GM warned in its plan.
“We have no plan B,” admitted GM’s chief operating officer, Fritz Henderson, in a conference call with reporters.
Chrysler, meanwhile, requested $7bn immediately. And Ford, seemingly best placed of all three, asked for $9 billion but noted that it would not access the money unless its situation worsened.
It was the second appeal to Washington within a month, with all three manufacturers seeking to present themselves as flexible, innovative and environmentally aware going concerns.
“As a company and as an industry, we readily admit that we have made our share of mistakes and miscalculations,” said Ford in its 36-page dossier. "We recognise that our business model needed to change, and we are changing it”.