3 US auto makers seek $34 bn assistance

Thursday, December 4, 2008 at 5:12 am

The three ailing American auto giants– General Motors, Chrysler and Ford– are seeking a financial aid to the tune of $34 billion to improve their battered fortunes. Faced with worsening financial turmoil and falling sales, the auto majors’ business has taken a severe beating and for the past few weeks, who have asked for Federal government assistance.

According to the bailout proposals submitted to the US Congress on Tuesday (December 2) which includes future strategies to make a turnaround, the auto makers have sought financial assistance to the tune of $34 billion. General Motors has requested for a loan of $12 billion stating that it might need another six billion dollars.

Ford has asked for nine billion dollars whereas one of the worst hit, Chrysler is looking for aid to the tune of seven billion dollars. The companies have also come up with plans to cut costs, bring down debt levels and also make investments in green technologies.

Moreover, the chief executives of the auto giants are also willing to take a deep cut in their salaries. The head of General Motors and Ford are even ready to work for just one dollar per year. “The chief executives of Ford and GM have even offered to work for one dollar a year if Congress approves the emergency aid,” the BBC said in a report published online on Wednesday (December 3).

As part of its bailout plan, General Motors said it would term loans of up to $12 billion to provide adequate liquidity levels through December 31, 2009. The company would immediately need four billion dollars this month. “GM anticipates an initial draw of four billion dollars in December 2008. In addition to the bridge loans, the company is requesting a 6 billion dollars line of credit to provide liquidity should a severe market downturn persist. GM’s intent is to begin to repay the loans as soon as 2011,” the firm said.

Ford has sought a life line of nine billion dollars from the US administration. “The government funding be made available to us, in the form of a ‘stand-by’ line of credit, in the amount of up to nine billion dollars. This line of credit would be a back-stop to be used only if conditions worsen further and only to the extent needed,” the company said.

Chrysler has requested for a bailout to the tune of $7 billion and said it is in need of the assistance by December end. “Chrysler is requesting a $7 billion secured working capital bridge loan by December 31, 2008,” the firm pointed out. The sales of the three auto giants plunged as much as 47% in November. While Chrysler saw its sales tumble 47%, General Motors witnessed a decline of 41%. Further, Ford recorded a 31% drop in the sales of lighter vehicles as against the previous month.

(With inputs from agencies)

( This post is from an independent writer. The opinions and views expressed herein are those of the author and are not endorsed by APakistanNews.Com.)

3 US auto makers seek $34 bn assistance

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