GM needs up to $30-billion more, Chrysler seeking $2-billion more
DETROIT General Motors Corp. said on Tuesday it could need a total of up to $30-billion (U.S.) in U.S. government aid more than doubling its original aid and would run out of cash as soon as March without new federal funding.
The request for additional aid from the top U.S. auto maker came in a restructuring plan GM submitted to U.S. officials on Tuesday.
The GM restructuring plan of more than 100 pages was posted on the U.S. Treasury Web site.
The request came on the same afternoon that No. 3 U.S. auto maker Chrysler LLC requested an additional $5-billion from the current $4-billion in U.S. government aid, saying it expected the brutal downturn in the U.S. market to run another three years.
GM also said it had not reached deals with bondholders and its major union to reduce some $47-billion in debt but would work to reach those agreements by the end of March.
In response to signs of a prolonged slump in demand for new cars and trucks, the auto maker also said it would step up cost-cutting, reducing its global work force by 47,000 jobs this year and cutting five additional U.S. plants by 2012.
In addition, GM said it would cut its U.S. work force by another 20,000 jobs by 2012 with most of those reductions coming earlier.
GM has been kept afloat since the start of the year with $13.4-billion in loans from the U.S. Treasury. Its expanded aid request for up to $30-billion includes a $7.5-billion credit line in the event that the autos market remains depressed.
Critics of the bailout of GM and its smaller rival Chrysler have urged the government to consider financing a court-supervised restructuring for the two ailing auto makers in bankruptcy.
GM said its own analysis of the costs and risks of a bankruptcy filing would require more than $100-billion in financing that could have to be provided by the U.S. government.
GM requested an unprecedented U.S. government bailout in December and had pegged its funding need then at up to $18-billion.
But the auto maker has faced a deep slide in sales outside its long-slumping home market in the weeks since and GM said its revised restructuring plan would take aim at loss-making overseas units as well.
GM also said it would plan to phase out its Saturn brand by the end of 2011 and make a decision on whether to sell or just wind down its Hummer SUV brand by the end of the current quarter.
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Chrysler LLC needs another $2-billion (U.S.) on top of $4-billion it has already received and $3-billion it is awaiting from the U.S. government, the auto maker said Tuesday.
The additional money is needed, Chrysler said, because of what it called an unprecedented sales decline even since its first request made to the U.S. government before Christmas.
The continued lack of available credit affects consumers and dealers, leading to reduced wholesale orders for Chrysler, the auto maker said.
It is now projecting that over-all U.S. industry sales will crash to a 40-year low of 10.1 million vehicles this year and average 10.8 million between now and 2012, below the numbers in the previous plan.
As part of its plan, Chrysler said it will eliminate three vehicle lines, a shift at an unidentified plant and slash another 3,000 jobs.
It added that it has a deal with the United Auto Workers to lower labour costs, but provided no specific elements of that part of the plan.
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A few more months and they will be asking for even more.
. Will one of them please go bankrupt!!
