Two US automakers say they need billions more of government money in order to survive.
General Motors and Chrysler say they need billions more from the government merely to survive until the end of March. The size of the requests were far bigger than expected.
Chrysler, the smallest US car maker, says it needs an additional $5 billion. General Motors, after Toyota the world's biggest car company, says it requires $2 billion by March 1. Together with the money already borrowed, GM is asking for $30 billion from US taxpayers.
Company president Fritz Henderson says that figure is far less than what taxpayers would pay in the event of the company seeking bankruptcy protection.
"The additional financing requirement for the US government [with bankruptcy] would be $50 to $60 billion more, than the out of court process [of bankruptcy]," said Fritz Henderson. "And if you actually tally up the incremental requirements for foreign governments [where GM has plants] that would likely be required, the size of the incremental financing in order to operate General Motors at peak while in a traditional Chapter 11 [bankruptcy] process would be close to $100 billion."
Both companies said they are closing more plants and laying off more workers. They have reached a contract agreement with the autoworkers union but terms of the concessions were not revealed.
US car companies pay far more in wages and benefits than foreign car companies operating in the United States. GM chief executive officer Rick Wagoner was asked if his company is considering selling its profitable operations in China.
"China is really fundamental to our future," said Wagoner. "And so I think that would be a very tough call for us to make. We've not had any conversations along those lines."
Wagoner did suggest that GM's European operations might be sold, but he said no prospective buyers have come forward.
Car companies worldwide are enduring their worse sales slump in a quarter century as the financial crisis has caused buyers to cut back. Both GM and Chrysler say they expect the market to remain distressed for all of this year and into 2010.