GM, Chrysler demand $22 billion more; to slash jobs, production lines

18 February 2009

Facing outright bankruptcy, US car majors General Motors and Chrysler have together asked the Obama administration for an additional $22 billion - nearly double their original estimate – just to stay afloat beyond next month. The two companies have already received $17.4 billion in government handouts.

Both General Motors and Chrysler Corp lodged viability plans with the US Treasury Department on Tuesday which involved massive layoffs and discontinuation of brands. They warned that the downturn in the US was more severe than they had predicted in December, when they first received government funds.

The automakers faced a Tuesday deadline to report progress in revamping their operations as a condition of the billions in loans granted so far. They now have until 31 March to prove to the government they can be commercially viable.

The biggest US auto maker, Ford Motor Co, has not yet asked for federal funds, but is reported to have borrowed billions from private sources. It says it can survive without government funding through 2009.

Chrysler, the smallest of the big three, requested $5 billion in addition to the $4 billion in government aid it has already received, saying it expected the brutal downturn in the US market to run another three years. It is in talks with Fiat about a strategic shareholding, but no deal has been reached.

GM, which has already received $13.4 billion, says it will close five more plants in the US and pare its workforce by 20,000 out of 92,000 currently employed in America, while shedding another 27,000 workers in other countries. It has also put the Hummer and Saab brands on the market and plans to phase out its Saturn brand, while Pontiac will be integrated into the Chevy-GMC line-up.