CEOs ask Congress for $34bn to save US car industry

THE CHIEF executives of America’s “Big Three” carmakers went cap in hand to the US Congress for a second time yesterday, to plead for $34 billion (€26.6 billion) in government funds they believe will save their crippled industry from collapse.

Rick Wagoner, chief executive of General Motors, admitted the company made grave mistakes that led to its downfall but added that competition from foreign rivals has been tough.

“It’s no secret that GM, like our fellow domestic automakers, has struggled in the face of increased competition from foreign manufacturers with lower wage, health-care and benefit costs,” Mr Wagoner said.

Chrysler chief Bob Nardelli cut to the chase and asked for a multi-billion-dollar loan in his second sentence of testimony.

“Before I answer your questions regarding our loan request, let me state clearly why we’re here,” Mr Nardelli said. “Chrysler requests a $7 billion loan to bridge the current financial crisis.”

Alan Mulally, Ford’s chief executive, was more confident in his company’s ability to survive but said outside the hearing that he was “worried” about GM and Chrysler.

The executives were dismissed by Congress when they appeared on November 18th to ask for financial aid. Politicians castigated them for failing to provide detailed plans of how the money would be spent and how it would help them to transform an industry that has been in a downward spiral for a generation.

They were also blasted for travelling to the last hearing in separate private jets.

This time all three executives drove the 500-plus miles form Detroit, Michigan, to Washington DC. Mr Wagoner went a step further in trying to establish his thrifty credentials by stopping for lunch at a fast-food restaurant on the way. The Senate banking committee heard that GM wants $4 billion and Chrysler $7 billion by the end of the year. GM also asked for another $8 billion in early 2009 and a $6 billion line of credit if its cash position deteriorates further.

Ford says it has sufficient funds for the moment but wants access to a $9 billion line of credit.

Senate banking committee chairman Christopher Dodd was receptive to the three executives, telling them “inaction is no solution”.

A panel of politicians in the House of Representatives – where opposition to a bailout is stronger than in the Senate – will hear the carmakers’ pleas today.