General Motors, Chrysler and Ford have asked the US Congress for a $25bn (£16.6bn) bail-out. The move follows weeks of lobbying and crisis talks concerning the three car manufacturers.
The heads of GM, Ford and Chrysler attended a US Senate hearing and warned that without a rescue package the three companies risked collapse. They underlined that this would lead wider problems for the US economy.
GM chief executive Rick Wagoner said a “financial chasm” has opened up in the company. Wagoner had earlier said that GM was in danger of running out of cash in a matter of weeks (MW.co.uk November 10).
Both Republicans and the White House have so far been against using the $700bn bank rescue measures to bail out car companies but Wagoner warns that without government action millions of jobs could be lost.
Last week, GM was understood to have frozen its media spend in a bid to cut costs (MW November 12), and this week it emerged that Ford UK is expected to slash its advertising, as part of global cuts over the next year (MW November 19).
Separately, GM’s German unit, Opel, is seeking Û1.8bn (£1.52bn) in backing from the German authorities.