Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Automakers Ask for Bailout to Keep Wheels Turning


Industry sinking in worst market in 25 years.

The auto industry wants to back a truck up to the US Treasury and drive away with $50 billion.

General Motors (GM), Ford (F) and Chrysler say they need the money to get them through the worst auto market in about 25 years.

But the money wouldn't necessarily be used to develop the next generation of fuel-efficient or electric cars. Legacy costs are killing the US auto industry and the automakers say they need about $25 billion for healthcare costs. The balance would be used for general liquidity and could be delivered in different ways, including short-term borrowing from the Federal Reserve.

In return, the automakers would grant stock warrants, Bloomberg reports.

In September, Congress approved a $25 billion loan program to help the automakers build fuel efficient vehicles. Buyers are shunning gas-guzzlers in the economic downturn and Detroit was stuck with production geared to SUVs and pickup trucks.

The 3 automakers reported combined first-half losses of $28.6 billion. In October, new vehicles sold at a seasonally adjusted annual rate of 10.6 million, the lowest since 1983.

The argument for the bailout is familiar: It'll saving jobs and a good chunk of the nation's manufacturing industry. It's hard to imagine Congress refusing, especially now that Democrats have extended their majorities in both houses.

Previously, Congress approved a $700 billion package for the financial industry. It seems to be working well, even if some executives at American International Group (AIG) spend some of the money on fancy trips.

The United Autoworkers Union says it supports the $25 billion for its members' healthcare costs. The automakers continue to struggle to support UAW-run trusts that were set up to cover retirees' medical care.

On Thursday, GM CEO Rick Wagoner, Ford top dog Alan Mulally, Chrysler's Robert Nardelli and UAW President Ronald Gettelfinger met with elected officials to push the deal.

Speaker of the House Nancy Pelosi, D-California, says the government wants to ensure the "viability" of the auto industry while "looking out for taxpayers."

President-elect Barack Obama says he plans to work with the auto industry to make it more competitive. Obama has said the nation needs a $175 billion stimulus package to follow the $168 billion package President Bush signed into law in February.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos