American auto: let the Big Three perish?
30 October 2008
Despite Congressional approval of $25 billion in loan guarantees for US automakers, the Big Three say they need much more, spurring questions whether they are worth saving at all. Dhruv Tanwar reports
Desperate times call for desperate measures. With General Motors seeking to merge with Chrysler, that is the biggest sign that for the American auto industry, survival is the only issue. And the key to survival seems to be staying solvent in the face of declining sales, and asking the US government for a bailout package.
The question resonating in the US media at present is whether the now-fabled Big Three of the US auto industry are actually worth saving.
In September 2008, Congress had approved $25 billion in loan guarantees for American automakers (See: US House of Representatives approves $25-billion loan package for American auto industry), with rules for their disbursal still in the making.
However, the Big Three have added some urgency to the discussion, saying that the time for disbursal has already arrived. With their sales plummeting, GM, Ford and Chrysler are burning cash faster than they can make it back, and the credit crisis in the markets has sealed their borrowing routes.
Therefore, it comes as no surprise that the American auto makers would like to see more funding in a shorter time. Reports quoted White House spokeswoman Dana Perino as saying on Tuesday that the auto industry has spoken to the Bush administration about ''funding on a much broader scale'' than what had been approved as part of the two programmes by Congress in September.
However, the clouds of gloom continue to gather around the horizon for the automakers, with rating agency Moody's having downgraded Chrysler and GM debt for the second time in three months. It said that the companies could find it difficult to remain solvent through 2009.