GM seeks up to $18 Bln from U.S. govt.

(RTTNews) - General Motors Corp. (GM | Quote | Chart | News | PowerRating), the world's largest automaker, submitted its plan for long-term viability to the U.S. Congress on Tuesday, requesting up to $12 billion in bridge loans and an additional credit line of $6 billion to enable it to weather the worst economic crisis since the Great Depression.

The automaker said it expects Congress to extend $4 billion in financing this month and provide the rest of the $12 billion by March. GM is seeking the $6 billion line of credit to provide liquidity if market conditions deteriorate. GM plans to begin repaying the loans as early as 2011 and fully repay it by 2012.

GM has also requested for the creation of a Federal oversight board to oversee the loans and restructuring plan.

GM's immediate need for cash raised speculation that the company may file for bankruptcy protection. However, GM President Frederick Henderson said in a conference call with reprters that the company is not considering bankruptcy as an option and is focusing solely on securing help from the federal government. "There is not a Plan B," he said.

Detroit's Big Three - GM, Ford Motor Co. (F | Quote | Chart | News | PowerRating) and Chrysler LLC - are pursuing Congress to provide billions of dollars in low-cost loans to help them weather the tough economic times and the tumultuous credit environment. They are presenting their turnaround plans Tuesday. Last month, Congressional leaders told the automakers they had until early December to make their case that any federal funds used to prop up the industry would be spent wisely and assist the firms in returning to financial health.

GM's plan calls for higher production of fuel-efficient vehicles and energy-saving technologies, rationalization of brands, models and retail outlets, reduced wage and benefit costs, significant capital structure restructuring and further consolidation in manufacturing operations.

GM said it will focus its product development and marketing efforts on four core brands - Chevrolet, Cadillac, Buick and GMC - in the U.S. Pontiac will be a specialty brand with reduced product offerings within the Buick-Pontiac-GMC channel.

GM said it plans to close 9 additional plants by 2012, taking the number of North American production facilities to 38 from 47 currently.

Under the plan, GM said it will accelerate its current efforts to reduce manufacturing and structural costs. GM also said it would significantly reduce the debt currently carried on its balance sheet.

GM CEO Rick Wagoner would reduce his salary to $1 per year, and GM's board members would receive retainer of $1 for the year.

The plan also requires further changes in existing labor agreements, including job security provisions, paid time-off and post- retirement health-care obligations. GM said it would not pay common stock dividend throughout the life of the loans to save cash.

The company said it would reduce number of U.S. employees to between 65,000 and 75,000 by 2012, compared with 96,000 now.

GM claimed that once it has completed the restructuring actions laid out in the plan, it would be able to operate profitably at industry volumes between 12.5 and 13 million vehicles.

Earlier Tuesday, Ford submitted a comprehensive business plan to Congress, reiterating its resolve to transform its North American automotive business through aggressive restructuring actions and the introduction of more high-quality, safe and fuel-efficient vehicles, as the third largest U.S. automaker sought access to up to $9 billion in bridge financing from the federal government in case the current economic crisis worsens or there is a bankruptcy of a major competitor.

In its plan, Ford said it would aggressively restructure to operate profitably at the current demand and changing model mix. The company also said it will accelerate the introduction of more high-quality, safe and fuel-efficient vehicles, including a broader range of hybrid-electric vehicles and the introduction of advanced plug-in hybrids and full electric vehicles.

Ford said it does not expect a liquidity crisis in 2009, except in the case that one of its domestic competitors goes bankrupt or a more severe economic downturn further cripples automotive sales and create additional cash challenges.

The company is asking the government to provide it access to up to $9 billion in bridge financing, though Ford reiterated that it hopes it will not need to tap the funds to lead its turnaround.

Ford also reiterated that it is canceling all bonuses to be paid in 2009 for all management employees worldwide and foregoing bonuses for all employees in North America. The company also will not pay merit increases for North America salaried employees in 2009.

There were also a lot of angry accusations that the automakers were wasteful. One action that seemed to symbolize this for many members of Congress was the fact that the automakers' CEOs traveled in separate private jets to appear before the Washington hearings.

To answer this charge, Ford confirmed Tuesday that it has decided to sell its 5 corporate aircraft. In addition, Ford's CEO Mulally said that he would work for a salary of $1 a year as a sign of confidence in the company's transformation plan and future.

Ford said it expects both its overall and its North American automotive business pre-tax results to be breakeven or profitable in 2011, excluding any special items. The company's expectations are based on the assumption of U.S. industry sales of 12.5 million units in 2009, 14.5 million units in 2010 and 15.5 million units in 2011.

Ford's plan calls for an investment of about $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency during the next seven years.

The company said it is exploring strategic options for its Sweden-based Volvo Car unit, including a possible sale. Since 2007, Ford has sold Aston Martin, Jaguar, Land Rover and the majority of its stake in Mazda.

Chrysler on Tuesday asked the U.S. Congress for an emergency $7 billion bridge loan by the end of 2008. Without the bridge loan, the struggling automaker said its cash could fall below the minimum amount required to run the company in the first quarter of next year.

Chrysler said it was counting on receiving $6 billion of that low-cost funding from the Department of Energy and had factored the loans into its business plan running until 2012.

Chrysler said it will be well positioned to begin repayment of the federal loans in 2012 and that it support of its private equity owner, Cerberus Capital Management LP, to offer the government warrants, common or preferred equity.

The company noted that its CEO Bob Nardelli already receives an annual salary of $1 and gets no health care, insurance or similar benefits from the company.

Meanwhile, Majority Leader Harry Reid said Tuesday he plans to bring legislation to the floor of the Senate on December 8 that can become a bailout bill for U.S. carmakers if lawmakers agree to a rescue plan.

U.S. automakers continue to report sharp decline in vehicle sales Tuesday. GM reported a 41.35 drop in U.S. vehicle sales, mainly due to a significant drop in the market's retail demand and continuing economic uncertainty that has negatively impacted consumer confidence.

The world's largest automaker said it sold 154,877 vehicles in the U.S. in November, down from 263,654 vehicles sold in the same month last year.

Total car sales for November dropped 44.1% year-over-year to 58,786 units, while total truck sales slipped 39.4% to 96,091 units.

"In November we saw the continuation of the dramatic decline in volume for the industry. Every manufacturer is posting awful numbers and we are no exception," said Mark LaNeve, vice president, GM North America Vehicle Sales, Service and Marketing.

For the year to date period, GM's U.S. sales fell 22.1% to 2.76 million vehicles from 3.54 million vehicles in the same period last year. Total car sales for the year to date period declined 14.8% to 1.17 million units from 1.37 million units in the prior year period, while total truck sales dipped 26.8% to 1.59 million units from 2.17 million units last year.

In November, GM North America produced 249,000 vehicles, including 109,000 cars and 140,000 trucks, down 32% from 366,000 vehicles, including 134,000 cars and 232,000 trucks, produced in November last year.

GM lowered its fourth quarter North America production forecast to 835,000 vehicles, including 380,000 cars and 455,000 trucks, from its prior forecast of 875,000 vehicles, including 407,000 cars and 468,000 trucks. In the fourth quarter of last year, GM North America built 1.042 million vehicles, including 358,000 cars and 684,000 trucks.

GM also provided initial North America first quarter production forecast of 600,000 vehicles, including 235,000 cars and 365,000 trucks. In the first-quarter of 2008, GM North America built 885,000 vehicles, including 360,000 cars and 525,000 trucks.

Ford today reported a 30.6% drop in November U.S. sales, hurt by a weakening economy and tight credit conditions.

The Dearborn, Michigan-based automaker, which was displaced by Toyota as No.2 U.S. automaker last year, said it sold 123,222 vehicles in November, down from 177,485 vehicles sold in the same month last year. For October, the automaker had reported a 30.2% drop in vehicle sales.

Total sales of Ford, Lincoln and Mercury vehicles fell 29.8% to 118,818 units in November from 169,258 units a year ago. Volvo sales plunged 46.5% year over year to 4,404 units. In the Ford, Lincoln and Mercury brands, car sales fell 31.5% year over year to 37,272 units in November, while crossover utility sales, which include Ford Escape, Edge and Flex, dipped 33.8% to 22,016 units and SUV sales dropped 39.8% to 10,586 units. Truck and van sales slipped 23.5% to 48,944 units.

Sales of Ford's F-Series truck, America's best selling vehicle for 31 years in a row, fell 18.6% to 37,911 units in November from 46,568 units in the same month last year. November marked the official launch of the all-new F-150, with sales of 5000 units of the all-new 2009 models during the month.

For the year to date period, Ford's total vehicle sales declined 19.7% to 1.85 million units from 2.30 million units in the same period last year.

Total sales of Ford, Lincoln and Mercury vehicles fell 19.2% to 1.78 million units in the year to date period from $2.20 million units last year. Volvo sales for the year to date period dropped 29.7% to 68,149 units.

Additionally, Ford reiterated its plan to produce 430,000 vehicles in the North America region during the fourth quarter.

The company also said it plans to produce 430,000 vehicles in North America in the first quarter of 2009, down from 692,000 vehicles produced in the first quarter of 2008.

Toyota Motor Sales U.S.A., Inc. a division of Toyota Motor Corp. (TM | Quote | Chart | News | PowerRating), reported November sales of 130,307 vehicles, a decrease of 33.9% from a year ago.

The Toyota Division posted November sales of 114,084 units, a decrease of 33.8% from a year earlier. The Lexus Division reported November sales of 16,223 units, down 34.7% from last year.

GM shares closed Tuesday's regular trading session at $4.85, up 26 cents or 5.66% and gained an additional 3 cents in after hours trading. Ford shares closed today's regular trading session at $2.70, up 15 cents or 5.88% and gained an additional 9 cents or 3.33% in after hours trading.

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