Checkout the latest Reuters report!
Nardelli wants the bailout loan and still a merger with a domestic company or overseas Alliances!
Chrysler urges bailout, Washington split
REUTERS By Soyoung Kim
DETROIT (Reuters) - Goldman Sachs suspended its rating on General Motors Corp on Thursday and said the automaker needs at least $22 billion in federal aid, while Chrysler said it would be "very difficult to survive" without government support.
But U.S. lawmakers remained deeply split over whether to bail out the U.S. auto industry, and U.S. Treasury Secretary Henry Paulson said any federal aid for the U.S. automakers must ensure their long-term viability.
Chrysler LLC Chief Executive Bob Nardelli said Chrysler was losing money due to a decline in U.S. auto sales to 25-year lows, and said Chrysler would seek federal money for its liquidity and restructuring needs.
In one of his few appearances since merger talks between GM and Chrysler broke off, Nardelli said Chrysler must have broader ties with U.S. automakers or alliances with overseas competitors to ride out the industry downturn.
The auto industry has stepped up lobbying efforts to get government support and the heads of the three U.S.-based automakers are expected to testify next week before a congressional committee considering aid for the industry.
The Bush administration said the government could quickly disburse $25 billion in loans already approved by Congress. However, the administration has responded coolly to an aid plan being shaped by Democrats, which includes using part of the $700 billion financial rescue package to provide additional liquidity for the auto industry.
U.S. President-elect Barack Obama is considering appointing someone to lead efforts to help the auto industry return to health, an Obama aide said on Thursday.
The sales slide that began in the United States has spread to the rest of the world because of the credit crisis. On Thursday, data showed that auto sales in Europe fell 15 percent in October from a year ago.
Goldman Sachs forecast that GM would end 2008 with $12.5 billion in cash, within the $11 billion to $14 billion minimum range GM has said it needs to operate, requiring the No. 1 U.S. automaker to seek government assistance.
GM's shares, which hit a 65-year low this week, closed down 13 cents, or 4.22 percent, at $2.95, as investors awaited news on any government rescue. Goldman Sachs said a new program to support the auto industry was most likely, though the timing was uncertain.
Also on Thursday, JPMorgan cut its GM rating to "neutral" from "overweight" and said the automaker needs "something immediately" to make it through the end of the year.
JPMorgan, which also slashed its target price for GM stock to $1.84 from $3.08, said a government bailout could easily reach $30 billion unless GM reforms its vast liability structure.
The warnings come in the wake of GM's deeper-than-expected third-quarter loss and cash burn, announced on Friday.
BAILOUT MEASURES DEBATED
Analysts have warned that any government assistance, which they say is imperative for GM to survive through early 2009, would come at a significant cost to existing shareholders.
Democratic leaders have called for emergency aid for the auto industry in addition to $25 billion of low-interest loans previously approved to support capital investment to meet new fuel economy mandates.
Lawmakers will hold a hearing next week to consider a bill to give another $25 billion in federal loans to U.S. auto manufacturers, possibly using part of the $700 billion financial market rescue law enacted last month.
But the White House said on Thursday it was not the intent of Congress to use the financial rescue package to help ailing U.S. automakers, while U.S. Commerce Secretary Carlos Gutierrez told Reuters that opening the financial bailout fund to one industry was "not a good idea.
House Republican leader John Boehner said spending billions on a bailout with no promises of reforming the companies was "neither fair to taxpayers nor sound fiscal policy."
GM, Ford Motor Co and Chrysler have been burning cash as the global credit crisis accelerated the decline in U.S. auto sales and placed severe limits on corporate and consumer borrowing.
GM ended September with $16.2 billion in cash, down from $21 billion at the end of the second quarter.
The downturn also has affected the plans of non-U.S.-based automakers in the United States.
The Nikkei newspaper reported that Toyota Motor Corp was considering delaying the start of production at its new Mississippi plant until 2011 or later, from 2010.
Standard & Poor's lowered credit ratings on two North American auto parts suppliers and placed the ratings on 14 other suppliers on negative watch, citing their exposure to the three U.S. automakers.
"The credit watch listings reflect the increasingly beleaguered state of the Michigan-based automakers and the multiple scenarios -- almost all of them negative -- that could play out over the next few weeks or months," S&P said in a report released on Thursday.
The agency lowered credit ratings on Dana Holding Corp to B+ from BB- and Magna International Inc to A- from A.
(Additional reporting by Kevin Krolicki in Palm Desert, California, Doug Palmer in Washington, Caren Bohan in Chicago, Christiaan Hetzner in Frankfurt; Editing by Gary Hill)
Stupid Daily News---Political Roast
No comments:
Post a Comment