Automakers Ask for $22B More
General Motors Corp. (GM) and Chrysler Holding LLC submitted their restructuring plans to the government Tuesday but came to the table with another request: an additional $21.6 billion in government aid. As of the additional $4 billion that had already been scheduled for distribution to GM Tuesday, the company has received a total $14.3 billion through the Treasury Department's Troubled Asset Relief Program. In the restructuring plan submitted Tuesday, GM requested another $16.6 billion for a total government investment of little more than $30 billion. Chrysler is requesting a total $5 billion from the government on top of the $4 granted in December. The company also requested government approval of a strategic alliance with European manufacturer Fiat, which would acquire a substantial ownership in Chrysler and combine the strength of U.S. operations. "Unusually severe and swift industry decline in demand for new vehicles has created [a] shortage of cash from sales," Chrysler officials said in the restructuring plan presentation. "Money is needed urgently to maintain current operations. Rejection of [the] request would result in insolvency and potentially adverse ripple effects throughout the auto industry and U.S. economy." GM said under its restructuring plan, there would be "considerable sacrifices from all stakeholders" as well as significant reductions in compensation for top executives. Chrysler officials said they believed the company could stand along with a strong balance sheet (meaning more government funds) pursued strategic partnerships like the one with Fiat and consolidation efforts. If a combination of these efforts fails, Chrysler said only then it would consider bankruptcy. The task now passes to the panel set up by President Barack Obama to oversee the automakers' restructuring efforts (in lieu of the "car czar" method). "[National Economic Council] director [Larry] Summers and I will be convening the President's Task Force on Autos later this week to analyze the companies' plans and to solicit the full range of input from across the Administration on the restructuring necessary for these companies to achieve viability," Treasury secretary Tim Geithner said in an official statement Tuesday. Read GM's restructuring plan. Read Chrysler's restructuring plan. Write to Diana Golobay at firstname.lastname@example.org. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.