New loans bid by US auto giants

The Big Three names of the American car industry will lay out plans to the US Congress today to secure more than $25bn (€19bn) of loans to help them survive the worst car sales environment in 25 years.

The plans will be much more detailed than when the three chief executive officers for General Motors (GM), Chrysler and Ford first appeared before Congress last month and were told to try again.

All three Detroit-based car-makers will appear before congressional committees on Thursday and Friday after GM and Chrysler said they were perilously low on cash and needed $25bn (€19bn) of government loans to survive the recession.

Today, Ford – the first to release its plan – said an electric car and profitability would be the hallmarks of its proposals.

The firm will tell Congress that it plans to return to a pre-tax profit or break even in 2011.

Ford CEO Alan Mulally said he would work for $1 (€.78)per year if the firm has to take any government loan money.

He said Ford would seek$9bn (€7bn) in government loans but may not need them. The firm has said it has enough cash to make it through 2009 without assistance.

The company will also cancel all management employees’ 2009 bonuses and will not pay any merit increases for its North American salaried employees next year.

Other cost-cutting actions include a plan to sell Ford’s five corporate aircraft, the company said.

The three CEOs were criticised for travelling to the original congressional hearings in private planes to ask for funds to survive the economic crisis.

Mr Mulally said Ford would emphasise its cost-cutting efforts with the United Auto Workers union at the hearings and would give much more detail than when they met last month.

The company added it would also accelerate plans to roll out electric vehicles, which are planned for 2010 and include the Transit Connect small van and a car the size of the Ford Focus compact.

Mr Mulally said he would encourage others in the car industry to join forces to develop new battery technologies in the US for future electric cars.

Ford’s plans call for an investment of up to €14bn (€10bn) to improve fuel efficiency over the next seven years. The company added it would improve the overall efficiency of its fleet by an average of 14% next year.

The company’s plans to achieve profitability or break even by 2011 were based on industry-wide sales estimates of 12.5 million units in 2009, 14.5 million in 2010 and 15.5 million in 2011.

The seasonally-adjusted annual sales rate dropped to 10.6 million vehicles in October.