American car manufacturers are determined not to be left behind in the green car race – but feel they need Government assistance if they are to catch and overtake their rivals including Toyota and Honda.
Bob Lutz, vice-chairman of General Motors (GM), has called on the US Government to supply $50bn worth of loans to car manufacturers to assist them in building fuel-efficient cars. He believes that the money is needed to re-tool factories and with the tight credit markets, the automakers will struggle to raise enough capital alone.
Congress has already granted $25bn in loans and currently GM, Ford and Chrysler are lobbying alongside the United Automobile Workers Association for a further $3.75bn.
However, the industry now wants even more money – up to $50bn (£27bn) in order to cope with rising demand for fuel-efficient vehicles as petrol prices continue to escalate.
Financially, GM has been hit hard in recent times with sales slipping and the cost of raw materials rising. It cut white collar staff costs by 20 per cent, ended health insurance for many retired workers, stopped bonuses for the company’s board and even sold and restructured assets. In total, the company has reported losses in the region of $57.5bn in the last 18 months.
Nevertheless, Mr Lutz is hopeful that the company can return to profit by 2010 and has made greener vehicles the focus of its plans. It is considering selling the gas-guzzling Hummer brand and hopes that the Chevy Volt will be the first fully electric car on the market when it is launched in 2010.
