The US government has confirmed that it will provide $17.4bn in loans to troubled carmakers GM and Chrysler.
President George W Bush said allowing the car industry to fail would not be ‘a responsible course of action’, the BBC report. Ford may also seek a share of the loan fund.
The money will be provided from the $700bn financial bailout fund, intended to help failing banks. General Motors will receive $9.4bn and Chrysler $4bn before the end of the year with further cash injections planned for next year.
The announcement could not come a moment too soon, as GM and Chrysler both warned that they run out of cash within a matter of weeks.
President-elect Barack Obama welcomed the news but warned the manufacturers not to “squander this chance to reform bad management practices”.
Meanwhile back in Blighty, the government is discussing plans to raise £667m in loans for Jaguar Land Rover and other UK manufacturers.
Business Secretary, Peter Mandelson said he was considering offering some ‘bridging help’ to Jaguar Land Rover but expected that parent company Tata, would take primary responsibility for the funding of the group.
The Society of Motor Manufacturers and Traders’ (SMMT) chief executive, Paul Everitt warned that despite the need for urgent action, “this is about the broader economy and how you go about maintaining industrial capability for the future.”
Adding “This is an industry-wide issue, Jaguar Land Rover is a fantastic company . . . but if [the government] only do something for Jaguar Land Rover, it’s not going to help us.” (Source: FT.com)
In Canada, Prime Minister Stephen Harper announced C$4bn in emergency loans to help ease the pressure off local subsidiaries of GM and Chrysler and automotive part suppliers.
