The Baltimore Sun

WASHINGTON - In their quest for a financial lifeline from Washington, U.S. automakers filed detailed plans yesterday for reinventing themselves for a leaner, greener future, but what might do more to win over a skeptical Congress was another round of disastrous news from the nation's car dealers.

New car and truck sales plunged 37 percent in November, the latest in a string of dismal sales reports stretching back more than a year. And evidence that the bottom is falling out of an industry with supplier and dealer networks that stretch across the country could bring the economic and political costs of a collapse home to uncertain members of the House and Senate.

The new dealer data, combined with Monday's official certification that the United States has been in recession since last December, "will embolden Congress to act quickly" to provide the billions of dollars in emergency loans sought by General Motors Corp., Ford Motor Co. and Chrysler LLC, predicted Thomas Mann, a senior fellow at the Brookings Institution.

"If I'm the Big Three, I'm going to Washington and pointing out the sales numbers," said Wes Brown, an auto industry specialist at the marketing firm Iceology.

The reform plans filed yesterday were demanded by congressional leaders after GM, Ford and Chrysler chief executives performed disastrously in pleading for help during hearings last month. Congress also demanded to know how much the restructuring plans could wind up costing, which caused the total aid request from the companies to grow to $34 billion from the $25 billion they had originally sought.

In return, GM pledged to take draconian steps to put its house in order: Company executives would take a 20 percent pay cut, CEO Rick Wagoner and members of the board would serve for $1 a year, and the company would slim down to four lines - Chevy, Buick, GMC and Cadillac - while shedding Saturn and its Saab imports.

Ford and Chrysler promised to speed deployment of new, fuel-efficient and environmentally friendly vehicles and take other steps. Their chief executives also promised to work for $1 a year if the companies got government help.

GM asked for up to $18 billion, Ford asked for up to $9 billion and Chrysler asked for up to $7 billion.

GM said its situation was dire: It said it needed $4 billion immediately and another $4 billion in January to avoid bankruptcy.

"Absent such assistance, the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the U.S. economy," the company said.

Chrysler said it needed $7 billion by Dec. 31 to avert potential bankruptcy. Ford, the most financially stable of the Big Three, said it could weather the recession and at least break even by 2011, unless economic conditions worsen.

In case things do get worse, Ford asked Congress to create a $9 billion line of credit that the company could tap as needed. But Ford officials stressed the interdependent nature of the U.S. auto industry in arguing that it is critical for Congress to make emergency loans available to GM and Chrysler.

"We have 80 percent overlap in supplier networks. Nearly 25 percent of Ford's top dealers also own GM and Chrysler franchises. That is why the collapse of one or both of our domestic competitors would also threaten Ford," the company told Congress.

The plans contained admissions of past mistakes and a litany of pledges to take steps that Detroit's critics have been proposing for years.

Ford, for example, said it would increase production of its fuel-efficient Focus sedan to more than 1 million a year. GM promised that 22 of the 24 new vehicles it will unveil between 2009 and 2012 would be more fuel-efficient cars and crossovers.

Chrysler's plan had the least detail. The company said that 73 percent of its 2009 vehicles will get more miles per gallon than previous models and that it would introduce a fully electric vehicle in 2010.

House Speaker Nancy Pelosi, a California Democrat, said the plans would be reviewed by congressional committees, the Federal Reserve, the Government Accountability Office and Bush administration officials.

"We want to see a commitment to the future. We want to see a restructuring of the approach that they have - a new business model," she told reporters.

She predicted that Congress and the White House would act, saying that Congress would add its own restructuring provisions if necessary.

"Everybody is disadvantaged by bankruptcy, including our economy, so that's not an option," she said.

Hearings begin tomorrow before the Senate banking committee, followed by the House Financial Services Committee on Friday. A vote could come next week, but a showdown looms with President George W. Bush.

Reflecting the sense of crisis, the United Autoworkers will hold an emergency meeting today in Detroit to discuss the situation.

General Motors' sales of cars and light trucks fell 42 percent last month, Ford's dropped 31 percent, and Chrysler was down 47 percent. GM is down 22 percent for the year so far, Ford is down 19 percent and Chrysler is off 28 percent, according to Autodata Corp.

Foreign automakers also were struggling. Toyota's sales were down 34 percent last month, and Honda was down 31 percent.

With 746,789 vehicles sold, November was the worst sales month since January 1982, according to Autodata Corp. GM, however, painted the poor results with an even darker brush. According to GM's chief sales analyst, Mike DiGiovanni, the month's sales, adjusted on a per capita basis to reflect population growth, were the worst since 1958.

Sen. Carl Levin, a Michigan Democrat, said the new figures show that the entire auto industry is struggling and predicted that it would improve the chances of congressional aid for Detroit's Big Three.

"Everybody around the world is in essentially the same situation ... and other countries are clearly coming to the support of their auto industries because of the importance of these jobs to their economies," Levin said.

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