According to the report, Obama is also prepared to let Chrysler LLC, the third-largest U.S. automaker, court bankruptcy and be sold off if it cannot reach an alliance with Italy's Fiat SpA.
GM is fighting hard for survival, thanks to the global economic slump and its own follies. The company has received $13.4 billion in federal loans from the U.S. Treasury, as part of Troubled Asset Relief Program, and has sought another $16.6 billion. While receiving the aid, the company was asked to present plans of long-term viability by mid-February. The Obama Administration said Monday that the restructuring plans offered by GM and Chrysler do not go far enough to warrant additional government assistance.
Rather, the embattled automakers will be allowed a limited period of time to "fundamentally restructure," Obama said and added that an organized bankruptcy could be the best option for GM and Chrysler. The president noted that the government has no interest in running GM and would instead give the company 60 days to restructure.
Sunday, Rick Wagoner stepped down as GM chairman and chief executive officer with immediate effect. Fritz Henderson, the company's president and chief operating officer, succeeded Wagoner as chief executive officer.
The new CEO, Fritz Henderson, said Tuesday that more of the automaker's plants could close as part of the company's effort to meet new, tougher requirements for government aid. This is in addition to the five plants the company said it would shut down when it submitted a restructuring plan to the government last month.
Speaking at his first news conference as CEO, Henderson also said if agreements can't be reached with the unions, bondholders and other parties, a decision on bankruptcy would be made in consolation with the Obama auto task force.
In its effort to spur sales, GM Tuesday unveiled its "GM Total Confidence" plan, whereby customers can get payment protection for the first 24 months of ownership. GM will provide payment protection on vehicle loans or leases of up to nine payments of $500 a month for customers who lose jobs for economic reasons. The offer is available for vehicles purchased April 1 through April 30. U.S. auto sales are at their lowest levels in at least 27 years under the pressure of tight credit and weak consumer confidence.
Meanwhile, German Chancellor Angela Merkel paid a 90-minute visit to the Opel Insignia production site, the European subsidiary of GM, in Rsselsheim on Tuesday and reportedly gave assurances that any investor in Opel would have state support.
In March, the European unit of the automaker had delivered a plan to save Opel brand and said the confidential plan delivered to the German government would make Opel profitable by 2011. The three point public outline for Opel's survival included receiving 3.3 billion euros in credit or credit guarantees from the government.
General Motors (GM) and  will receive  from the government of Canada and the provincial government of Ontario, however no more will be forthcoming from either Canadian or US governments unless the companies can reinvent themselves.

"This is a regrettable but necessary step to protect the Canadian economy.  We are doing this on the assumption that we obviously cannot afford either in the United States or Canada a catastrophic short-term collapse." said Stephen Harper, .

"We cannot, we must not, and we will not let our auto industry simply vanish.  This industry is, like no other, an emblem of the American spirit; a once and future symbol of America's success," said Barack Obama, . "These companies - and this industry - must ultimately stand on their own, not as wards of the state." 

Chrysler will receive 1 billion and may in fact be eligible for as much as CA$4 billion. If Chrysler succeeds in the next 30 days with a restructuring plan it would be eligible for a US$6 billion loan. A part of Chrysler's restructuring plan must include a partnership with  within 30 days to appease the US administration. Fiat is a supplier of smaller  vehicles, and the merger will help Chrysler to be viable in the North American market. A Chrysler court  would inevitably lead to it being sold off.

As a part of Chrysler's restructuring plans, Tom LaSorda, the president of Chrysler announced that Canadian operations would fold if it does not receive both the US commitment of $2.3 billion of aid and a new  CAW contract to reduce all-in costs by CA$19 per hour.  As a result of this announcement Chrysler's auto sales volume in Canada dropped 23% compared to March of 2008.

GM has until the end of May to restructure its company to receive up to CA$7.5 billion. As part of the companies restructuring, General Motor’s chief executive Rick Wagoner was replaced Sunday with Fritz Henderson, the current chief operating officer. Henderson spoke out on Tuesday that GM has submitted a restructuring plan which would close five plants, and this may be increased to meet the requirements for financial aid.  He is in full compliance with Obama's auto task force to seek bankruptcy if GM cannot negotiate with their unions, bondholders and others.

GM recently brought forward the ''"GM Total Confidence"'' program providing consumer purchase protection for customers who lose their job for economic reasons within the first two years from purchase. As a result of Chrysler's restructuring announcement in Canada, GM's Canadian vehicle sales volume fell only 17.3% compared to 2008, an increase from the previous month.

GM must reduce some of its  which include its pensions and union health care costs. A part of GM's ailments arose from investing in supplying truck and  during an economy of high gas prices when consumers were demanding fuel efficient vehicles.
2009  
, , is hoping that the CAW will support the restructuring process and re-negotiate their agreement. Whereas a  negotiator has said, “I don't see how the UAW will do anything until they see what the bondholders will give up."
 
The Obama administration is looking toward bankruptcy proceedings for the automakers, "as a mechanism to help them restructure quickly and emerge stronger. It will quickly clear away old debts that are weighing them down.  What we are asking is difficult. It will require hard choices by companies. It will require unions and workers who have already made painful concessions to make even more. It will require creditors to recognise that they cannot hold out for the prospect of endless government bailouts." said Obama.

The auto parts suppliers and IT software exporters in India have already been affected by the declining auto sales. GM and Chrysler software contracts provide US$300 to 350 million a year to vendors in India. As well these two major automakers usually award US$1 billion contracts to auto parts suppliers. "We are worried and closely watching the developments in the US to gauge the impact. The decline in auto sales in the US has already hit the order books of Indian suppliers," said a Delhi auto parts supplier. 

"Going forward, the industry will undoubtedly be smaller, but if our efforts are successful it will be viable and it will support good jobs for Canadians," said Clements. 

,  Congresswoman put forward the CARS act which provides a US$3,000 to 5,000 incentive for those who trade in their vehicle for a fuel-efficient car. "It clearly stimulates the economy, and it gets the consumer into the showroom and gets them buying again. But importantly — and this is what I particularly like about it — it really helps the environment quite a bit in two respects." said William Clay Ford Jr., executive chairman of Ford Motor Co.

 has not come forward with requests for assistance.

Since December GM and Chrysler have received US$17.4 billion government loans.