Washington, March 30, President Barack Obama Monday took control of the troubled US auto industry, giving General Motors 60 days and Chrysler 30 days to make a final push toward proving they can run viable businesses.
Announcing his rescue plans for the two ailing automakers, which have already been given $17.4 billion to keep them running, he said the government would try to help the companies, but prescribed tough conditions holding out the threat of a “structured bankruptcy”.
“We cannot, we must not, and we will not let our auto industry simply vanish,” Obama said from the White House. “This industry is, like no other, an emblem of the American spirit; a once and future symbol of America’s success.”
The formal announcement of government plans came after White House forced out General Motors Corp’s chief executive Rick Wagoner and pushed Chrysler LLC toward a merger suggesting the two had failed in their own turnaround efforts.
The federal government will provide operating funds for both automakers for several weeks, during which time the companies will have to undergo significant restructuring, administration officials said late Sunday night.
At GM, part of that restructuring began early Monday with Wagoner, a 32-year veteran of the company who has served in the top post since 2000, announcing his resignation which he said came at the request of the Obama administration.
“On Friday I was in Washington for a meeting with administration officials. In the course of that meeting, they requested that I ’step aside’ as CEO of GM, and so I have,” Wagoner said in a statement posted to the GM website.
Wagoner will be replaced by GM’s chief operating officer, Fritz Henderson. Kent Kresa will serve as interim chairman.
GM will get 60 days and Chrysler 30 days in which to make a final push toward proving they can run viable businesses. If Chrysler succeeds, it will receive a $6 billion loan. In GM’s case, the officials would not specify how much money the carmaker might receive.
In the case of both companies, the officials said, stakeholders - and particularly debt holders in both companies - had not done enough to relieve the automakers of ongoing financial burdens.
In order to help assuage consumer fears about buying cars from these companies as they restructure, the government is also setting aside funds to back up warranties on vehicles GM and Chrysler sell.
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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.