Automobile Industry

For a year, General Motors Corp. has been singing the praises of the new Chevrolet Malibu, voted the 2008 North American Car of the Year by auto writers and billed by GM Chairman Rick Wagoner as "the finest midsized car this country offers." To promote its launch, GM spent nearly $250 million on advertising, dubbing it "the car you can't ignore." Meanwhile, GM has been quietly making and selling a similarly sized and priced sedan: the Chevrolet Impala.

As General Motors Corp. and Chrysler race to submit plans today for assuring their long-term survival, President Obama's decision to have his top economic advisors bird-dog the auto industry bailout shows how high the stakes have become -- for Detroit, for Washington and for the nation's economy. With job losses escalating and the just-passed $787-billion economic stimulus bill only today being signed into law, the last thing the president or the economy needs is for one or more of the U.S.

General Motors Corp. and Chrysler said Tuesday that they needed nearly $22 billion more in government loans to avoid financial ruin, further darkening a day of global financial turmoil. The struggling Detroit automakers said in business plans submitted to the Treasury Department that they needed a total of $39 billion in taxpayer-funded loans by 2012 -- and perhaps billions more in following years -- to help them survive plunging auto sales amid the global recession.

Pay a lot now, or much more later. That's the choice General Motors Corp. and Chrysler presented Washington this week as they requested $22 billion in additional bailout money -- and warned that the tab could be many times that should the companies go bankrupt. Despite historic sales declines, critics contend that the automakers' arguments are simply posturing to squeeze more money out of the government and to make billion-dollar cash infusions seem more palatable.

The Obama administration plans to raise fuel efficiency standards by two miles per gallon to a 27.3 average mpg for new cars and trucks in the 2011 model year, marking the first increase in passenger car standards in more than two decades. Under the changes, which are slightly less stringent than those proposed by the George W. Bush administration, new passenger cars will need to meet 30.2 mpg for the 2011 model year; and pickup trucks, SUVs and minivans will need to reach 24.

Honda Motor Co. is offering voluntary buyouts, cutting workers' pay and imposing 13 non-production days at its North American plants to reduce its inventory this summer by 62,000 vehicles. Honda spokesman Ron Lietzke said Tuesday that the buyouts would be offered to most of the Japanese automaker's 35,600 employees in the U.S., Canada and Mexico. Enhanced retirement packages are also being offered, he said.

So what'll it take to get drivers behind the wheel of an American car? That's the $20,000 (or more) question after President Obama leaned on Detroit this week to start churning out leaner, meaner and hybrid-happy vehicles as the antidote to plunging sales and financial catastrophe. Judging from conversations with several dozen drivers at gas stations around town Tuesday, most people want the U.S. auto industry to succeed.

The sea of new cars, 57,000 of them, stretches for acres along the Port of Baltimore. They are imports just in from foreign shores and exports waiting to ship out -- Chryslers and Subarus, Fords and Hyundais, Mercedes-Benzes and Kias. But the customers who once bought them by the millions have largely vanished, and so the cars continue to pile up, so many that some are now stored at the nearby airport.

President Obama said the government was speeding up its purchase of 17,600 new U.S.-made cars for the government fleet by June 1. The purchases from General Motors Corp., Chrysler and Ford Motor Co. are being made from the $787-billion stimulus package to increase demand for U.S. auto companies during these difficult economic times, the White House said Thursday.

Ford Motor Co. has long maintained that a bankruptcy filing by one of its Detroit competitors could have disastrous effects on it as well. Wall Street seems to think otherwise. With bankruptcy rumors growing ever louder, General Motors Corp. shares have struggled to reach $2 in recent months, falling 33 cents, or 17%, to $1.71 on Monday after a Standard & Poor's downgrade drove its bonds to record lows. Ford, meanwhile, has been steadily climbing, rising 2 cents to $4.26 on Monday.