By Kevin Krolicki and John Crawley
DETROIT/WASHINGTON (Reuters) - Distressed U.S. automakers began submitting plans to Congress on Tuesday as they tried to show that they have a viable future and deserve federal aid, while new reports showed that vehicle sales continued their freefall in November.
Ford Motor Co led off with a request for a $9 billion taxpayer-funded line of credit and promised big changes ahead of the government review, lifting Wall Street.
General Motors Corp and Chrysler LLC planned to file their plans later in the afternoon, with lawmakers expecting a deep range of commitments for cutting costs and the mapping of a clear path for the industry to regain its competitive footing.
"We're trying to preserve our way of life and preserve our jobs," Chrysler President Jim Press said in Baltimore, where Chrysler exports 150,000 vehicles annually.
GM, Ford and Chrysler failed two weeks ago to obtain a $25 billion bailout from lawmakers unconvinced that taxpayer money would be well-spent considering the industry's horrible financial prospects.
Democratic leaders had asked them to return this week with retooled plans focusing on viability. Although some insiders believe the chances of aid have improved, no promises were made. The political calculus is uncertain, with Congress not even in session. Democrats hold a slim majority in the Senate and the Bush administration continued on Tuesday to back a plan not supported by many Democrats.
A key barometer will be hearings on Thursday and Friday before the Senate Banking and House Financial Services committees, respectively. Key members of those panels, especially Republicans, sharply criticized Ford, GM, and Chrysler chief executives last month.
This time, the industry will let their plans do most of the talking.
Ford pledged to cancel executive bonuses, eliminate dealers and pursue electric car technology, and it forecast that its North American auto business would break even on a pretax basis or turn a profit in 2011.
"The Ford news has given the market a lift," said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York. "People are ... expecting the stocks to continue their upward trend on hopes of a bailout plan."
Chrysler's Press said Chrysler would seek a bridge loan to survive for between a year and 18 months. He did not divulge an amount, but Chief Executive Bob Nardelli said last month that the company would need about $7 billion.
Press also did not release details of the business plan being submitted to Capitol Hill. However, he said it would include cost-cutting and givebacks from all stakeholders, including suppliers and labor.
Press said bankruptcy is not an option for Chrysler, the smallest of the Detroit Three, and said alliances would be key to the industry's future.
Indications are strong that controlling shareholder Cerberus Capital Management is preparing Chrysler for a break-up or sale, people close to the automaker have said. The company has taken steps that would make it easier to sell individual brands, such as Jeep.
"Just as General Motors is too big to fail, Chrysler is too small to survive on its own," said IHS Global Insight analyst Aaron Bragman.
While many leaders in Washington agree that Detroit needs help, they disagree on how to provide it. Lawmakers and the Bush administration staked out positions on Tuesday in a debate expected to flare at the hearings later this week.
U.S. Commerce Secretary Carlos Gutierrez told Reuters in an interview that the administration backs a Senate bill that would redirect $25 billion to aid automakers from a program already approved to help Detroit make more fuel-efficient vehicles.
But that bill is opposed by many Democrats, who say the $700-billion bank bailout fund, or Troubled Asset Relief Program (TARP), could be used to help the auto industry.
The White House opposes that approach. "TARP is for the financial industry," Gutierrez said. "We would hope that Congress would see it with that clarity."
SALES SLUMP AND GAS GUZZLERS
Ford sales fell nearly 31 percent in November from a year earlier, while GM said it delivered 41 percent fewer vehicles and weakness was seen among non-U.S. companies as well.
The American Honda unit of Japan's Honda Motor Co Ltd said November U.S. car and light truck sales fell 31.6 percent from a year earlier, while Germany's Volkswagen AG posted a 19.2-percent decline.
Critics have charged that many of the Detroit Three's problems are of their own making due to their insistence on building fuel-inefficient SUVs and trucks that Americans in growing numbers no longer want or can no longer afford.
The downturn in business and the call for aid will also affect labor and other stakeholders.
For its part, the UAW is likely to be asked to give up job security guarantees for workers at U.S. plants that close and asked to renegotiate how automakers make payments into a trust fund set to take over retiree health care from 2010.
In addition, GM is almost certain to ask its bondholders to swap some portion of its existing $44 billion debt for a deeply discounted payout and some equity interest in the restructured company, analysts say.
Analysts say Detroit is gambling that plans that show labor, management, creditors and investors sharing in sacrifices at a time of crisis will win the political support that has so far eluded the companies.
"Going in it was pretty clear that the powers that be in Washington were interested in seeing the automakers come back with plans with more concessions," said Dennis Virag of the Ann Arbor, Michigan-based Automotive Consulting Group. "I think they will get the funding."
The cash squeeze is most pressing at GM, which ended September with $16 billion after burning through $6.9 billion in the third quarter. The automaker has said it needs a minimum of $11 billion to operate and warned it could fall short of cash by early next year.
After being pilloried for flying private jets to attend November hearings, the three auto chief executives have made alternate travel plans this time, their companies said.
Ford Chief Executive Alan Mulally is driving a Ford hybrid vehicle from Detroit. GM CEO Rick Wagoner and Chrysler CEO Bob Nardelli will both fly commercial or make other arrangements.
In late afternoon Tuesday trading on the New York Stock Exchange, Ford shares were up about 3.9 percent at $2.65 and GM shares were unchanged at $4.59.
(Writing by Kevin Drawbaugh in Washington. Additional reporting by Jui Chakravorty and Bill Rigby in New York; Doris Frankel in Chicago; and Richard Cowan, Thomas Ferraro in Washington)
