Page last updated at 01:59 GMT, Friday, 5 December 2008

'We made mistakes' says GM boss

The bosses of the Detroit Three carmakers justify their request for $34bn

General Motors boss Rick Wagoner and his Ford counterpart Alan Mulally have admitted making mistakes in the way that they have run their businesses.

They were in Washington with Chrysler boss Bob Nardelli, and were explaining to a Senate committee why they wanted $34bn (23bn; 26.6bn euros) in aid.

All three also blamed the US recession for decimating sales and leaving their companies in desperate need of cash.

But senators raised doubts about whether the money would be enough.

"No matter how important the autos are to our economy, we don't want to put good money after bad," said President George W Bush in a separate interview with US media.

"We are here today because we made mistakes, and because circumstances beyond our control pushed us to the brink," said Mr Wagoner, referring to the global economic downturn.

Mr Nardelli said that Chrysler had lost $16bn of revenue as a result of plunging car sales this year alone.

Mr Mulally admitted that Ford had "produced more vehicles than our customers wanted, then slashed prices".

Wider implications

In his opening comments, chairman of the Senate Banking Committee, Democrat Christopher Dodd, laid bare the severity of the situation.

Letting Chrysler, General Motors or Ford fail would be like playing "Russian roulette with the entire economy", he said.

Democrat Christopher Dodd warns that 'inaction is no solution'

Failure would affect "almost every sector of the economy", he added.

Mark Zandi, economist with Moody's, also testifying to the committee as an independent expert, said bankruptcy at this time would be "cataclysmic" for the US economy.

But he threw a spanner into the works by telling the committee that $34bn would not be enough to save the carmakers.

They might need as much as $75bn to $125bn, he said.

This sparked concerns that the so-called Detroit Three would simply return to Washington, cap in hand, when the money ran out.

All three bosses said their requests were realistic and based on conservative sales estimates.

Hard sell

The car company bosses said that their plan would also focus heavily on boosting investments in more fuel-efficient, environmentally friendly cars.

US policymakers have already approved $25bn in cash handouts to the car companies to help them develop greener vehicles.

All three of the bosses were at pains to explain how they had driven to the hearing in hybrid cars made by their respective companies. They had been heavily criticised two weeks ago for flying to Washington in separate private jets for their last hearing in Congress.

Some progress was made when senators floated the idea of a board to oversee the handling of any potential loans. This would impose strict conditions and could lead to fund being withheld should the conditions not be met.

All three chief executives agreed in principle to defer to such a board.

Loan proposals

Earlier this week, Chrysler, Ford and General Motors submitted their proposals to Congress for the multi-billion-dollar loans upon which their survival could depend.

Slashing costs, reducing levels of debt and investing in greener technologies form the centre-piece of each proposal.

The chief executives of Ford and GM even offered to work for $1 a year if Congress approves the emergency aid.

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