GM tries to remain upbeat in crisis

By Michelle Fleury
Business reporter, BBC News, Detroit auto show

The heads of the major car firms asked for a bail-out from Congress

More than 100 General Motors (GM) employees, dealers and retirees cheered and waved signs that said "Here to Stay" as the car maker showed off its latest offerings at the start of the 2009 Detroit auto show.

Even though it was carefully stage managed, the message was simple: GM plans to pull through its current troubles.

Whether after that shrinkage there is enough room for three US-based [carmakers], we'll have to see GM boss Rick Wagoner

Like its rival Chrysler, GM got a helping hand from the US taxpayer in the form of a loan.

And its chief executive Rick Wagoner says the money is being used to "keep the business running during this difficult time".

The loan is enough to keep GM going until Barack Obama is into the first few months of his presidency.

Mr Wagoner would not comment on whether the struggling automaker would go back to Congress to ask for more money on top of the $13.4bn (£9bn) it has already been pledged.

Instead he was cautious, saying only that "at this point the funding that we've got is going to be adequate".

Collapsing demand

GM says that its sales have fallen sharply and inventories are high

It is struggling amid an economic meltdown that has curbed consumers appetites for new vehicles.

That made 2008 the worst year for new car and truck sales since 1992.

And Mr Wagoner is not upbeat for his firm's short-term prospects.

"Eventually we'll get some recovery, but for now we have to plan for low industry volumes and for cutting out our costs and capacity to be able to manage against that," he says.

To try to shift the focus away from its survival plan and back to its carmaking - GM unveiled several new models, including an electric Cadillac concept car that uses the same technology as the Chevrolet Volt.

During the presentation, Bob Lutz, GM's vice chairman, told the audience that he once accidentally ran out of power 12 miles from his house and had to call on a friend to come and pick him up.

GM is hoping its strength around the world, and its actions at home, will give it enough power to get through this crisis.

Union fears

Further job losses are causing despair for the industry's workers

Just outside, members of the United Auto Workers union and their supporters held a small rally.

Among those braving the cold was Jim Reed.

He lost his job as a skilled tradesmen at Chrysler three years ago and with the recession deepening, he worries things could get worse.

"If the economy is bad there's nobody going to buy a car because there's nobody working, and it's one vicious circle," he said.

There is also anger at the extra concessions union members are being asked to make.

In exchange for receiving a government loan, GM and Chrysler must re-negotiate their union contracts by 17 February.

But even if they can reach agreement, that may not be enough to guarantee the future of Detroit's big automakers.

Last hopes

Back inside the show, among the gleaming pieces of metal that represent the industry's hopes for the future, motor analyst David Cole warned this could be the last show in which all of the "Big Three" take part.

"There is a possibility that a company like Chrysler will be absorbed or broken up, but we just don't know," he said.

Unlike General Motors and Ford, Chrysler doesn't have an international base to fall back on.

And with sales falling in the US, there simply is not the need for so many cars to be made.

To adjust to this new reality will require a major overhaul of the industry, believes GM boss Rick Wagoner.

"Whether after that shrinkage there is enough room for three US-based [carmakers], we'll have to see," he said.