GM, Chrysler: Back to the Trough: Viability Plans presented

Both General Motors and Chrysler presented Viability Plans to the U.S. Treasury Department late yesterday as required by provisions of the federal low-interest loan agreement finalized at the end of 2008. In addition to outlining short and long term plans to right their respective financial ships in the face of the continuing banking/credit crisis and resultant plunge in auto sales, both companies now are asking for more funding.

A request from GM for an additonal $16.6bn is on the table. That would bring GM's total tab in actual loans and revolving credit line to an even $30bn.

Chrysler is requesting an additional $2bn to go with the $4bn received to date plus the $3bn credit line for a total obligation of $9bn.

Tuesday's submission of Viability Plans by GM and Chrysler fulfilled a requirement authorizing distribution of the remainder of the opening round of funding. The newly formed cabinet-level Presidential Task Force on Autos plus Treasury officials are now beginning a detailed review of the reports and may request further information and clarifications.

The Obama administration and its auto task force have stated that "more will be required from everyone involved - creditors, suppliers, dealers, labor and auto executives themselves - to ensure the viability of these companies going forward." That pretty much sums up the major hurdles. On March 31, the task force will rule on whether GM and Chrysler have demonstrated they can stay afloat over the long haul - i.e., have a solid chance of making good on its federal loan obligations. A negative report will no doubt result in forced bankruptsy.

Ford continues to eschew the federal loan option.