Obama team working hard on GM, auto woes: White House

A U.S. flag flies in front of a broken sign at a General Motors dealer in Denver in this February 26, 2009 file photo.

WASHINGTON (Reuters) - President Barack Obama's administration is working "around the clock" to form an approach to the challenges facing General Motors Corp and the auto industry, a White House spokeswoman said on Thursday.

"The administration is very mindful of the challenges in the auto sector," the spokeswoman said.

"Our team is working around the clock to develop the most thoughtful approach possible to the situation."

GM said earlier its auditors had raised "substantial doubt" about its ability to survive outside bankruptcy if it fails to stem its losses and stop burning cash.

The warning from the struggling U.S. automaker had been expected, but it underscored the stakes for GM as it seeks up to $30 billion in U.S. government aid to restructure outside a court-supervised bankruptcy process.

An Obama administration official said the update was not a surprise in Washington.

"This meets the expectation we have had for weeks," the official said.

"There is a high level of recognition of the urgency of the situation which is why we're in the process of working through restructuring plans with the companies."

The Obama administration has formed a task force, which is overseeing the restructuring of General Motors and Chrysler. It must decide by March 31 if the companies can be commercially viable.

The group, led by White House and Treasury Department officials, is meeting on Thursday with bondholders as part of crucial debt reduction efforts at the companies.

The group has met with company executives and still plans to meet with union officials.

Obama has said the United States cannot walk away from the struggling auto industry, while the government should not protect them from "their own bad practices."

(Reporting by Jeff Mason; editing by Mohammad Zargham)