CORRECTED - Overseas automakers quiet on U.S. loans

(Corrects to say Volkswagen sedan options include gasoline, diesel and hybrid technology)

By John Crawley

WASHINGTON, Sept 15 (Reuters) - Distressed U.S.-based automakers are crossing their fingers the government will extend $25 billion in loans to help them produce more fuel efficient vehicles, while major foreign rivals have expressed little interest publicly in the financing.

Although foreign car companies with a mature U.S. manufacturing presence like Nissan Motor Co (7201.T) and Toyota Motor Corp (7203.T) might qualify for loans to accelerate development of advanced fuel saving technologies, the criteria most strongly favor General Motors Corp (GM.N), Ford Motor Co (F.N) and Chrysler LLC and their suppliers.

David Cole, chairman of the Center for Automotive Research, said all automakers are feeling some pain but overseas companies are in better shape. He also believes industry leading Japanese automakers are unlikely to use the loan facility for political reasons.

They still import two million vehicles annually and are sensitive to any perception they might contribute to the failure of an iconic U.S. brand even though Toyota has already surpassed GM in global sales, Cole said.

"If they don't need it, they're not going to ask for it. If it would separate them from going over the falls, that would be a different story," he said.

Up to $25 billion in low-interest loans were included in last year's energy law, but Congress must approve $3.8 billion in funding to activate the financing.

Congressional Democrats hope to include the money in must-pass spending legislation that is expected to move through the House of Representatives and Senate next week. Detroit has also asked lawmakers to relax eligibility requirements to give companies more flexibility when trying to qualify for help.

The loan program gives preference to companies with plants at least 20 years old, a clear advantage for Detroit. GM, Ford and Chrysler all face prohibitive borrowing costs.

The final eligibility rules will be written by the Energy Department and the Bush administration has said it would be careful not to structure the program as a bailout for GM, Ford and Chrysler.

Nevertheless, the high cost of developing new hybrids and more powerful battery systems is widely seen as a hurdle, even for the Japanese who lead the world in both categories.

GM Chief Executive Rick Wagoner told U.S. Senate lawmakers last week the drive for 40 percent greater fuel efficiency by 2020, mandated in the 2007 energy law, would require massive capital investment.

Detroit needs help to retool its infrastructure while some foreign auto companies are already investing in future U.S. facilities.

Toyota said it is not lobbying on the loan issue but did not foreclose it as an option, depending on the final eligibility rules.

"We think it should be equitable and open to everyone who is building in the United States," company spokeswoman Martha Voss said.