DETROIT The Big 3 Detroit-based automakers are seeking about $25 billion in federal loans as they struggle to ride out a steep downturn in U.S. auto sales, The Wall Street Journal reported on Friday.
Lobbyists for the U.S. automakers -- General Motors Corp (GM.N), Ford Motor Co (F.N) and Chrysler LLC -- briefed White House officials, as well as U.S. Rep. John Dingell and other Michigan Democrats, on a possible bailout and plan to unveil the proposal after Labor Day, according to the report.
The plan is for the government to lend some $25 billion to the automakers in the first year at an interest rate of 4.5 percent, or about one-third what the companies are currently paying to borrow, the report said.
Under the proposal, the government would have the option of deferring any payment at all for up to five years, the article said.
Representatives at GM, Ford and Chrysler were not immediately available for comment.
In a letter to U.S. Senate Majority Leader Harry Reid and House of Representatives Speaker Nancy Pelosi, Michigan congressmen sought up to $25 billion in low-interest credit for U.S. automakers and parts suppliers from the federal government.
"This incentive program will make it more economically feasible for U.S. auto manufacturers and part suppliers to retool their facilities by providing low-interest credit," said the letter, dated August 1.
"The federal government must be a strong partner in the investment in the advanced technologies," the letter said.
GM Chief Executive Rick Wagoner said on Thursday that the top U.S. automaker was seeking federal loan guarantees for itself and its suppliers. He declined to say how much the company was looking to borrow under such a program if it were approved by the government.
The embattled automakers are closing truck plants and laying off thousands of workers in response to changing consumer tastes and to conserve cash at a time when U.S. vehicle sales are hovering at decade lows. At the same time, the companies are ramping up investment in more fuel-efficient small cars, hybrids and electric vehicles in response to record gas prices.
The Detroit Free Press reported earlier this month that executives at GM, Ford and Chrysler met and agreed that they would need about $40 billion to ride out their current troubles, and the way out of the losing streak would be a government bailout.
(Reporting by Soyoung Kim; Editing by Lisa Von Ahn)