Washington -- The Obama auto task force is preparing to loan General Motors Corp. about $5 billion in additional federal short-term aid, and Chrysler LLC $500 million, an Obama administration official familiar with the matter said Thursday.
The disclosure assigns a dollar amount to the pledge of continued short-term support issued late last month by the administration, after it rejected GM's and Chrysler's restructuring plans and requests for up to $21.6 billion in additional assistance. The official said the decision was expected to be announced next week -- though the precise amounts were still the subject of talks between the government and the automakers.
The White House said Thursday night no decision had been made about how much either automaker will receive. "No decisions have been made on how much working capital GM and Chrysler will be getting," said spokeswoman Amy Brundage.
Both Detroit automakers say they need the money to survive, as they craft plans they hope will convince the government they can compete in the global marketplace.
Meanwhile, GM could dramatically slash expenses by eliminating its GMC and Pontiac brands, because the company no longer would need to operate factories or pay hourly workers that produce them, analysts said.
GM is studying the fate of the two nameplates as it reviews all of its vehicle lines and prepares to initiate a public bond-exchange offer aimed at slashing $28 billion in unsecured debt.
The multipronged effort to keep GM out of bankruptcy is intensifying ahead of a June 1 government deadline by which the automaker must aggressively cut costs and restructure.
President Barack Obama's administration gave Chrysler until the end of this month to complete a tie-up with Fiat SpA. Under the proposed deal, the Italian automaker would get an initial 20 percent stake in Chrysler in exchange for small-car technology -- but no cash.
The Obama White House has pledged up to $6 billion in additional loans for the joint venture.
GM initially sought $2 billion in March and $2.6 billion in April, along with $12 billion in credit lines. GM withdrew its request for additional aid for March.
GM spokeswoman Renee Rashid-Merem declined to comment Thursday about the short-term aid, as did Treasury Department spokeswoman Jenni Engebretsen.
Cash burn is $1B a month
Both GM and Chrysler are burning through at least $1 billion a month amid sharply declining auto sales. In the first three months of 2009, industry sales fell 38 percent.
Chrysler Financial LLC, the automaker's financing arm, confirmed Thursday it will receive no additional government loans -- and that could hinder the company's sales.
"Chrysler Financial has determined that it has adequate private capital funding to cover the short-term needs of our dealers and customers and, as such, no additional (Troubled Asset Relief Program) funding is necessary at this time," spokeswoman Amber Gowen said Thursday.
Chrysler had complained that rival auto lending arm GMAC had received nearly $6 billion in aid, undercutting its ability to underwrite auto sales.
The initial $1.5 billion to Chrysler Financial, delivered in $100 million increments, has all but run out.
Chrysler Financial and the Obama administration's auto task force had been in intensive talks to extend the loan program in recent weeks.
But talks ended this week after Chrysler and the administration were unable to come to agreement on additional loans.
GM may cut half its brands
GM's restructuring might involve shedding more than half of its eight brands.
The company proposed keeping four core brands: Chevrolet, Cadillac, Buick and GMC, and Pontiac as a niche nameplate. But the autos task force, which has been meeting in Detroit this week with GM executives, is pressing the automaker to look at the Pontiac and GMC brands. It rejected GM's restructuring plan last month.
GM has made no decisions on whether to go beyond its plans to close or sell Saab, Hummer and Saturn, Rashid-Merem said.
GM president and CEO Fritz Henderson plans to brief the media during a conference call today, but he isn't expected to announce any change to the brand strategy -- except to confirm that they remain under review.
Shedding GMC and Pontiac would dovetail with GM's plans to eliminate 47,000 workers and shutter 14 plants.
The Pontiac G6, Saturn Aura and Chevrolet Malibu, for example, are built at GM plants in Orion Township and Fairfax, Kan.
"If you eliminate the G6 and Aura, and are down to the Malibu, you no longer need two plants," said auto analyst Aaron Bragman of IHS Global Insight.
While GMC has been profitable thanks to the high margin on large trucks and sport utility vehicles, stiffer fuel-economy standards and fickle oil prices threaten a sustained shift in consumer demand toward smaller vehicles, Bragman said.
"If they enter bankruptcy, it's one opportunity for General Motors to really restructure for long-term viability at a much more manageable size," he said.
Henderson has said GM was speeding up its plans to pare back its dealer network. The company had announced plans to cut at least 1,700 dealers, at least 25 percent, by 2012.
Now, GM is holding intensive meetings with dealers to quicken the process. A source familiar with the talks said GM is negotiating with certain dealers nationwide to close their franchises or swap brands with other dealers, and additional federal aid could facilitate that expense.
Company spokeswoman Susan Garontakos, however, said Thursday she was unaware of "any conversations we are having with dealers."
"All I know is that in President Obama's address of March 30, he wanted us to be faster, more aggressive and dig deeper across the whole infrastructure of General Motors," Garontakos said.
The source said GM is telling some dealers that unless they cooperate with the plan to close or realign retail outlets, their franchise agreements could be voided in bankruptcy. The source said GM has downplayed reports about eliminating GMC and Pontiac, saying no brand, even Cadillac, is untouchable.
Time running out
The June 1 deadline set for GM by the White House also is factoring into the timing of the bond-exchange offer.
Though GM has been unable to reach concessions from a committee representing some of its largest bondholders, the automaker needs to launch the exchange soon to give bondholders enough time to decide whether to swap debt for equity.
"Everybody knows we are running out of time," GM spokeswoman Julie Gibson said.
GM is unlikely to make the offer until at least next week.