President-elect Barack Obama said yesterday that the US auto industry was too vital to disappear but vowed no "blank cheque" for a government bailout without long-term changes from the Detroit manufacturers.
"We can't allow the auto industry simply to vanish. What I also have said is that we can't just write a blank check for the auto industry," Obama told a news conference.
"Taxpayers can't be expected to pony up more money for an auto industry resistant to change and I was surprised that they did not have a better thought-out proposal," he said of a request the Big Three automakers made last week for 25 billion dollars in government-backed loans.
"I think Congress did the right thing, which is to say you guys need to come up with a plan and come back before you're getting any taxpayer money."
Chrysler, Ford and General Motors warned Congress last week that the domestic auto industry faces a "catastrophic collapse" which would lead to the loss of millions of jobs if lawmakers don't help them weather a sharp economic downturn with "bridge" loans.
Having flown in on their company executive jets, they were sent away empty-handed and told to return by early December with more detailed proposals for long-term recovery in return for government cash.
Obama cautioned that significant reform would be expected in exchange for government help.
"What we should expect is that any additional money that we put into the auto industry is designed to assure a long-term sustainable auto industry and not just kicking the can down the road," Obama said.
The auto giants said their problems are not of their making, arguing they have been hit by falling demand amid the financial crisis just as years of painful restructuring was beginning to bear fruit.
But critics said they've failed to have sufficient foresight to develop more fuel efficient products ahead of changing customer demands.
Obama demanded more financial clarity from the auto bosses but also plans for "an auto industry that is focused on retooling, understands that we're entering into a new energy economy that is going to be competitive globally."
GM has warned it could run out of cash as early as January without "immediate" help and analysts say a bankruptcy filing would likely result in a liquidation of the world's second largest automaker rather than a court-supervised restructuring.
Ford and Chrysler are also burning through cash with auto sales plummeting to levels not seen in 25 years.