On Sept. 28 the U.S. Senate approved $25 billion in loan guarantees for the financially strapped U.S. auto industry, intended to spark a wave of automotive innovation. The loan guarantees were included in a continuing resolution that included funding for the U.S. government and the wars in Iraq and Afghanistan.
President George W. Bush has indicated that he intends to sign the bill.
"We're very pleased Congress has chosen to act at this critical time," said Greg Martin, director of communications for General Motors Corp's Washington office. GM had been subject of much speculation that it could be forced into bankruptcy.
The bill, which was approved by the House of Representatives on Sept. 24, are the first loan guarantees for U.S. carmakers since Congress approved a similar $675 million measure for Chrysler Corp. in 1980.
Chrysler Chairman Robert Nardelli, however, said this week the loan guarantees should not be considered a rescue package for struggling carmakers. "This is not a bailout," he said.
Under provisions of the new legislation, not only U.S. carmakers are eligible for the guarantees but also suppliers and foreign automakers with plants in the U.S.that are more than 20 years old -- Nissan and Honda's U.S. operations qualify.
Martin said automakers could use the money for projects such as a new engine plant GM has announced it intends to build in Flint, Michigan. GM Chairman Rick Wagoner spoke of plans to invest $370 million in a new plant, which will be the exclusive site for production of the gasoline engine or "range extender" for the electric Chevrolet Volt, due out in November 2010.
Copyright Agence France-Presse, 2008