GM could need more US funds, won't rule out petrol tax

GM could need more US funds, won't rule out petrol taxDetroit  - General Motors Corp cannot rule out the possibility that it will need another cash injection from the US government, which threw ailing automakers a lifeline late last year, GM's chief executive Rick Wagoner said at the Detroit auto show on Monday.

Wagoner also suggested he was open to raising petrol taxes in the United States, which are far lower than in Europe, if it could help the US car industry complete the shift to fuel-efficient vehicles that are more common in other countries.

Higher petrol taxes were one of many "policy options" the industry could support, Wagoner said. Raising taxes has been politically untenable in the US in the past.

Car sales plunged more than 35 per cent in the last quarter of 2008 as consumers struggled to get loans in the current financial crisis, adding to the woes of an industry that has already been struggling to keep up with more fuel-efficient and cheaper foreign competitors.

GM and Chrysler LLC were given a 13.4-billion-dollar loan from the government through the end of March, but the loan comes with tough restructuring conditions or the money could be withdrawn.

Wagoner said the rescue "covers our needs through the first quarter" of 2009. Only after March 31 would the company have a "picture" of their financial situation for the rest of the year.

GM, Chrysler and Ford Motor Co all used this year's Detroit auto show to showcase more fuel efficient and hybrid petrol-electric motor cars that will be rolled out in the coming years.

But Wagoner acknowledged some of those plans could backfire if petrol prices stayed low over the next few years.

"If we want to move away from so much reliance on oil ... providing consumer incentives, whether that's tax advantages on the purchase or taxes on gasoline ... I think is going to be the most effective way to move the needle fast," Wagoner told reporters.

Oil prices surged to more than 140 dollars per barrel over the summer, sparking high demand for smaller, fuel-efficient cars in the US, but oil has plunged again by more than two-thirds in the last few months. The spike was felt less in Europe, where taxes make up a much higher percentage of the petrol price.

Wagoner also said a possible merger between GM and Chrysler was no longer under discussion, but he did not rule out talks at a later time. The two companies considered the possibility early last year, but shelved the talks as the financial crisis took hold of the industry.

Under the terms of the 13.4-billion-dollar direct loans to the car industry, GM can claim 9.4 billion dollars and Chrysler LLC gets 4 billion dollars over December and January. GM could get another 4 billion dollars in February.

The federal funds come with tough conditions. GM and Chrysler will have to prove they can return to viability or the money could be withdrawn after March 31, likely leaving no option other than bankruptcy.

Detroit's annual auto show has been toned down given the current economic climate, with a number of automakers including Nissan Motor Co pulling out of this year's show altogether. (dpa)

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