Government readies first $8 billion for GM, Chrysler

General Motors, Chrysler LLC and the government today were making final arrangements to transfer the first installments of federal emergency loans to the automakers.

"We're making good progress finalizing the automaker loans and are committed to closing them on a timeline that will meet their individual near-term funding needs," Treasury Department spokeswoman Brookly McLaughlin said in an e-mail to Automotive News.

Under terms of a deal announced Dec. 19 by President Bush, GM and Chrysler are to receive $4 billion each from the government today.

GM spokesman Greg Martin told Automotive News he expects the transaction to be completed on time.

Comment was not immediately available from Chrysler.

The Bush administration promises another $9.4 billion for GM early next year. The final $4 billion of that amount will require congressional action.

Amid collapsing sales, GM and Chrysler told government officials they need the federal funds to avoid running out of cash.

The automakers must file plans by Feb. 17 describing how they will restructure to become viable for the long term. Unless the agreement is changed by the Obama administration, a president's designee, or car czar, is to decide by March 31 if an automaker's restructuring plan is sufficient. If not, the first loans will be called in, possibly forcing the company into bankruptcy.

Ford Motor Co. is not seeking an emergency loan but wants to be able to tap a $9 billion government line of credit if necessary.

Together the Detroit 3 CEOs told lawmakers early in December they need access to at least $34 billion from the government to get through the extreme economic downturn.

Some analysts and economists say much more government help will be needed.

Honda quits F1

Japanese sensationally drop out of Formula One

Honda has quit F1 due to deepening financial worries and a crashing car market. Honda has recently pulled back production at its Swindon plant, and the decision to leave F1 is apparently to protect the brand's core business activities.

Where this leaves Jenson Button remains to be seen, with Honda placing its team for sale rather than winding it down altogether. It sends a stark message out to followers of F1 though, who may now fear other manufacturers such as Renault doing the same.

This is the statement from Takeo Fukui, President and CEO of Honda Motor Co:

"We, Honda Motor Co., Ltd., have come to the conclusion that we will withdraw from all Formula One activities, making 2008 the last season of participation.

This difficult decision has been made in light of the quickly deteriorating operating environment facing the global auto industry, brought on by the sub-prime problem in the United States, the deepening credit crisis and the sudden contraction of the world economies.

Honda must protect its core business activities and secure the long term as widespread uncertainties in the economies around the globe continue to mount. A recovery is expected to take some time.

Under these circumstances, Honda has taken swift and flexible measures to counter this sudden and expansive weakening of the marketplace in all business areas. However, in recognition of the need to optimize the allocation of management resources, including investment regarding the future, we have decided to withdraw from Formula One participation. We will enter into consultation with the associates of Honda Racing F1 Team and its engine supplier Honda Racing Development regarding the future of the two companies. This will include offering the team for sale.

In its third era of Formula One activities, Honda has been participating in Formula One races from the 2000 season, initially with BAR, by adopting a new format of jointly developing racing machines. Subsequently, in a move to meet the changing environment surrounding Formula One, we switched to running a 100% Honda-owned team commencing with the 2006 season.

Surmounting many challenges, the Honda Team achieved a Grand Prix victory in 2006, enabling Honda to receive overwhelming support from Honda fans around the world that were looking forward to greater success. It, therefore, has been an extremely difficult decision for us to come to this conclusion without having been able to fully meet the expectations of our fans.

By making the best of what we have learned during these times of economic turmoil, coupled with the spirit of challenge gained through active participation in racing, we intend to continue with our commitment in meeting new challenges.

Finally, we would like to take this opportunity to sincerely thank our fans and all those who have supported Honda’s Formula One efforts, including everyone in the world of Formula One.

Thank you very much."

Porsche set to move closer to VW takeover

Porsche will be one step closer to acquiring majority control of Volkswagen on September 2, when its deal to buy 4.9 percent of that company's ordinary shares takes effect.

The VW takeover "will be executed piece by piece," Porsche CEO Wendelin Wiedeking said during an event in the Black Forest on Wednesday evening.

A spokesman for Porsche said the deal closes on that day in early September.

The purchase of another 4.9 percent of VW common shares was necessary before Porsche could proceed with gaining regulatory approval from the European Commission, which required further proof a takeover was indeed intended.

Once Porsche has received the green light from various antitrust authorities, it plans to raise its voting stake in Volkswagen to over 50 percent.