Third-quarter losses could result in GM running out of money soon

DETROIT — The American auto industry is running on fumes.

General Motors, the nation's largest automaker, warned Friday that it may run out of money by the end of the year after piling up billions in third-quarter losses and burning through cash at an alarming rate. Ford sustained heavy losses, too.

The situation is so severe that GM has suspended talks to acquire Chrysler and is appealing to the government for help as the slumping economy drags car sales to their lowest level in a quarter century.

GM Chairman and CEO Rick Wagoner said the company will "take every action" possible to avoid bankruptcy.

"We're convinced that the consequences of bankruptcy would be dire," he said, adding that the company would use every source of potential funding. "We need to find a way to get through this, and that's really our focus," he said.

GM also planned more job cuts, including another 5,500 salaried and factory workers. But company officials cautioned that those measures alone would not be enough and that federal aid is essential.

Ford saw its cash supply decline rapidly and announced its own job cuts Friday. But it's in better shape because the company borrowed billions of dollars in 2007 by mortgaging its factories. The Dearborn-based manufacturer said it had enough cash to make it through 2010.

Friday's events called into question the future of Detroit's three automakers and heightened pressure on the government to take action.

President-elect Barack Obama on Friday indicated that help may be on the way. At a Chicago news conference, he said Congress must pass an economic stimulus measure either before or just after he takes office in January, and he mentioned aid for the auto industry.

Top executives of General Motors, Ford, Chrysler LLC and the president of the UAW met with congressional leaders Thursday to discuss some $50 billion more in loans, participants said. The loans would include $25 billion to help the companies withstand the weak economy and another $25 billion for future.

The money would be in addition to the $25 billion in loans that Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.

IHS Global Insight analyst George Magliano said the cash problems reported by GM and Ford were worse than experts had thought. And that raised the risk of bankruptcy.