Automakers approached Washington on Thursday to ask for a $50 billion loan to help them survive and weather a slump in auto industry.The chief executives of "Big Three" and United Auto Workers President Ronald Gettelfinger met House Speaker Nancy Pelosi to and Senate Majority Leader Harry Reid and requested to double the $25 billion low-interest loan program approved by Congress, as part of energy legislation, to help automakers produce energy efficient vehicles.

In a statement Nancy Pelosi said government wants to "ensure the viability of this industry." She added further "it is essential that we preserve our manufacturing and technology base in this country."
Greg Martin, G.M's (NYSE: GM) spokesman said the executives had a “frank and constructive discussion” about Detroit’s “deteriorating liquidity situation. We are committed to working closely with Speaker Pelosi and Senate Majority Leader Reid to ensure immediate and necessary funding to keep the auto industry viable and its transformation on track during this critical time,” Mr. Martin said." Chrysler had engaged in merger talks with GM but the same didn't produced any result as federal authorities refused to back the deal.

Chrysler's CEO Bob Nardelli said that he was "encouraged by the lawmakers' understanding of the significance of the auto industry. Ford Motor's (NYSE:F) Alan Mulally said "we applaud their efforts."
United Auto Workers Presiden Gettelfinger called the meeting "constructive." "The U.S. Treasury and the Federal Reserve can help immediately by taking steps to provide liquidity to auto manufacturers so they can get through the difficulties caused by an across-the-board decline in auto sales," Gettelfinger said.

Automakers have been trying very hard to convince Washington to include the auto companies in the $700 bailout plan floated to rescue troubled financial companies. High fuel price and credit squeeze have wreaked havoc upon Detroit's automaker and they are burning cash faster than they are generating. Deteriorating consumer spending and massive layoffs in financial sector have severely hit the auto sales in past few months. 
In October, US auto sales dropped for the 12th straight month to 838,156 from 1.23 million last year, the lowest monthly level since 1991, according to New Jersey-based research firm Autodata. A report from the Center for Automotive Research says that "Should all of the Detroit Three's U.S. operations cease in 2009, the first-year total employment impact would be a loss of nearly 3 million jobs in the U.S. economy."
Automakers, in a desperate bid to survive, have been cutting jobs and trying to sell their asset to raise capital. GM has put on saleits truck business, a French factory, Hummer brand and is also lookingfor a buyer for its ACDelco. Ford is approaching European governments for 40 billion euros ($51.2 billion) in loans.

Automakers have also pinned their hopes on new president. Ford Motor Co. Chairman Bill Ford invited Barack Obama to next year's economic summit in Detroit, saying the industry was "under significant pressure." Meanwhile, Obama has already announced that he will call a summit shortly after taking office with the heads of Detroit's automakers and the UAW to chalk out a survival plan for the industry. U.S. Senator Carl Levin said Obama's top economic adviser, Jason Furman, reassured him Wednesday that the industry is among Obama's highest priorities. In a statement, Senator Debbie Stabenow said "We now will have a friend of the auto industry and manufacturing in the White House. President-elect Obama understands you can't have an economy that doesn't make things."

Meanwhile, on Friday, General Motors posted a third quarter net loss of $2.5 billion or $4.45 a share compared to a loss of $42.5 billion in corresponding quarter in 2007. Adjusted loss was $4.2B versus $1.6 billion in the same period in previous year. Analysts on an average were expecting a loss of $3.54 a share. Sales declined 13% to $37.9 billion against $43.7 billion a year ago.

Ford Motor Co. reported a third quarter net loss of $129 million or 6 cents per share, compared to a loss of $380 million, or 19 cents per share, in the same quarter a year ago. Revenue dropped 22% to $32.1 billion from $41.1 billion. Excluding one time items, the automaker lost $2.98 billion $1.31 per share, worse than the analyst estimates of loss of 94 cents per share on sales of $28 billion. The automaker said that it burnt $2.98 billion in cash and will slash another 10% of its North American work force.

Disclosure: Author does not own any of the stocks discussed here.