Late on Tuesday, General Motors Corp. (NYSE: GM) formally requested Congress for as much as $18 billion in government loans in order to survive the downturn in economy. In its submission, GM said "absent such assistance, the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the U.S. economy."

GM Chief Executive Officer Rick Wagoner said the request “demonstrates in detail why GM needs federal funding not just for the company, but to be beneficial to the U.S. economy.”

"There isn't a Plan B," said President and Chief Operating Officer Fritz Henderson.

GM requested $4 billion by the end of December, as $4 billion more in January, as much as $2 billion in February or March, another $2 billion by the end of 2009, and an additional line of credit of as much as $6 billion if economic conditions worsen. The automaker said it is requesting $4 billion to ensure “minimum liquidity levels through Dec. 31.” GM has agreed to offer the government financing warrants in exchange for the loan.

In return, GM pledged to undertake "a dramatic shift in the company's U.S. portfolio." The company proposed to eliminate its total number of vehicle brands to 40 from 48 by 2012, and will on its “core brands” of Chevrolet, Cadillac, Buick and GMC. In the plan, GM also said that it will strive to reduce labor costs, cut jobs and slash executive pay. In a conference call Henderson said the troubled automaker plans to cut its overall U.S. headcount by at least 21,000 employees by 2012. He added that the company has “identified a plan with our union partners” to cut hourly worker costs and make it more competitive.

As part of the rescue plan, GM Chief Executive Rick Wagoner offered to reduce his salary to $1 in 2009 and refuse annual bonuses this year and next. GM also promised cuts of 50% in salary next year for its next four senior executives and said it would immediately cease use of its fleet of corporate jets.

Henderson said the automaker plans to work with its creditors to reduce its current debt load by from $65.6 billion to $30 billion, but plans to honor the full value of its debts to suppliers and fully honor all consumer warranty obligations.GM will also cut dealers from about 6,450 in 2008 to 4,700 by 2012, and will reduce showrooms in major U.S. cities and suburbs.

On the front of fuel efficiency, GM hopes to achieve 40% improvement in fleet-wide average fuel economy to 35 miles per gallon by 2020.
With federal assistance, GM said in its plan, “the company’s current baseline projections show that GM will be profitable on automotive adjusted earnings before taxes basis in 2011, after the restructuring actions.”

Sales at GM fell 41.3% to 154,877 vehicles in November. Car sales were down 44.1% to 58,786 while truck volumes fell 39.4% to 96,091.

Mark LaNeve, vice president, GM North America Vehicle Sales, Service and Marketing, said in a statement "in November we saw the continuation of the dramatic decline in volume for the industry. Every manufacturer is posting awful numbers and we are no exception." He added "every ill-informed pundit is weighing in on our business."We are being adversely impacted by all the bankruptcy talk and negative coverage. It is a negative headwind to us."

On Tuesday, shares of General Motors Corp. (NYSE: GM) gained 26 cents or 5.66% to finish at $4.85.

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