WRAPUP 2-US carmakers to aid suppliers, GM to meet Task Force

* GM, Chrysler launch aid programs for part suppliers
* White House wants to accelerate process for GM
* German cabinet backs extending scrapping subsidy-source
* Daimler warns of 'considerable' drop in '09 auto revenue

(Adds comments from executives at New York Auto Show, details
of U.S. Treasury program for suppliers)
By David Bailey and Christiaan Hetzner
DETROIT/FRANKFURT, April 8 (Reuters) - General Motors Corp
and Chrysler launched government-backed assistance
programs for parts suppliers on Wednesday, and the task force
overseeing the carmakers' restructuring was expected to meet
with GM this week to speed up the process.
The government will give $2 billion to GM to support
suppliers, and Chrysler will receive $1.5 billion to maintain
its supply base.
GM, Chrysler and the suppliers are required to kick in
capital to participate in the program. [nN08524353]
On March 20, the Obama administration pledged up to $5
billion to help auto suppliers, which are crucial to the
survival of U.S. automakers.
A steep drop in North American auto production has put
suppliers under intense pressure and created the possibility of
failures. Failure of even a small auto parts supplier could
shutdown production at many automakers.
GM is also trying to keep itself in business. A source
familiar with the company's plans said on Tuesday that GM was
in "intense" preparations for a possible bankruptcy filing that
could split GM into a "new" company comprised of its most
successful units and an "old" company of unprofitable units.
[nN07463416]
Susan Docherty, vice president of Buick, Pontiac, GMC for
GM, said on Wednesday the automaker needed to restructure
"without a bankruptcy or with a bankruptcy." [nN08530998]
GM is operating under $13.4 billion of government loans. To
avert bankruptcy, it must reach deals with bondholders to cut
unsecured debt and the United Auto Workers union to alter
funding of a union retiree healthcare trust.
GM and Chrysler executives at the New York Auto Show said
they preferred to restructure outside of court, but were
prepared to seek bankruptcy protection if necessary.
The White House said its auto task force would meet with GM
in Detroit this week and next to accelerate the process laid
out by President Barack Obama at the end of March.
[nWBT011013]
Obama rejected GM's turnaround plans, asked for the
resignation of GM's Chief Executive Rick Wagoner and told the
automaker it would have to dig deeper and move faster on its
restructuring. He also rejected Chrysler's turnaround plan.
Chrysler, owned by Cerberus Capital Management LP [CBS.UL],
was given until April 30 to complete an alliance with Italian
automaker Fiat or face possible bankruptcy.
Chrysler Vice Chairman Jim Press said the automaker was
working around the clock to complete the Fiat alliance and that
he was confident an agreement could be reached by the end of
April. [nN08525972]

RADIATING PAIN
Turnarounds for U.S. automakers depend partly on a rebound
in auto sales, something other governments have tried to
accomplish in their countries through incentive programs such
as subsidies for scrapping old cars.
The German government has extended a scrap program that has
helped drive sales higher, increasing funding to 5 billion
euros ($6.60 billion), an official familiar with the decision
told Reuters. [nBAT002841]
Toyota Motor Sales USA President Jim Lentz said a program
similar to the one in Germany could increase sales in the
United States, the world's most lucrative market.
He said that Toyota expects U.S. auto sales to be about the
same or slightly better in the second quarter of 2009 than in
the first under a scenario that sees a recovery until 2010.
[nN08528619]
Daimler AG warned on Wednesday that it expected
a "considerable" drop in revenue in all of its automotive
businesses this year and pushed expectations for a potential
industry turnaround to the second half. [nL8442844]
And in Russia, industry data showed a deepening decline in
demand for new cars, with sales plunging 47 percent in March
year on year, compared with a 38 percent decline in February.
[nL7712071]
Independent contract carmaker Karmann filed for insolvency
on Wednesday, becoming the biggest German auto company to file
so far in the industry crisis. [nL8436994]
In Asia, South Korea's cash-strapped sport utility vehicle
maker Ssangyong Motor <003620.KS> announced plans to reduce
its workforce and sell idle assets. [nSEO271413]
But China vehicle sales for March could hit a record high,
the official Shanghai Securities News said on Wednesday.
[nSHA54358]
($1=.7582 Euro)
(Reporting by David Bailey, Soyoung Kim, Christiaan Hetzner,
Chelsea Emery, Jan Strupczewski, Matthias Sobolewski, Nguyen
Nhat Lam, Gernot Heller, Fang Yan, Cheon Jong-woo, Poornima
Gupta, David Lawder and Claudia Parsons; Writing by Helen
Massy-Beresford; Editing by Marcel Michelson, Jon
Loades-Carter, Toni Reinhold)
((david.bailey@thomsonreuters.com; +1 313 967 1910; Reuters
Messaging: david.bailey.reuters.com@reuters.net))
Keywords: AUTOS/

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