GM and Ford losses, cash burn dire

By David Bailey and Kevin Krolicki

DETROIT (Reuters) - General Motors Corp (GM.N) and Ford Motor Co (F.N) reported far deeper-than-expected quarterly losses on Friday and said their rate of cash burn had accelerated, as an extended slump in car sales raised questions about the future of the U.S. auto industry.

Both companies said they would take aggressive steps to cut costs further. The two largest U.S. automakers reported third-quarter results after the world's No. 1 automaker, Toyota Motor Corp (7203.T), slashed its profit forecast for the year.

President-elect Barack Obama said on Friday that help for the U.S. auto industry was a high priority and urged the Bush administration to do "everything it can" to accelerate disbursement of $25 billion of loans to the industry previously approved to make fuel economy improvements.

"I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel efficient cars here in the United States," Obama said.

GM shares fell more than 9 percent while Ford rose 2 percent. The two burnt through a combined $14.6 billion in cash in the face of deepening global downturn. Chrysler LLC is also burning through cash quickly, sources said.

Ford and GM both expect their rate of cash use to decline in the fourth quarter.

GM also indicated it had set aside consideration of an acquisition of smaller rival Chrysler -- without mentioning the company's name -- saying it was focussed on cost-cutting and other steps to free up $20 billion (12.8 billion pounds) in liquidity through 2009.

Cash preservation has become crucial for GM, which said its cash holdings would fall short of the minimum needed to run its business without new funding or other drastic action. Analysts saw that as presenting two alternatives, a government rescue package, or a potential bankruptcy if a bid for aid fails.