Bush seeks to avoid autos collapse, GM denies talks

The White House said yesterday it wants to avoid a disorderly collapse of the US automakers as it worked out a way to provide them with financial aid.

Also, the outlook for a near-term recovery in global auto demand dimmed further as Europe saw a record fall in truck sales and a Japanese industry group warned that the US economic woes would keep vehicle sales depressed next year in the rest of the world, with Japanese car sales likely to be the worst in at least three decades.

US President George W. Bush is nearing a conclusion on how to provide US automakers with financial aid, the White House said, adding that options include tapping money from the $700 billion financial sector rescue package. The news came as General Motors said it has not reopened merger talks with Chrysler's parent Cerberus Capital Management, denying a report in The Wall Street Journal that talks had been revived.

GM and Cerberus suspended talks in late October. GM had pushed for up to $10 billion in US government aid to support an acquisition of Chrysler, according to sources with knowledge of the talks. The discussions were dropped when no financing was immediately available.

The month-long shutdown of the No. 3 US-based automaker's factories reflected the deepening crisis at Chrysler, which is seen as the weakest of the three Detroit automakers.

The White House, which has repeatedly said it wants to help only those automakers that have long-term viability, said the administration was taking into account Chrysler's decision on shutdowns.

There is an "orderly way to do bankruptcies that provides for more of a soft landing," White House spokesman Dana Perino said. "That would be one of the options. I'm not saying that is necessarily what would be announced."

Globally, various governments were considering aid for distressed automakers.

The European Commission, as well as individual governments, have pledged support packages to help their carmakers, with France's President, Nicolas Sarkozy, saying on Monday he would consider new forms of assistance, such as loans or guarantees.

The Russian government will also discuss support for its struggling domestic car producers today.

In Japan, the head of the Japan Automobile Manufacturers Association said that it was very difficult to gauge where the bottom is for the global car market.

Announcing its outlook for 2009, the Jama industry group said it expected Japanese demand for new cars, trucks and buses to fall below five million for the first time in 31 years - the fifth straight year of decline in the third-largest car market after the US and China.