General Motors and Chrysler LLC both submitted their government-mandated "viability" plans yesterday. The upshot is both need more money -- lots of it -- even as GMAC will generate $1.1 billion of cash flow to GM. (Chrysler did not appear to indicate how much cash flow Chrysler Financial specifically is providing to the corporation.) Below are the plans available for download. I hope your reactions in comments to this forum follow.

Here are some of the salient points related to auto finance:

GM on GMAC

In December 2008, the Federal Reserve approved GMAC‘s application to become a Bank Holding Company and the U.S. Department of the Treasury made a $5 billion TARP investment in GMAC. This was an important and positive development not just for GMAC, but as well for General Motors given the role GMAC plays in the everyday conduct of the Company's business. This action, as well as GMAC‘s successful bond exchange, leaves GMAC significantly better positioned to be competitive over the long-term. As a result of these developments, at year end 2008 GM and GMAC were able to launch special financing programs for select 2008 and 2009 models.

Nevertheless, the ongoing lack of liquidity in credit markets continues to create difficulties for GMAC in securing funding for its automotive assets. Even programs such as TALF have not provided a funding benefit to GMAC since participation requires that securities be rated AAA, and rating agencies are not willing to provide the required rating level while GM‘s situation remains unresolved. Should the rating agencies continue to take this view, even after GM submits its Viability Plan, and potentially receives Federal Government support, the continued lack of funding will have a substantial negative impact on GMAC‘s ability to provide both retail and wholesale funding in the U.S. and Canada, and consequently on GM‘s ability to sell cars and trucks in these markets.

GM on Why Bankruptcy Will Hurt GMAC

Consumer confidence is essential to the Company’s future success. For most consumers, the purchase of a vehicle represents their second largest expenditure (after housing). Consumers view resale value and the assured availability of warranty coverage and long-term parts and service as critical inputs to their purchase decision. It is the judgment of the Company that a bankruptcy filing would substantially, if not completely, erode consumers’ confidence in GM’s ability to deliver on those requirements. The consumer, with a choice of a comparable product backed by a manufacturer operating outside bankruptcy, is substantially less likely to opt for the bankruptcy tainted product. The resulting deep and precipitous slide in the Company’s revenue would endanger not only the Company’s viability, but that of countless of its dealers and suppliers, which are in turn relied upon by other manufacturers and the public. In addition, a GM bankruptcy would threaten GMAC’s ability to fund itself in the capital markets, impairing GMAC’s capacity to provide wholesale and retail financing essential to support the viability of GM.

GM on GMAC's Floorplan Financing

The second key impact in a GM bankruptcy relates to GMAC and its wholesale credit lines to the Company’s dealers. A GM bankruptcy may constitute an Event of Default in one or more of GMAC’s independent credit facilities. GMAC might also experience indirect effects of a GM bankruptcy which triggered provisions in existing facilities or resulting in the inability to renew existing facilities. Therefore, absent some form of additional support for GMAC, General Motors believes that GMAC would cease wholesale dealer financing for all but the most creditworthy retailers. This would necessarily shift substantially the entire burden of wholesale financing to the Company, in turn increasing the size of any DIP funding facility.

Assumption on Which Chrysler Is Basing Its Request for $7 Billion of Bridge Financing

Chrysler assumed that Chrysler Financial would be viable and could have adequate financial capacity to support our wholesale shipments and retail sales assumptions (we need a financial company solution to be viable).

Chrysler's Assessment of the Current Financing Market

The lack of financing availability has affected automotive dealers in two ways:

• Lack of retail financing availability has directly reduced their consumer sales; and
• Lack of floor plan financing has reduced all dealers’ ability to order new cars to hold in
inventory.

Both of these factors combine to lower Chrysler’s sales.