NEW YORK (CNNMoney.com) — A group representing auto parts suppliers may ask for as much as $25.5 billion in federal aid as the industry struggles under falling car sales and production cutbacks.

The Motor & Equipment Manufacturers Association, a trade group representing auto parts makers, is working on a request to access $8 billion in federal loans from the Treasury Department, group president Bob McKenna told CNN.

MEMA is also asking for $10.5 billion in loan guarantees that would support loans made against outstanding invoices owed by General Motors (GM, Fortune 500) and Chrysler, carmakers that have already received federal assistance.

Automakers typically take 45 days to pay for a shipment of auto parts. Parts suppliers typically take out loans using those “receivables” as collateral, allowing them to continue operations until the bill is paid. Industry representatives have complained that it is now virtually impossible to get loans against receivables from GM and Chrysler.

To further help cash flow, suppliers also want $7 billion to help their customers, major automakers, speed up their payments and get them their money in 10 days rather than 45.

“We are in discussions with the Treasury, administration, but we haven’t figured out yet what the best solution is,” McKenna told CNN. He described the request as a “work in progress,” and that MEMA has not yet made an official submission to Treasury.

Treasury officials would not comment on the request.

Auto parts suppliers currently employ about 600,000 people in the United States, according to the Original Equipment Suppliers Association, a group affiliated with MEMA. But the loss of one auto industry job means the loss of four other jobs in other industries, parts manufacturer groups have argued.

“Vehicle manufacturing and parts producers have of the greatest, if not the greatest economic multiplier effects, looking at the support systems, said David Andrea, vice president for industry analysis and economics at the OESA.

Vehicle production is down of over 40% from last year, Andrea said, and that has put enormous pressure on the entire industry. Industry analysts have predicted that hundreds of auto parts suppliers could fail this year, which would leave the industry ill-equipped to benefit from any eventual upturn in the economy.

Separately, the National Automobile Dealers Association is working on a request for roughly $10 billion in federal loan guarantees that would cover inventory financing loans for dealerships. Under NADA’s planned request, funding for the guarantees would come from Treasury Department’s Troubled Asset Relief program.

Auto dealers employ more than a million people in the U.S. according to NADA spokesman, David Hyatt. More importantly, he said, auto dealerships provide enormous amounts of tax revenue for states and communities. Auto sales represent about 20% of all retail sales revenue in the U.S., according to a report commissioned by NADA.

SOURCE: CNNMONEY

Jan. 28 (Bloomberg) — Chrysler LLC and Ford Motor Co. say a C$12 billion ($9.9 billion) proposal by Canada to buy pools of auto loans and leases may help revive slumping auto sales.

The federal budget yesterday included a government pledge to buy securities backed by loans and leases for autos and equipment. The so-called Canadian Secured Credit Facility is among measures aimed at boosting lending in Canada.

“Improving access to financing is critical medicine that the Canadian economy needs right now to return to health,” said Reid Bigland, president of Chrysler’s Canadian business. “The creation of the Canadian Secured Credit Facility to support financing of vehicles is a big step forward to helping automobile sales in Canada.”

Leasing has become less popular in Canada, in part because fewer carmakers offer it. Chrysler Financial and Detroit-based GMAC LLC stopped leasing in Canada in August after borrowing costs soared and the value of used vehicles tumbled amid a glut of unsold cars.

“This is definitely a most welcome effort,” Meredith Libbey, a spokeswoman for Ford Motor Credit Co., a unit of the Dearborn, Michigan-based automaker, said in an interview. “Obviously, the goal is to take some quick action and get funding out to the Canadian public.”

The percentage of Ford’s Canadian customers who lease vehicles has fallen to about 10 percent from 40 percent a year ago, David Mondragon, president of Ford’s Canadian unit, said in an interview earlier this month. For Chrysler, that figure dropped to zero from 53 percent, according to Bigland.

Fewer Leases

Leasing accounted for about 30 percent of Canadian car sales last year, according to the Power Information Network of J.D. Power & Associates. That’s down from almost 43 percent in 2007.

Many Chrysler customers haven’t been able to qualify for financing from traditional lenders due to tight credit markets, Bigland said in an interview from Toronto today. The government plan may prompt Chrysler to resume leasing, he said.

“We are interested in getting back into leasing,” Bigland said. “We’re hoping it will make vehicle purchases for those who want to purchase a vehicle accessible, and open up leasing options back to the Canadian marketplace.”

Auto sales in Canada fell 21 percent in December as the U.S. recession spread north. The December decline, the worst for that month since 1996, pushed nationwide sales down 1.1 percent in 2008.

Ford is the second-biggest U.S. automaker, after General Motors Corp. Chrysler, controlled by Cerberus Capital Management LP, ranks No. 3.

SOURCE: BLOOMBERG.COM

NEW YORK (CNNMoney.com) — Ford Motor reported that its ongoing losses soared in the fourth quarter, but the company reiterated it still does not need the federal bailout already received by its two U.S. rivals.

Ford reported a net loss of $5.9 billion, or $2.46 a share, up from a loss of $2.8 billion in the same quarter a year ago.

For the full year, Ford lost $14.6 billion, and the company has now lost nearly $30 billion over the past three years.

Excluding special items, losses were $3.3 billion, or $1.37 a share. Analysts surveyed by Thomson Reuters were forecasting a loss of $1.30 a share on this basis.

Ford’s automotive operations reported a loss in every region but South America during the fourth quarter. Worldwide vehicle sales plunged 31% from a year ago, to 1.1 million. Total sales dropped 36%, to $29.2 billion, but they did top Wall Street’s consensus estimate of $27 billion.

Separately, the company’s Ford Credit arm confirmed that it was eliminating 1,200 jobs, or about 20% of its staff, due to lower sales. In addition to suffering from weak demand for vehicles, Ford also sold its Jaguar, Land Rover and Mazda brands last year.

Ford (F, Fortune 500) burned through $5.5 billion in cash during the quarter. That left the company with gross cash of $13.4 billion as of the end of 2008.

The company said it will burn through cash again this year, but Ford added that it does not anticipate needing to receive federal help “barring a significantly deeper economic downturn or a significant industry event, such as the bankruptcy of a major competitor that causes disruption to the company’s supply base, dealers or creditors.”

Instead, Ford said it will draw on its available credit lines to receive an additional $10.1 billion in cash on Feb. 3.

“Ford went to the credit markets two years ago when they were functioning normally and obtained the funding necessary — including our credit lines — to support our product transformation and restructuring,” said Ford CEO Alan Mulally in a statement.

“Given the instability of the capital markets with the uncertain state of the global economy, we believe it is prudent to draw these credit facilities at this time,” Mulally added.

Ford’s access to credit and cash on hand puts it in far better financial position than General Motors (GM, Fortune 500) and Chrysler LLC, who both needed loans from the federal government to avoid falling below the minimum cash level they needed to continue operations.

Ford had asked for a $9 billion line of credit from Congress at the same time GM and Chrysler were appealing for help last month. Congress did not approve such financial assistance, forcing the Treasury Department to step in and give the loans to GM and Chrysler late last year.

But the company did announce a slightly more conservative sales target for 2009, however. When it presented its turnaround plan to Congress in December, Ford said it expected 2009 U.S. industrywide sales of about 12.5 million vehicles, including medium and heavy duty trucks. On Thursday, the company said it now anticipates sales of between 11.5 million to 12.5 million vehicles this year.

The company announced it had reached an agreement with the United Auto Workers union to eliminate the jobs bank, which guarantees nearly full pay for UAW members who lose their jobs.

Ford said management and the union are working on details of implementing that agreement. GM announced a similar deal Wednesday, and there were reports Monday that Chrysler had also reached such a deal with the UAW.

SOURCE: MONEY@CNN