Analysts say Big 3 need loans quickly

The prospect of giving federal loans to foreign-owned companies raises political concerns, even though several Japanese automakers have factories that would qualify, Cole said.

"There's no way, for example, that a Toyota or a Honda is going to put in for this kind of money," Cole said. "I think politically it wouldn't be a good thing, and they don't need it."

The Detroit automakers, however, are in dire need.

Ford already has $25 billion in long-term debt, while GM has about $32 billion. Both are losing billions with no short-term prospect for profits. Chrysler, now a private company that does not have to report its debts, has seen the steepest U.S. sales drop of any automaker, down 24 percent through August.

In addition to covering losses and paying restructuring costs, all three are burning cash to retool plants, develop new gas engines and engineer new electric cars.

"You're swimming a river that's getting deeper and faster and wider," said Cole, who believes the market will eventually recover and automakers will again make money. "The pot of gold on the other side is getting bigger."

All the headwinds mean the automakers can use government loans as quickly as possible, said Fitch analyst Mark Oline.

"It would be important for Ford and GM and Chrysler to get this money in the second half of 2009," Oline said, adding that the government loans would help keep the confidence of parts suppliers and consumers.

Automakers hope to receive the loans at government interest rates of about 5 percent, which would save them about $100 million a year for every $1 billion they receive. The auto manufacturers have poor bond ratings and would otherwise only qualify for double-digit interest rates.

The loans were authorized in last year's energy bill but not funded then.

Companies would need to build vehicles that are at least 25 percent more efficient than "vehicles with similar attributes" to qualify for the funding. Automakers have not said which projects they would seek funding for because the regulations have not yet been written.

As automakers wait for the loans, they will continue trying to cut expenses, take advantage of a new cost-saving contract with the United Auto Workers and sell assets in an effort to raise more money and ride out the downturn.

"They'll continue to pull the levers that they need to pull," said Pete Hastings, senior analyst with Memphis, Tenn.-based Morgan Keegan & Co. "They're not in a unique circumstance. Unfortunately every industry that's economically sensitive is facing these severe headwinds."

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