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Carmakers Deserve Loan Guarantees, GM Official Says

A top General Motors executive said Thursday that automakers were “deserving” of as much as $50 billion in government-backed loans so that they can build more fuel-efficient cars.

G.M.’s vice chairman, Robert A. Lutz, said the car companies need money to retool their plants but probably cannot raise enough capital on their own because of the tight credit markets. He said the automakers have already made considerable progress in transforming themselves and that the government should help them proceed faster.

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General Motors logo

“The American auto industry is deserving of government loan guarantees,” Mr. Lutz told reporters at an event near Chicago where G.M. showed off its 2009 lineup. “We have done a whole bunch of things that people said, ‘Why aren’t you doing this?’ ”

The automakers, along with the United Automobile Workers union and Michigan lawmakers, are urging Congress to appropriate $3.75 billion to back the $25 billion in loans authorized last year.

They also want more money — up to double the original amount, given the sudden jump in consumer demand for fuel efficiency — and they are urging Congress to act by the end of September so that the money can be available next year.

Critics have denounced the loans as a bailout.

Detroit carmakers have announced plans to revamp numerous truck plants so that they can build the smaller cars and crossover vehicles that have become scarce at many dealers. The cost of each conversion is significant, ranging from $75 million at a Ford plant near Detroit that already had a recent major overhaul to several billion dollars at other facilities.

Sales of pickups and S.U.V.’s plummeted this year as gasoline prices climbed above $4 a gallon in much of the United States. In July, large S.U.V. sales were down 43 percent, and sales of full-size pickup trucks declined 28 percent. Automakers have been offering substantial discounts on some models and shutting down the plants that make them to keep inventories from growing larger.

But Mr. Lutz said that interest in trucks had begun to rebound and that big vehicles “still represent a great opportunity to register sales.” Since mid-July, the average price of regular gas nationwide has fallen 45 cents, or 11 percent, according to the AAA motor club.

“We’ve been hearing from some of our dealers that pickup sales have bottomed — same with S.U.V.’s,” Mr. Lutz said. “There has been some resurgence of demand for full-size pickups and sport utilities. Many people still simply need to buy a truck.”

Still, August is expected to be dismal for G.M. and most other automakers. Edmunds.com on Thursday projected that total sales for the month would be 14.4 percent lower than a year ago and that G.M.’s sales would be down 27.5 percent. Sales would also be down at Chrysler, Ford and Toyota , Edmunds said.

G.M. said it was seeing a good response to its current promotion, which offers “employee pricing” to all buyers, but Edmunds said big discounts had been overshadowed by the high gas prices and sluggish economy.

“Over all, the program has not been nearly as effective as its first implementation back in 2005,” the director of industry analysis at Edmunds, Jesse Toprak, said.

The falloff in truck sales has been devastating to the Detroit automakers because those vehicles historically have generated the most profit.

Mr. Lutz said small cars would become considerably more expensive, filling some of the void created by the evaporation of big profits from trucks.

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