Two of the Big Three have collected their allowance from Uncle Sam, but what they will do with it is not yet clear.
The Washington Post reports that General Motors "received an initial $4 billion of its $13.4 billion bailout from the government" last week.
According to the Wall Street Journal, GM "is scheduled to receive more money during the next two months."
Chrysler received its own $4 billion loan over the weekend. Autoblog explains the delay, saying, "CEO Bob Nardelli acknowledged the complex arrangements that had to be made with privately owned Chrysler. It's not known at this point exactly what arrangements were made as far as collateral and what the government would get from Cerberus in the event of a default by Chrysler."
Now, it's up to the automakers to determine what to do with the money. Motor Authority notes, "Covering debts and meeting supplier payment demands is priority one at this point."
However, the companies cannot afford to simply use the funds to continue normal operations. Autoblog points out, "by February 17, GM and Chrysler need to have submitted plans" to the federal government "to demonstrate their long-term viability; on March 31, a putative 'car czar' will decide whether those plans are actually worth anything." At that point, the government may decide to recall the loans and allow the automakers to fail if they have not made sufficient plans to restructure. Chrysler, in particular, may have a tough time with that requirement. "The idea that Chrysler can demonstrate sound health over the long-term in just 45 days is a head-scratcher," Autoblog comments, "but hey, some folks didn't even think Chrysler would still be here, so that's got to count for something."
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