The American car industry – a “Chrome Colossus” that bestrode the planet and swaggered through most of the 20th century – has long since fallen to its knees. Today it lies prostrate, begging for help, before political masters old and new.

On Monday Barack Obama asked President Bush to support an immediate infusion of up to $50 billion (£32 million) for the Big Three motor manufacturers, which are losing money at such an alarming rate that at least one may be bankrupt by Christmas.

The share price of General Motors, once the biggest car-maker in the world, has slumped to below its 1946 level and a bank is forecasting that shares in the corporation will soon be worth precisely zero. Ford and Chrysler have also been stricken by the plummeting demand for vehicles, which threatens to leave them without the cash needed for overheads.

Mr Bush, who has balked at allowing car-makers to tap into the $700 billion bailout fund for Wall Street, indicated through his spokeswoman yesterday that he was “open to proposals” for propping up the faltering companies.

Although Mr Obama had wanted to avoid embroiling himself in the financial crisis before his inauguration, he has come under pressure from Congress and the unions which form much of the Democratic party’s base.

Last week he described the industry as the “backbone of American manufacturing” and, by raising the issue with Mr Bush in their White House talks on Monday, has signalled he favours a degree of state intervention in an industry that has been eschewed by the current Administration.

Nancy Pelosi, the House of Representatives Speaker called for “emergency and limited financial assistance” to be agreed within days “in order to prevent the failure of one or more of the major American automobile manufacturers”.

If the Detroit car-makers were to go bust about 3 million jobs would be lost in the plants, the companies that supply components and the communities beyond.

In the long term Mr Obama wants a plan to help industry to switch to more fuel-efficient cars. And he has already called on the Bush Administration to accelerate $25 billion in federal loans set aside for such retooling.

The Big Three car-makers in Detroit desperately need money to keep going through the credit-crunch. John Podesta, the head of Mr Obama’s transition team, denied reports that President Bush was seeking to make any short-term bailout conditional on the Democrats backing a free trade deal with Colombia. “There was no quid pro quo in the conversation,” he said. “The President didn’t link – try to link – Colombia to the question of an economic recovery package going forward.”

The plight of General Motors – which manufactures under such icon-ic marques as Buick, Cadillac, Chevrolet, Hummer and Pontiac, as well as Vauxhall and Opel in Europe – is particularly acute. Its loss of $38.7 billion last year was equivalent to the gross domestic product of Bulgaria.

Last week it posted quarterly losses of $2.5 billion and said that it had burnt through another $6.9 billion in the previous three months. Although the corporation still has cash reserves of $16.2 billion it needs $11 billion to pay workers and suppliers.

With sales falling by 45 per cent last month alone Rick Wagoner, the chief executive, has said that General Motors will run out of money by the end of the year.

Ford is in only slightly better shape. On Friday it announced quarterly losses of $2.75 billion and has cash reserves of $18.9 billion. At the current rate Ford will have no cash left by April. Figures are more opaque for Chrysler but the last member of the Big Three is looking for a new partner to take it over after talks with General Motors were scrapped.

It is an extraordinary transformation for an industry that was once synonymous with American suburban prosperity and a lifestyle, fueled by cheap petrol, that encapsulated the nation’s sense of personal freedom and postwar confidence in itself.

As freeways that began in Motor City – Detroit – were built spanning the country, General Motors ran advertisements stating: “See the USA in your Chevrolet”.

Detroit however has been in decline for a generation or more, shrinking from a thriving city of 1.8 million people into a crime-ridden broken shell of fewer than 1 million. The Big Three, faced with competition from foreign manufacturers, failed to adapt to rising fuel prices while limping into the 21st century under the burden of hugely expensive pension and health care benefits for its workers.

Many of the jobs have already headed South where Toyota, Honda and Hyundai have built car plants without the expensive unionised labour of Detroit. In 2007 General Motors belatedly cut a deal with unions whereby it could either retire or sack its most expensive workers, replacing them with employees on a lower hourly rate and fewer benefits.

They were still making the wrong cars however. In the aftermath of the Great Depression Ford created the F150 pickup truck for poor families to attend church on a Sunday and take their pigs to market on a Monday. It has been the best-selling vehicle in America for the past 50 years.

This summer, as America stood at the brink of another deep recession, that era was drawing to a close. The price of a secondhand Toyota Prius – the type of fuel-efficient hybrid car the Big Three were slow to build – exceeded the price of a new one because customers wanted to avoid a two-year waiting list. And that was before the banking crisis. .

Credit markets crunched to the point where it is all but impossible to get a car loan in America, costing the industry an estimated six million sales by Christmas alone.

Daniel Howes, a columnist for The Detroit News, declared this week: “It’s over, folks. The credit crisis of ’08 has ensured that Detroit as we know it will never be the same again. Why is that so hard to understand?”