HOWZAT

While Ford is widely thought to be the strongest of the three carmakers, Mr Mulally said that he still needed a $9 billion loan from Washington in case the market worsened or another car company went bust.

"We are woven into the fabric of every community [...] from suppliers, dealers and customers. We are committed to being a lean and profitable organisation but we have a lot more work to do," Mr Mulally said.

While the carmakers have been criticized widely for failing to make the cars people wanted to buy, and for failing to compete on cost with more effirivals such as Toyota, it is also recognised that the rapidly escalating credit crisis, which was beyond their control, has decimated sales.

After Lehman Brothers went bust in September, lenders began to withdraw from auto-finance in a move which cost the American car industry around 6 million new vehicle sales. Around 90 per cent of all cars are bought using auto-loans. Already suffering from sliding demand triggered by the surging gasoline price last year, the carmakers struggled to stay afloat. Last month, Mr Wagoner told Wall Street that General Motors was burning through so much of its cash reserves, at this rate, it would have run out of money by the end of the year. Ford said that while it had credit lines from which it could draw, it might run out of money by April. Two weeks ago, GM, Ford and Chrysler all faced Congress and begged for state aid, and were temporarily refused. Nancy Pelosi, the Speaker of the House who controls Washington's purse strings, told them to submit detailed business plans showing how they would spend the money and how they planned to pay it back.

Washington is scared of allowing the carmakers to fail because the auto industry provides around three million jobs across the country.

Senator Dodd said that to allow the Big Three auto companies to fail would have "sweeping" consequences to the US economy and could place ancient extraordinary burden on the American taxpayer who would have to shoulder tens of billions of dollars worth of pension liabilities.

He added: "If we can find $30 billion for Bear Stearns [...] $200 billion for Fannie and Freddie, if we can back Citigroup, there ought to be a way to find a smaller figure to protect the car business."

The Dow Jones Industrial Index was trading down by over 230 points at 8,359.28 in afternoon trading in New York.

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