The chief executives of General Motors and Ford expressed remorse for having to beg the American taxpayer for a $34 billion (£23 billion) hand-out and insisted that they were learning from their mistakes.

Their contrite remarks were made on Capitol Hill before the Senate Banking Committee, which had assembled to question Rick Wagoner, chief executive of General Motors, Alan Mulally, his counterpart at Ford, and Robert Nardelli, who runs Chrysler, on whether federal funds should be employed to avert the collapse of the American car industry.

Mr Wagoner sought to convince Washington that General Motors needs an $18 billion loan to survive the sharpest fall in car sales since the 1950s.

He urged the committee to lend General Motors the money in two tranches, with $3 billion made available immediately to prevent the carmaker running out of cash by the end of the year.

Chrysler is requesting an immediate $7 billion loan by the end of the year. Ford wants a $9 billion line of credit that it said it would not tap unless economic conditions worsened. Mr Wagoner and Mr Nardelli proposed a March 31 deadline by which time they would return to Washington to show that their restructuring was progressing as a condition of receiving taxpayer assistance.

Mr Wagoner testified: “We’re here today because we have made mistakes, which we are learning from. But this is a job worth doing.”

He pledged that in return for state aid, which he said GM should be able to start repaying in 2011 and fully repay the following year, the carmaker would increase the number of fuel-efficient cars it made; reduce costs; seek to renegotiate onerous employee contracts with unions; significantly restructure its balance sheet; continue to suspend its dividend to shareholders; and effectively scrap all executive pay. Under his proposals, the GM board would take $1 a year in pay.

Each of the three executives, along with Ron Gettelfinger, president of the United Auto Workers union, and representatives of car part suppliers and dealership organisations across the country, gave evidence to the committee and were then questioned.

Politicians are loath to throw good money after bad, using taxpayer funds to prop up near-bust industries, and want to be certain that the carmakers are sufficiently robust to be able to recover and to pay the American taxpayer back, with interest.

Chris Dodd, chairman of the Senate Banking Committee, said: “I want to know whether the automobile companies are in dire straits. I want to know that if they fail, what would the consequences be. And I want to know whether the US Government has a responsibility to help them.”

Mr Mulally admitted that the carmaker had made foolish mistakes in the past but that it had rectified them. He said: “In the past we thought, ‘If you build it, they will come’. Now we are aggressively matching production to meet customer demand.”

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.

Washington is afraid of allowing the carmakers to fail because the motor industry provides about three million jobs across the country. Senator Dodd said that to allow the Big Three car companies to collapse would have “sweeping” consequences for the US economy and could place an extraordinary burden on American taxpayers. They 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.”

Brazil in reverse

Car sales in Brazil fell for the second consecutive month in November. Sales of new cars and lorries fell 25.7 per cent to 177,800 units compared with October, the industry association Anfavea said. Production also fell 34.4 per cent last month to a two-year low of 194,900 vehicles. Brazil is a crucial market for car makers such as Fiat, Volkswagen and General Motors.

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