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Ford: No plans to use credit

2009-01-12 08:10

Detroit - US automaker Ford Motor Company intends to forge ahead and not use a line of credit it has requested from the US government, despite an ongoing slump in auto sales.

"The game plan is to keep going on our own and to try as hard as we can to not do that," company executive chairman Bill Ford said during a Ford event at the Detroit auto show, responding to reporters' questions about the line of credit.

"Right now as we see it we're comfortable, but we have asked for a line of credit just in case the world implodes as we know it," he said.

The other two US automakers General Motors Corp and Chrysler LLC - which is controlled by private equity firm Cerberus Capital Management LP - have both received loans from the US government to help them survive through the worst US auto sales in decades as the world's largest economy languishes in recession.

Ford, the number two US automaker, has insisted that it has sufficient cash to keep going on its own and has not taken a government loan. However, it had asked for a $9 billion credit line as insurance against the economy worsening.

Ford has been seen by analysts as better placed to weather the latest economic storm because it borrowed more than $23 billion in 2006 to fund its turnaround, loans that were secured against most of the company's assets.

The automaker burned $7.7 billion of cash in the third quarter and reported automotive cash totaling $18.9 billion at the end of September. The cash burn rate in the fourth quarter was better, but still significant, a Ford spokesman said.

Ford had slightly less than $15 billion of automotive cash available at the end of 2008, the spokesman said.

At the end of the third quarter, Ford reported about $10.7 billion of secured and unsecured available automotive credit lines, a figure that is about unchanged since then.

"We are in good shape on the financing of our plan," Ford chief executive Alan Mulally told reporters. "With everything we see right now, we are very confident it is sufficient."

Ford, the great-grandson of company founder Henry Ford, told reporters that government incentives should be considered for US consumers to buy hybrid vehicles as gas prices have fallen well below the highs reached in July 2008, and said that "right now, the entire economy needs help."

Bill Ford added that he expects gas prices will rise as the US economy recovers.

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