US Treasury officials were locked in talks with representatives of General Motors, Chrysler and Ford after warnings that a failure to provide the firms with emergency financing would put other suppliers out of business and imperil up to 3.5m jobs.
The White House stepped in on Friday, pledging to use money from the Troubled Assets Recovery Programme (TARP), set up in the earlier $700bn Congressional bail-out for struggling banks, to fund emergency loans to the car industry.
A direct loan from the US Federal Reserve was also being considered, but that would be complicated by the need to find viable collateral for a loan in failing companies.
President Bush and Treasury Secretary Henry Paulson vowed to act after Republicans in the US Senate refused to support a new $14bn deal agreed between the White House and the Democratic leadership on Capitol Hill.
Sources familiar with the discussions said the new bail-out would see $11bn handed to Chrysler and GM to tide them over until a long-term deal can be struck with the incoming Obama administration and a new Senate.
GM, which employs 5,000 workers in Britain, has asked for $4.4bn this month and the same sum again next month. On Friday, the company said it is set to close 30 plants for the first quarter of 2009, which will cut production by 250,000 vehicles.
Industry analyst Dennis Virag, president of Automotive Consulting Group, warned that bankruptcy by GM or Chrysler would be the start of a cascade of failures and that the economy would be in chaos within weeks.
While 239,000 people work in the US for Ford, GM and Chrysler, ACG calculates total job losses would reach 2.5m if GM failed and 3.5m if all three car companies went out of business in 2009.
The US National Automobile Dealers Association says that even with a bail-out, 900 showrooms will close this year and another 1,100 in 2009.
Car sales fell by 37pc in November, their lowest level since 1982.
As the US government battles to save the car-makers from bankruptcy, new figures from Nielsen Media Research show Ford will have spent an estimated £55m, GM a total of £44m and Chrysler a sum of £11m, in Britain in the nine months to September.
These budgets are likely to fall dramatically if a new “car tsar” reviews contracts to cut expenditure. The $7.3bn global marketing budget of the big three is already down on last year, as the car-makers struggle with slumping demand.
Car companies make up 11pc of UK advertising revenues, but the current crisis in the auto industry is predicted to send total expenditure down by between 2pc and 4pc next year.
