'We can't allow the auto industry simply to vanish. What I also have said is that we can't just write a blank check for the auto industry,' Mr Obama told a news conference.

'Taxpayers can't be expected to pony up more money for an auto industry resistant to change and I was surprised that they did not have a better thought-out proposal,' he said of a request the Big Three automakers made last week for US$25 billion (S$38 billion) in government-backed loans.

'I think Congress did the right thing, which is to say you guys need to come up with a plan and come back before you're getting any taxpayer money.'

Top executives from Chrysler, Ford and General Motors warned Congress last week that the domestic auto industry faces a 'catastrophic collapse' which would lead to the loss of millions of jobs if lawmakers don't help them weather a sharp economic downturn with 'bridge' loans.

They were sent away empty-handed and told to return by early December with more detailed proposals for long-term recovery in return for government cash.

Mr Obama acknowledged the economic significance of the automotive industry, which he called the 'backbone of America's manufacturing base' but cautioned that significant reform would be expected in exchange for government help.

'What we should expect is that any additional money that we put into the auto industry is designed to assure a long-term sustainable auto industry and not just kicking the can down the road,' Mr Obama said.

The auto giants said their problems are not of their making, arguing they have been hit by falling demand amid the financial crisis just as years of painful restructuring was beginning to bear fruit.

Critics say they were left flat footed by the failures of managers who failed to develop fuel-efficient small cars and were content to let their iconic brands crumble in the face of competition from foreign transplants whose US plants operate at much lower costs.

Mr Obama demanded more financial clarity from the cap-in-hand auto bosses but also plans for 'an auto industry that is focused on retooling, understands that we're entering into a new energy economy that is going to be competitive globally'.

'I think that Americans take great pride in the history of the American automobile industry, but taxpayers don't want to see more money wasted, so we need to see a plan and when we do, we're going to, I think be able to shape the kind of package that makes sense.'

GM has warned it could run out of cash as early as January without 'immediate' help and analysts say a bankruptcy filing would likely result in a liquidation of the world's second largest automaker rather than a court-supervised restructuring.

Ford and Chrysler are also burning through cash with auto sales plummeting 40 per cent last month to levels not seen in 25 years as credit dried up for loans and the financial crisis shattered consumer confidence.

The Big Three have lost tens of billions of dollars and laid off tens of thousands of workers in recent years after high fuel prices undermined demand for their highly-profitable but gasoline guzzling trucks and sport utility vehicles.

They have slashed billions of dollars in annual operating costs and negotiated historic changes to their labour agreements which will bring their costs in line with the US plants of their foreign rivals by 2010.

Analysts warn more pain is ahead as auto sales are expected to remain weak for at least another year. Unprofitable brands and vehicle lines will likely have to be abandoned, a bloated dealer network will have to shrink and more job cuts can also be expected. -- AFP