The head of one of the most powerful unions in America has sought to increase pressure on Washington to bail out the country's three biggest car companies ahead of a showdown between the Bush Administration and the incoming President- elect.

Ron Gettelfinger, president of the Auto Workers Union, has warned lawmakers in Washington that should General Motors, Ford and Chrysler be forced to file for Chapter 11 bankruptcy protection, they would never re-emerge as solvent companies.

He agrees with Barack Obama that allowing the carmakers to collapse would be the least favourable route for an industry that employs about 3 million across the country.

The plight of the "Detroit Three" is coming to a head on Capitol Hill as it divides the policies of the outgoing Republican Administration under President Bush and the incoming Democrat Administration led by Mr Obama.

The President-elect does not take office until January 20 but has been urging lawmakers to help the car companies.

However, many Republicans, including Henry Paulson, the US Treasury Secretary who is controlling the $700 billion federal rescue package, believe that the car companies should not be allowed to benefit from the bailout, which was established to help banks through the credit crisis.

In September, the carmakers approached Mr Paulson and asked for federal aid. He refused them, arguing that taxpayer money should only be used to help healthy companies that would be able to pay back the loan with interest and that the money should not be used to prop up failing industries.

But time is running out for General Motors.

Last week, Rick Wagoner, chief executive of the car manufacturer, admitted that his company had lost $2.5 billion (£1.67 billion) in the third quarter of the year and that it was burning so much cash that it could be bust by Christmas. Ford, which confessed to losing $2.75 billion over the same period, said it had enough cash to survive until April.

President Bush, who is stuck in the middle of the row between Republicans and the incoming Administration, has sought to accelerate a pre-approved $25 billion loan earmarked for the car companies to help them pay for green modifications for new vehicles.

Mr Obama is anxious to protect the 3 million jobs that the industry provides at a time when 6.5 per cent of the US workforce is unemployed and more than 500,000 people are losing their jobs a week across the country.

Harry Reid, the Senate Majority Leader, is today widely expected to propose a bill that would allow the carmakers to access the bank bailout scheme — the Troubled Asset Relief Programme.

Mr Gettelfinger has argued that the carmakers have suffered so badly because of high gasoline price of earlier this year, which hit new car sales.

However, many car experts believe this to be disingenuous.

Roy Kishor, an automobile industry restructuring expert at Kroll, the consultancy firm, told The Times: "His argument is a bit silly. Part of the problem of the Detroit Three is that they have such a high fixed-cost structure with wages, pension liabilities and healthare benefits.

"When Honda and Toyota tried to cut costs, they set up factories in South [America] where labour costs are cheaper. Now, they pay $13 an hour in states such as Arkansas and Tennessee instead of the $27 an hour that General Motors is paying in Michigan."

It also emerged at the weekend that Opel, a European subsidiary of General Motors, has approached the German government for state aid and has also been refused. However, Angela Merkel, the German Chancellor, has agreed to meet Opel executives tomorrow for talks.

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