McCurdy said using a mobile phone without a hands-free device or scrolling through a cellular phone’s list of phone numbers may put drivers at risk.

But the industry strongly supports allowing hands-free devices to make calls. Some states ban the use of cell phones by drivers without using a hands-free device. “You have to minimize the eyes off the road time. That’s critical,” McCurdy said.

The alliance represents 11 automakers, including Detroit’s Three automakers, Toyota Motor Corp., Daimler AG and BMW AG.

Ford Motor Co. endorsed a ban earlier this month as part of an effort to defend its Sync system, which among other features reads a caller’s text messages to a driver and allows them to make phone calls or play songs through voice commands.

General Motors Co. spokesman Greg Martin said the Detroit automaker agreed with calls to ban texting behind the wheel.

“Text messaging is dangerous while driving. It should be banned,” he said.

Transportation Secretary Ray LaHood plans to hold a summit next week on distracted driving and address the issue of texting.

“If it were up to me, I would ban drivers from texting,” LaHood said in August. “But we’ve learned from our efforts to get people to wear seat belts and to persuade them not to drive drunk that laws aren’t always enough. Often, you need to combine education with enforcement to get results.”

He said the summit will include senior transportation officials, safety advocates, law enforcement representatives, members of Congress and academics.

“When we are done, I expect to have a list of concrete steps to announce,” LaHood said. “The bottom line is, we need to put an end to unsafe cell phone use, typing on BlackBerry (devices) and other activities that require drivers to take their eyes off the road and their focus away from driving.”

A Senate bill, sponsored by Sen. Charles Schumer, D-N.Y., would withhold highway funding to states that didn’t adopt a ban. Ford has endorsed the bill, but the alliance hasn’t specifically endorsed the measure.

McCurdy said the alliance supports the intent behind the bill’s effort to ban texting. The alliance goes farther than the Schumer bill, in calling for an outright ban on using hand-held cell phones.

States would lose 25 percent of their funds if they didn’t comply under Schumer’s bill, and the provision is similar to one that enticed states to adopt a 0.08 percent blood alcohol level limit for drunken driving.

To date, 18 states and the District of Columbia have banned sending text messages. But the issue has gotten a lot of attention this summer in Washington amid a series of reports highlighting the issue. Congress could act on the question before the end of the year. Schumer’s bill has five co-sponsors in the Senate. Michigan doesn’t ban the practice.

A Virginia Tech Transportation Institute study released in July said drivers of heavy vehicles using a hand-held text messaging system had 23.2 times as high a risk of a crash than drivers who weren’t.

A House version sponsored by Rep. Carolyn McCarthy, D-N.Y., has seven supporters currently.

Some safety advocates want all texting or all cell phone use banned. The National Safety Council has called on banning all cell phone use while driving.

But automakers note that technology will always be involved in driving.

“Drivers must be able to perform multiple functions safely, whether it is turning on the windshield wipers, the radio or the climate control while driving,” the alliance said.

“In 2009, the global economy will shrink for the first time since World War II,” Chief Executive Dieter Zetsche told Daimler’s shareholders at the company’s annual meeting in Berlin.

“The automotive industry didn’t cause this crisis, but is feeling the full brunt of its impact and suppliers and dealers are suffering just as much as manufacturers,” he told some 7,000 shareholders gathered in the cavernous Berlin ITB Messe. “Ultimately, nobody will go unscathed by an economic crisis.”

Zetsche said the Stuttgart-based company, whose brands include Mercedes-Benz, Smart, Maybach and AMG, was poised to take “all the required measures,” to remain strong, including more cost saving and efficiency plans besides the ones it has already announced.

Daimler said it would stick with rigid cost management and reduced labor costs, including management pay cuts, but did not provide a figure on how much savings the plan would create.

Daimler also reiterated it expects a first-quarter loss, because of the economic meltdown’s pinch on the automotive industry, but didn’t provide any figures. In February, the company posted a fourth-quarter loss of euro1.53 billion — its first in two years.

Daimler’s full-year 2008 revenue slid 12 percent to euro23.2 billion compared with euro26.5 billion in 2007.

As a result, the company plans to reduce its dividend by 70 percent to 60 euro cents a share compared with the euro2 a share it paid last year.

The company didn’t provide a more detailed outlook, citing the uncertainty of the global economy. However, it said the company does expect a gradual improvement in earnings through the rest of this year.

That did not mollify some shareholders, many of whom interrupted Zetsche’s speech with protests and condemnations of the company’s performance and that of its managers. Other shareholders yelled for people in the crowd to “shut up!”

“Write down your question so you won’t forget,” Zetsche responded.

Earlier this month, Daimler said it hoped to save euro2 billion ($2.7 billion) in personnel costs by cutting work time for 73,000 workers — largely administrative staff — in Germany by as much as five hours a week, but did not plan to eliminate jobs.

Those plans are unrelated to the previously announced decision to put some 50,000 automotive production workers on shorter hours. Daimler has said it also plans to put another 18,000 commercial vehicle workers on shorter hours after Easter. German companies often reduce hours worked to scale back output.

The cost cut announcements cheered investors, sending shares of Daimler up nearly 5 percent at euro23.57 in Frankfurt trading.

Musk said that he hopes the initial contract between the two automakers will eventually lead to a larger contract that could see thousands of Tesla-produced batteries being installed in Smart EVs.

Tesla recently introduced a performance version of its electric Roadster at the North American International Auto Show in Detroit. Smart is dipping its toes into the electric market in order to compete with the Mini E, an electric-powered, BMW-built Mini Cooper.

The government is weighing the request since it’s likely that no federal official wants to be on the watch that saw the instantaneous vaporizing of two American icons and hundreds of thousands of jobs. The government has asked that as many jobs as possible be spared, and GM said “Sure!” Yet for a merger where cost savings and redundancy elimination have been the headlines, we don’t know why anyone believes GM-Chrysler wouldn’t jettison a whole bunch of the 11 brands, 10,000 dealers, and 100,000 union jobs. And that’s just for starters.

Which is one of the (many) reasons we still don’t understand the GM-Chrysler union. The additional $10 billion we can swallow — after all, the government spends much more than that on projects that could be considered far more dubious than trying to save an astronomical number of jobs and businesses. And we know what Cerberus gets from the deal. We’d like to find out what the GM guys see that makes this merger attractive… other than the fact that Chrysler has $11 billion in cash.

The request for federal aid is being led by GM. The automaker’s chief executive, Rick Wagoner, was in Washington in recent days to lobby administration officials.

Cerberus has not been involved in any of the lobbying efforts, a source familiar with the matter said.

GM has been in talks with Cerberus about buying Chrysler since last month but the discussions have been snagged by difficulty in securing investment or financing at a time when credit is tight and global auto sales are in rapid retreat, others close to the talks have said.

A decision by the Bush administration to provide the government’s first funding for the auto sector since the $1.5 billion bailout of Chrysler in 1980 has been widely seen as the merger’s best chance for success.

“The automakers are facing a maelstrom and that’s why I think an unprecedented government infusion could happen,” said Efraim Levy, an automotive equity analyst with S&P.

An injection of $3 billion in equity to support a GM acquisition of Chrysler would be roughly equivalent to the current, depressed value of the top U.S. automaker.

It would also give U.S. taxpayers a large stake in the turnaround of a struggling auto industry that employs more than 350,000 American workers and is credited with supporting employment for another 4.5 million in related fields.

Analysts perceive GM, Chrysler and rival Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) as driven to the brink of failure by a combination of management missteps, slowing global growth and problems in credit markets.

Now, in addition to taking a stake in what would be the world’s largest automaker by volume, the U.S. government is also being asked to provide support by taking over some $3 billion in pension obligations, the first source said.

The final component of the proposed support would be a credit line that could include U.S. government purchases of commercial paper to relieve short-term pressure on liquidity, the person said.

GM could not immediately be reached for comment. Cerberus and Chrysler had no comment.

TOO BIG TO FAIL?

A combined GM-Chrysler would control roughly a third of the U.S. auto market by sales and would face immediate pressure to cut costs stemming from excess capacity in almost every facet of its business. Those would include a stable of 11 brands, some 10,000 dealers and 97,000 union-represented factory workers.

But one of the conditions of a merger would be that GM-Chrysler spare as many jobs as possible to win broad political support for the government funding, people familiar with the merger discussions said.

Many analysts are skeptical that balance can be struck.

“I still think they need to make deep cuts to survive,” said IHS Global Insight analyst Aaron Bragman.

The roughly $10 billion in government funds to support a merger would be in addition to whatever funds would be allocated under an already-approved $25 billion program to provide low-interest loans to the auto industry for retooling to make more fuel-efficient cars.

A government rescue package would come at a time when investors and creditors are increasingly concerned about the ability of U.S. automakers to survive a punishing downturn in sales now expected to continue into 2010.

“Nobody reasonable is going to tell you that next year we’re going to be out (of this crisis),” Carlos Ghosn, head of Nissan Motor Co (7201.T: Quote, Profile, Research, Stock Buzz) and Renault SA (RENA.PA: Quote, Profile, Research, Stock Buzz), told a business seminar in Tokyo, adding the worst is yet to come.

Ghosn predicted U.S. auto sales would stay at an annualized rate of 12.5 million vehicles through March. U.S. car sales slumped by 26 percent last month to that level.

Moody’s Investors Service cut its GM rating on Monday deeper into junk territory on the view that GM’s liquidity would continue to erode into 2009. The ratings agency also cut Chrysler for similar reasons and said it might cut Ford.

GM has a market capitalization of just over $3 billion based on Monday’s close and roughly $10 billion of outstanding debt. Chrysler’s privately held auto operations were valued at zero last week by Daimler AG (DAIGn.DE: Quote, Profile, Research, Stock Buzz), which holds the 19.9 percent of the struggling automaker not owned by Cerberus.

Chrysler’s U.S. sales have tumbled by 25 percent this year, almost twice the rate of decline for the overall market. GM’s sales had dropped almost 18 percent through September.

GM’s shares have slumped nearly 80 percent this year and its market value has dropped below what it was in 1929.

Rumors of a Mercedes-Benz-Aston Martin tie-up first surfaced just two months ago, but talks are progressing quickly with farther reaching partnerships now being discussed at the highest levels. In fact, talks have gone so well that the projected has been renamed from Project Alligator to Romeo and Juliet.

According to Car Magazine, the far-reaching tie-up will be worth at least €300, and will involve far more than just engine swapping.

Although not everyone in Mercedes-Benz’s camp is quite sold on the idea of an Aston Martin tie, Dieter Zetsche of Daimler and Aston’s Ulrich Bez are pushing the deal through rather quickly, with the possibility of the first joint project hitting the road in 2010. That’s the same year Daimler will refresh its Maybach line, a project has now been handed over to Aston Martin. If Aston does a good job with the Maybach re-do, the partnership will spill into more joint projects.

While the early stages of the partnership won’t see any Mercedes products re-dressed as Aston Martins, Mercedes will likely supply Aston with powerplant and transmission. That means that the next DB9 could use Mercedes’ twelve-cylinder engine and the company’s seven-speed transmission. Mercedes’ new hybrid system has also been part of the talks, with the first hybrid Aston Martin expected to make production within the next 10 years.

The second phase of the tie-up will begin around 2012, corresponding with Aston Martin’s re-launch of the Lagonda brand. Although the Lagonda brand will be under the control of Aston, its vehicle lineup will consist of Daimler-sourced models. The brand’s first model will be a luxury sedan, which will be largely based on the Maybach, albeit with mush sportier intentions. A GL-based SUV is also in the works, but Aston will do far less to disguise its Mercedes roots.

Further down the line, Lagonda could offer a four-seat coupe and convertible, both of which would be based on the Mercedes-Benz CL. There’s even a remote chance that the upcoming Mercedes Gull Wing could receive the Lagonda treatment, or that the CL could be re-badged as an Aston Martin DB10.

Stay tuned as more details on Romeo and Juliet are sure to pop up over the following weeks.

This comes shortly after Chrysler drew on it’s available $2 billion line of credit. Issued by Daimler, and Cerberus management, it gave Chrysler a loan at just 7 points above prime.

This is a significant move, as Chrysler lost $1.6 billion in 2007, yet managed to keep over $9 billion in cash.

Fitch Ratings cut Chrysler and GM in it’s review, as both face serious problems in their business.

It is believed that there have been talks about a possible spinoff of Chrysler from Cerberus Financial, although Cerberus denies these allegations.

Turn the clock forward, and as we previously reported, the Aspen and Durango will be outfitted with Hybrid systems. Immediately after, next in line will be the current LX chassis, which is the Chrysler 300, Magnum as well as others amongst that line up.

Chrysler aims to offer all of it’s vehicles in Hybrid forms in the future. That would mean that the current two-mode technology, which is essentially a conventional gas assisted electric car would be outfitted to a front wheel drive configuration. In it’s current form it has only been tried and tested on rear wheel drive configurations by GM, BMW and Daimler (Mercedes).

One has to wonder, which company will offer front wheel drive hybrids in it’s line up the first, as well as how well mannered these hybrids will be.