The Obama administration has used the threat of withholding more public support to force out General Motors (GM) Chief Executive Rick Wagoner and set strict conditions for the third US car maker Chrysler.

The administration's auto task force on Sunday announced the departure of Wagoner. In a summary of its findings, the task force said it doesn't believe Chrysler is viable as a stand-alone company, and suggested that the best chance for success for both GM and Chrysler "may well require utilizing the bankruptcy code in a quick and surgical way."

The task force determined that neither company had put forward viable plans to restructure and survive. The government said it would provide Chrysler with capital for 30 days to agree a workable arrangement with Fiat, the Italian car maker that has an alliance with Chrysler.

"On Friday I was in Washington for a meeting with administration officials,"Wagoner said in a statement released by GM."In the course of that meeting, they requested that I 'step aside' as CEO of GM, and so I have."

During his tenure as chief executive since 2000, the company’s stock has fallen from $70 a share to less than $4 now, and its market share has fallen roughly 10 percentage points.

The New York Times says, in 1994, when Wagoner took charge of GM’s North American operations, the company made up 33.2 percent of auto sales in the United States.

Last month, GM represented only 18.8 percent of American car and truck sales, according to statistics from Motor Intelligence, which tracks industry data.

Both GM and Chrysler, which lost a combined $39 billion in 2008, need the savings to keep $17.4 billion in US loans and make the case to borrow $21.6 billion more. GM has reported losses of  $82 billion, since 2005.

GM has received $13.4 billion in federal loans from the US Treasury, as part of Troubled Asset Relief Program (TARP), and is seeking another $16.6 billion. Chrysler has obtained $4 billion and seeks an additional $5 billion. Ford is not seeking any government funding.

On Sunday, President Obama said that he intends to extract "a set of sacrifices from all parties involved-management, labor, shareholders, creditors, suppliers, dealers." The industry, he said on CBS's "Face the Nation," must "take serious restructuring steps now in order to preserve a brighter future down the road." The two companies "are not there yet," he added.

President Obama speaking on the CBS Face the Nation program on Sunday, March 29, 2009

Last October, Prof. Peter Morici of the University of Maryland, said on Finfacts: "The simple fact is that the best solution for Chrysler is Chapter 11 to remove the burdens of the UAW (the industry trade union) contract and scale down the company to something one half to two thirds its current size. That would serve GM’s interests too—both Ford and GM would benefit from some capacity and cars going off the market."

Morici said in relation to financing a tie-up between GM and Chrysler: "Suggestions are emerging that Uncle Sam take a stake in the combined company. So rewarding two of the worst run companies on the planet makes little sense to me."

In 1955, the then Chairman and CEO of GM, Charlie Wilson, said: "What is good for General Motors is good for America."

General Motors Corp. , the world’s largest carmaker, had been the annual global industry sales leader for 77 years. Founded in 1908, GM today employs about 266,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 34 countries.