For weeks, the carmakers have insisted that they face a real deadline. Pressure grew for a deal as Chrysler announced Wednesday it will close all 30 of its manufacturing facilities in North America until Jan. 19. GM has told lawmakers it needs an infusion of $4 billion in taxpayer loans before the end of the year or the company will go bankrupt.
There was a big sigh of relief from the nation's car dealerships who have been watching helplessly as the White House negotiated with the automakers. Sales were also hurt by consumers' uncertainty that GM and Chrysler would still be around to service any new cars purchased.
"This sends a clear message: Consumers can now consider any car from any manufacturer with confidence," said Annette Sykora, chairman of the National Automobile Dealers Association.
Congress tried to hammer out a deal last week that included a government veto over major decisions by the carmakers if they accepted the federal funds. The bill died in the Senate, however, when Republican senators insisted on sharp cuts in workers pay and benefits.
That left the White House as Detroit's last hope to keep them afloat, at least until the Obama administration can take up the problem.
Republican senators voiced their continued opposition to a bailout of the iconic American companies this week unless GM and Chrysler agreed to major structural changes and concessions from its stakeholders, including labor.
ABC News Rachel Martin, Sunlen Miller, Kate Barrett and Kirit Radia contributed to this report.