Automakers and their suppliers must use the breathing space they have been given by bankruptcy and government programs to innovate and to create vehicles consumers want, said Corinne Ball, who led a team of attorneys representing Chrysler during its Chapter 11 reorganization.

You have got to be selling something someone wants to buy, said Ball, an attorney for Jones Day, speaking at the Reuters Restructuring Summit in New York.

I think they're well poised having done the cost side of equation ... and now they've really got to focus on revenues.

She said bankruptcy, which has given breathing space to Chrysler, General Motors and numerous suppliers, along with the government's cash-for-clunkers incentive program, have brought manufacturers through the worst of the crisis.

Now they must quickly develop attractive cars and find better business models.

I think they have to find a way of being less capital intensive.

She cited the proposal by Penske Automotive Group (PAG.N) to buy the Saturn brand from GM. He's (Roger Penske) buying a brand without a production capacity. What's he thinking about? She said. That's a very different approach to the way we think about autos historically with the whole dealer model.

(Reporting by Tom Hals; Editing by Phil Berlowitz)