Carmaker moves to conserve cash, tightens lending to dealers
Alisa Priddle / The Detroit News
Chrysler LLC is shutting its North American production operations Friday for a month, the latest in a string of drastic cost-cutting measures it is making as it awaits word on emergency federal loans to prevent it from possibly having to file for bankruptcy.
The Auburn Hills automaker said the action is a response to a severe sales slump, tight credit and an urgent need to preserve cash. All 30 of the company's assembly, engine and transmission plants in the United States, Canada and Mexico will close at the end of their shifts Friday for at least 30 days, the company said.
Chrysler said people aren't buying vehicles because they can't get loans, but company dealers also have been hit by the tight credit market. Chrysler Financial has warned dealers that it may have to stop providing loans they need to stock their showrooms because dealers have been withdrawing too much money from an account used to fund the loans.
The production cuts come as Chrysler and General Motors Corp. seek up to $15 billion in emergency aid from the government to help them fund their operations for the rest of this year and into early 2009. Chrysler has asked for $7 billion in emergency loans and has warned that without the money, it could be forced to file for bankruptcy protection.
Chrysler's U.S. sales have slumped 27.7 percent this year and fell 47.1 percent in November, according to Autodata Corp.
"It's clear that the automakers are in a very fragile financial condition and they're taking steps to deal with it," White House spokeswoman Dana Perino said Wednesday. "We're aware of their financial situation and are considering possible policy options to provide assistance in an appropriate way. As we've said, a disorderly collapse of the auto industry should be avoided."
Chrysler spokeswoman Shawn Morgan said the issues aren't unique to Chrysler, which continues to restructure and invest in future products...More...
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