Daily Auto News Chrysler to Government: We Need $5 Billion More
Daily Auto News
Chrysler has asked the federal government for an additional $5 billion, beyond the $4 billion in loans the government provided the company in December, in order to avoid bankruptcy. The company provided the White House with an update yesterday on its progress toward restructuring, required under the terms of the earlier loan. The Obama administration has until the end of March to decide whether to demand immediate repayment of loans already given to the company, effectively forcing America’s third largest automaker to declare bankruptcy before its financial situation can worsen further.
“Chrysler CEO Bob Nardelli said the automaker’s request for $9 billion in loans amounted to about $70 per taxpayer,” Reuters reports. “If Chrysler were forced to liquidate, the government would have to cover pension and other costs and the bailout tab could hit $1,200 per taxpayer, he said.”
With government support, the International Herald Tribune reports, Chrysler “[s]ays it expects to post a profit in 2010.”
The company announced some plans to reduce costs, but the moves amounted to a far less significant restructuring effort than what cross-town rival GM proposed. “Chrysler said it will cut 3,000 more jobs and stop producing three vehicle models,” according to the AP. The company will not, however, sell or close any underperforming brands.
The IHT reports that Chrysler “[h]as signed term sheets with United Auto Workers agreeing to work toward reduction in retiree health care costs.” Terms of the agreement, and its impact on Chrysler’s finances, are not yet available.
Discussions with the UAW on other issues are continuing, according to Bloomberg.
Bloomberg notes, “The automakers’ fates are now in the hands of the Obama administration, which must decide whether to give them the additional money or let them go bankrupt. Robert Gibbs, President Barack Obama’s chief spokesman, yesterday didn’t rule out forcing the companies to restructure through bankruptcy.”
While awaiting the administration’s decision on their fate, the automakers are discounting nearly every car they make in an effort to prove that they can sell their products even in a recession. Research the best car deals with U.S. News’ car rankings and reviews
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