Chrysler extends shutdowns at 3 plants; seeks $1.5 billion government loan

16 January 2009

Chrysler LLC has sought a $1.5 billion loan from the US government's Troubled Asset Relief Programme (TARP) funds and announced an extension of a month-long shutdown of manufacturing operations at its three plants.

Chrysler has sought loans from the US government's bail-out fund through the automaker's credit arm, Chrysler Financial, following a $6 billion Treasury loan to GMAC LLC, the lender affiliated to General Motors Corp.

GMAC became eligible for treasury funds after it became a bank holding company.

The government loan would give Chrysler enough funds to make more loans to its customers and boost sales. Chrysler's US sales plunged 30 per cent last year against the industry average of 27 per cent. Chrysler's sales were down 53 per cent in December.

''We are the only company that really doesn't have an active captive finance company able to finance wholesale and retail. Our dealers in the months of November and December were really not doing much business with Chrysler Financial at all,'' said Steve Landry, Chrysler LLC's executive vice president of North American sales.

Chrysler LLC and Chrysler Financial are controlled by Cerberus Capital Management LP.