The big three U.S. automakers submitted plans to Congress on Tuesday, detailing how each would spend federal aid money to revive their dying prospects. While Ford and General Motors offered fairly detailed breakdowns of their financial needs and future corporate restructuring plans, Chrysler's proposal was much less specific, but contained a simple warning: Chrysler will run out of cash soon without government help.
Reuters reports, "Chrysler LLC on Tuesday asked the U.S. government for an emergency $7-billion bridge loan by the end of the year, saying it needs the funds to survive a brutal downturn in sales that has depleted its cash reserves." The company "said its cash could fall below minimum cash needed to operate in the first quarter of 2009." Cerberus Capital Management, which owns most of privately-held Chrysler, said it "will work with the government to provide warrants, common or preferred stock or other equity" in exchange for the funding.
The AP notes that the plan outlines some anticipated cost-shaving measures but "also says that CEO Robert Nardelli already gets a $1 per year salary from Chrysler and receives no health care or other benefits. Chrysler LLC also says it did not pay salaried workers merit raises or performance bonuses this year and doesn't intend to pay them in 2009."
Autoblog notes, "The section on ‘Providing Cars and Trucks People Want to Buy' covers plans to bring 24 major products to market between now and 2012, including a range of hybrid and electric vehicles covering "Neighborhood" EVs, City EVs, Range-extended EVs and a battery-powered EV."
The automotive press is already familiar with those cars, having seen range-extended electric prototypes of a sports car, a minivan and a Jeep Wrangler from Chrysler this year.
Otherwise, Autoblog notes, "There's no mention of consolidating, selling or killing brands, further employee cuts or the reduction of Chrysler's bloated dealer network. We get the impression that [Chrysler CEO Robert] Nardelli and Cerberus are saying ‘We've done all we can, we just need some cash.'"
The company did use a portion of its recovery plan to outline for Congress the potential consequences of not funding Chrysler's recovery. CNN Money notes, "Chrysler also ruled out the possibility of a pre-packaged bankruptcy, saying that any bankruptcy filing would take years to complete, there would be no way to reject or modify union bargaining agreements and it is unlikely the company could get financing." Short of government aid, Chrysler said it would be forced to liquidate - meaning that "all 22 of its manufacturing plants would close, 53,000 out of the company's 55,000 hourly employee and salaried employees would be let go and no payments would be made on the $7 billion in outstanding auto supplier invoices."
While the bailout debate goes on, automakers are trying to sell cars as fast as possible with deep discounts. Research the best car deals with U.S. News' Car Reviews.
