February 12, 2009 / 10:10 PM / 11 years ago

Chrysler braces for long auto sales slump

CHICAGO (Reuters) - Chrysler’s U.S. government-required viability plan would have the automaker viable even if U.S. auto sales stay at current depressed levels for four years, a top executive said on Thursday.

And it would be “a mistake” to assume that the plunge in U.S. auto sales to an annual market of roughly 10 million units is only an aberration, Chrysler Vice Chairman Jim Press said.

“We need to accept and come to grips with it,” Press said in a speech at an Economic Club of Chicago lunch on the sidelines of the Chicago Auto Show.

U.S. auto sales fell 18 percent to about 13.2 million units in 2008, but the monthly sales rates have been running at roughly the 10 million unit annual rate range for several months and January’s sales were at a 9.57 million rate.

Chrysler, 80 percent held by private equity firm Cerberus Capital Management CBS.UL, and larger rival General Motors Corp (GM.N) must submit viability plans to the government by February 17 under a $17.4 billion bailout program.

The automaker remains in talks with various constituents, including debt holders, suppliers, unions, dealers and others.

“We feel very good about our plan,” Press told reporters after the speech. “We are confident that we are able to show our need and our requirements are going to be met. But we still have to work through the discussions with the different constituents.”

Press declined to comment on a report from a Japanese news organization that Nissan Motor Co Ltd (7201.T) had frozen progress on an alliance with Chrysler, saying he was not familiar with it.

Kyodo news agency reported on Thursday that Nissan had frozen preparations for the alliance with Chrysler.

In his speech, Press made a reference to the Nissan partnership as going forward. The April 2008 agreement calls for Nissan to provide a small car for Chrysler and Chrysler to build a pickup truck for Nissan.

Since then, Chrysler has announced a nonbinding agreement for an alliance with Italy’s Fiat FIA.MI that would bring small cars to the United States and open international markets to Chrysler.

The agreement with Fiat is contingent on Chrysler receiving an additional $3 billion of government loans. The Fiat alliance would give Chrysler access to small car platforms it lacks and Fiat access to the U.S. market.

Fiat also would receive a 35 percent stake in Chrysler without providing any cash.

However, Press described Fiat’s contribution to Chrysler as billions of dollars of platforms that would accelerate its entry into the small car market by five or six years.

“The basic viability plan does not have a specific partner,” Press said.

Chrysler product development chief Frank Klegon told reporters on Wednesday that it would be “a tough call” as to whether all of the automaker’s current plans for alliances on small cars would go forward.

“At some point, we will have to make some choices; do we move forward as a singular partner or is there still multiple partners along the way?” Klegon said.

Additional reporting by Bob Burgdorfer in Chicago, editing by Leslie Gevirtz and Matthew Lewis

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below