January 24, 2009 / 9:14 PM / 11 years ago

Chrysler sees viability even at weak U.S. auto sales

NEW ORLEANS (Reuters) - Chrysler LLC sees U.S. industry auto sales in 2009 at the low end of prevailing expectations but its turnaround plan is aimed at achieving “viability” even at that sales level, executives said on Saturday.

The Chrysler logo is seen at the North American International Auto Show in Detroit, Michigan January 13, 2009. REUTERS/Rebecca Cook

Chrysler expects U.S. light vehicle sales to drop to 10.1 million units this year, the most conservative forecast yet among major automakers, U.S. sales executive Steve Landry told reporters on the sidelines of the annual National Automobile Dealers Association convention.

The forecast marks a further decline from the 11.1 million unit sales the struggling U.S. automaker had assumed in December when it presented its restructuring plan to Congress as condition of receiving government funding.

The automaker received a $4 billion U.S. government loan to avert collapse and is seeking $3 billion more. It has a deadline of February 17 to prove to U.S. lawmakers it can be viable.

“This is the new normal,” Chrysler Vice Chairman Jim Press said, referring to annual auto sales of between 10 million and 11 million units.

“We feel good about our plans being executed. Viability, in our minds, is not a question,” Press said.

Other analysts have forecast U.S. sales in a range between about 10.2 million and 12.5 million units for 2009.

Rocked by tighter credit and weak consumer confidence, the U.S. auto market plunged to 13.5 million vehicles in 2008 from 16.2 million in 2007.

Earlier this week, Chrysler announced an alliance with Fiat in which the Italian automaker would acquire a 35 percent stake in Chrysler in return for providing access to its small car platforms.

The alliance, and its negotiations with creditors and the United Auto Workers union to reduce debt and fixed costs, would allow the company to remain “solvent” even as sales remain at decade lows, Press said.

Chrysler’s U.S. sales fell 30 percent in 2008 to about 1.45 million units, a steeper decline than the overall market, partly hit by the pullout of its main finance partner, Chrysler Financial, from vehicle leases.

Press said Chrysler has no plans to return to leasing, saying it makes people indebted beyond their ability.

The automaker shut down all of its U.S. plants for a month starting December 19 as it sought to shore up cash in the face of dwindling sales.

As a result of the production cut, Chrysler has reduced its U.S. car and truck inventory by about 42,000 units so far this month from the end of December, Press said.

Inventory stands at 456,000 units, down from 498,000 units.

Editing by Mohammad Zargham

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