Page last updated at 18:33 GMT, Thursday, 13 November 2008

Chrysler calls for cash lifeline

Chrysler Dodge Ram
Chrysler and its compatriots Ford and GM are really suffering

The boss of struggling US car firm Chrysler has warned that it would be "very difficult" for the company to survive without government support.

Bob Nardelli's comments come as Chrysler and fellow "Big Three" US car firms Ford and General Motors (GM) seek a total $25bn (17bn) in federal aid.

House Speaker and leading Democrat Nancy Pelosi said this week that she wants Congress to approve these funds.

Chrysler, Ford and GM have all been hit by falling US sales and growing losses.

Equity stake?

Mr Nardelli said that while Chrysler "cannot assume we are going to get financial assistance", he said that if it was forthcoming, the government would likely take an equity stake.

Bob Nardelli
Mr Nardelli has long warned that Chrysler faced tough times

Whether state aid is given to the three firms is complicated by the change in US presidency, which will be completed when Barack Obama is sworn in on 20 January.

However, most analysts expect the firms to get some form of financial assistance at least by the spring, saying it is highly unlikely that President-elect Obama will want to see any of the country's iconic carmakers fail so soon into his presidency.

Chrysler, GM and Ford have already received support from President Bush, who at the start of October signed legislation that gives them access to $25bn of cheap government-backed loans to help them develop less-polluting cars.

Ms Pelosi has suggested that $25bn for the three carmakers could come from the $700bn bail-out package for the financial sector.

However US Treasury Sectary Henry Paulson has appeared to rule out such a move, saying the funds are only for financial firms.

Job cuts

Last month Chrysler announced thousands of job cuts as it continues efforts to establish a firmer financial footing.

It said it would cut a quarter of its 18,500 white collar positions and 1,825 manufacturing jobs.

Mr Nardelli said at the time that the US car industry was facing "truly unimaginable times".

"We continue to be in the most difficult economic period most of us can remember," he said.

Private equity firm Cerberus bought 80% of Chrysler for $7.4bn (5bn) in May 2007. Since then Chrysler's share price has plummeted.



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SEE ALSO
Peugeot to launch 'massive' cuts
24 Oct 08 |  Business
Global car industry: Audio reports
23 Oct 08 |  Business
Chrysler cuts jobs as sales slow
23 Oct 08 |  Business


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