DETROIT -- In submitting its viability plan to the federal government today, Chrysler LLC asked for an additional $2 billion beyond the $7 billion in rescue loans it sought late last year and stepped-up cost-cutting moves to combat falling sales.
Chrysler said it will reduce fixed costs by an additional $700 million, cut 100,000 more units of production capacity and sell $300 million more worth of assets.
Since Chrysler LLCs original $7 billion submission, there has been an unprecedented decline in the automotive sector, the company said in a statement. We will require incremental financial support to continue our orderly and effective restructuring.
Chrysler's revised bid adds to the industry's wish list as the recession deepens and sales flounder at levels last seen in the early 1980s. General Motors today boosted the size of its aid request to $30 billion, and auto-parts suppliers seek $18.5 billion in assistance.
President George W. Bush gave Chrysler only $4 billion of the $7 billion in loans it sought. In asking the Obama administration for more money, Chrysler said it was again lowering its forecast for U.S. sales this year, to 10.1 million, and said annual demand will average 10.8 million through 2012. Chryslers own sales have dropped more than 50 percent in each of the last two months.
The reduced forecasts for the next four years alone result in approximately $18 billion in lost revenue and a $3.6 billion decline in cash inflows, CEO Bob Nardelli said in a conference call with reporters. That scenario assumes a Chrysler market share of 10 percent, down from last years 11 percent.