Chrysler Re-Ups Credit Facility… Barely
While The Big D2.8 try to get their product-related shit together in a post $4-a-gallon world, their vulnerability in the still-shaky credit markets threatens to throw them into bankruptcy. Which is why Chrysler was so hell-bent on renewing its $30b credit facilities, regardless of the high costs of default protection. Automotive News [sub] reports that the facility has been rescued, although this time around Chrysler Financial could only hustle up $24b. No worries, say ChryFi spokesfolks. They claim that's all they need now that they've abandoned the leasing game. Some 90 percent of the new credit facility is being backed by banks that were part of the original financing, suggesting that financial firms are doubling down on the troubled automaker. Chrysler won't say exactly what interest rates are being charged on the facility. But given the high default risks of all domestic automakers, it's safe to assume that Auburn Hills isn't getting a charity handout. After all, that's the government's job, not Wall Street's. And until such time as government-backed cheap credit becomes available, Chrysler (et al) will continue to hemorrhage cash to keep credit lines like this one open. Like the poet said, mo' credit, mo' problems.
More by Edward Niedermeyer
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Cheap credit is only a problem if people want to buy what you have to sell. With Chrysler's current lineup of vehicles I don't see them having a problem anytime in the near future. ;)
Their '08 credit renewal rate from last year - 80% - is still stronger than than their '08 sales comparison from last year - below 70% -. Borrowing costs had to be 2% higher + outrageous fees and conditions. Otherwise they would have maintained a leasing program. All of that doesn't matter; according to Mr. Home Depot, Chrysler is on track with the master plan and they have deep pockets.
I would like to see Jeep sold to Honda. Chrysler/Dodge could just fold, never to be seen again. Wishfull thinking I know...