By on March 16, 2009

Chrysler’s Chief Financial Officer ended last week with an admission that a $5B “loan” from Uncle Sam may not get it through the summer. The AP [via The Detroit News] tells the tale.

Even if Chrysler LLC gets additional government loans, it could face another cash shortage in July when revenue dries up as the company shuts down its factories for two weeks to change from one model year to the next, its chief financial officer said…

Kolka wouldn’t say what would happen if the company doesn’t get further government aid, saying only that he’s not planning to run out of money…

“Following that, the next critical low point in cash is July shutdown,” he said Friday.

As TTAC commentator FredMan points out, Chrysler [via CNNMoney] spent part of this weekend backpedaling. “The $5 billion will help Chrysler work through the crucial July shutdown period when US auto makers traditionally idle their plants for up to two weeks to retool their factories, a company spokeswoman said.” Help? You’re welcome!

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7 Comments on “Bailout Watch 439: ChyrCo: $5B Bailout Beneficiary Faces July Cash Crunch...”


  • avatar
    TheFredMan

    Apparently their CFO was misquoted. Correction via Associated Press this morning below:

    DETROIT -(Dow Jones)- Chrysler LLC won’t need additional federal funding to run its operations if it succeeds in securing $5 billion in low-interest loans by the end of the month.

    The $5 billion will help Chrysler work through the crucial July shutdown period when U.S. auto makers traditionally idle their plants for up to two weeks to retool their factories, a company spokeswoman said.

    The Associated Press reported earlier Saturday that Chrysler Chief Financial Officer Ron Kolka said Chrysler would need additional government loans or face a cash shortage in July. Kolka, Chrysler said, was explaining when the next large cash usage would occur.

  • avatar
    psarhjinian

    Again, I don’t mind the idea of bailing out the automakers provided we can get some accountability for our dollar.

    It’s the difference between “securing a sustainable business model” and “facilitating a junkie”. Right now, we’re just doing the latter because the former would mean offending both the titans of industry (“Oh no, the gubmint gonna tell us what to do next!”) and the Libertarians (or at least people who want to look Libertarian, but really just want their share of the pork) who think the same.

  • avatar
    menno

    Let’s look at that AP report more closely.

    “Chrysler LLC won’t need additional federal funding to run its operations if it succeeds in securing $5 billion in low-interest loans by the end of the month.”

    Notice that fascinating little, two letter word?

    Starts with “I”

    Ends with “F”

    Which begs the question; who in their right mind is going to give $5 billion in loans to Chrysler?

    Yeah, I know the government has been willing to do so.

    Reread my question. I said “who in their right mind.”

  • avatar
    ConejoZing

    Ramshackle (adj.) So poorly constructed or kept up that disintegration is likely; rickety: a ramshackle cabin in the woods.· The American Heritage® Dictionary

    You mean ChryCo not ChyrCo of course? You will probably adjust the spelling later. Well, anyway, why do taxpayers have to support this company?

    In the Consumer Reports Annual Auto Issue, take a look at the “report card” for Chrysler. Their overall score is 48, which is total failure. “No Chrysler, Dodge, or Jeep vehicles are recommended.”

    Another thing is obvious after reading Consumer Reports. If I purchase American, it’ll probably be Ford.

  • avatar
    windswords

    ConejoZing,

    A couple of points. One it’s Consumer Reports, and there are a number of articles on this website about the problems with CR’s methodology (as well as good comments by the Best & Brightest). use the search feature at the top of the page if you want to read them.

    Two, the survey you mention is reported in the fall issue, but is reprinted in the April 2009 issue, which is currently out. The cars that were surveyed in the spring of 2008 were built in the fall of 2007, which was shortly after the transition from Daimler to Cerberus ownership. Since then warranty claim rates for Chrysler vehicles are down 30 percent. Interiors are getting redone. But don’t expect the ratings to change anytime soon, Consumer Reports measurements are based on three years of reliability data for each model, so it will take a considerable amount of time for changes implemented to appear in full. I suspect the opposite will happen with Toyota. Vehicles will still be recommended long after they have ceased being the reliable stalwarts that forged their reputations.

  • avatar
    menno

    Sorry, windswards, but I’ve heard the “you should see our quality now” story from the Detroit 3 even back when it included the Kenosha 1, and after 35 years of hearing it, I don’t believe it any more.

    I’ll stick to what works. Literally.

    Toyota. Hyundai. Maybe I’ll try a Honda some time.

  • avatar
    windswords

    Menno,

    I didn’t say they were equal to the Japanese, just that quality has improved post-Dumbler and that won’t be reflected in CR for a while.

    Your list should be Honda, Hyundai, and Toyota in that order. Toyota’s stuff ain’t what it used to be, no matter what they say.

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