Embattled American carmaker Chrysler is closing all its US factories for a month from today as the credit crunch bites harder
In a statement, it said employees won’t return to work before January 19, citing “the continued lack of consumer credit for the American car buyer” and the resulting drop in sales, as the reasons for the longer than usual holiday period shutdowns.
US Chrysler dealers have said they’ve lost 20 to 25 percent of sales volume because customers can’t get loans.
The New York Times newspaper said this week that the Bush administration is negotiating with Chrysler and General Motors about reorganising the companies, and wants to reach an agreement before Christmas.
The NY Times says it belives US Treasury Secretary Henry M. Paulson Junior has become the auto czar who will oversee the restructiring and have the power to say whether key executives will stay in their jobs.
American car dealers are pressuring President Bush to act urgently. National Automobile Dealers Association chairperson, Annette Sykora, says more dealerships are closing every day, putting people out of work.
"These are desperate times in many communities around the country,” she said in a statement. “We've heard encouraging words from the White House, but time is of the essence.
“A lot of people are depending on the White House to provide the bridge loans to prevent a collapse of the auto industry. We need action now."
The White House is looking to find ways to keep GM and Chrysldr afloat after the US Senate rejected a $US15 billion bridging loan. Chrysler and GM have said that without the money they’ll go out of business.
The White House has said the administration is considering an orderly bankruptcy for one or both of the carmakers where they would file for bankruptcy protection and the government would provide federal aid.
President Bush says a disorderly collapse of one or more of the major US carmakers could ripple devastatingly throughout the American economy. “In ordinary circumstances, failing entities should be allowed to fail (but) I have concluded these are not ordinary circumstances, for a lot of reasons.”
Meanwhile, GM has refuted a Wall Street Journal newspaper report that it has been talking to Chrysler about merging.
"There are no talks going on,” GM said this week. "Our position has not changed at all since November when we said we are concentrating on our liquidity situation."