Chrysler shuts factories for a month to avert collapse

December 18th, 2008 - 3:07 pm ICT by IANS  

Washington, Dec 18 (DPA) Hoping to avoid bankruptcy, ailing US carmaker Chrysler LLC will Friday shut down all of its manufacturing plants for at least one month because of plummeting car sales, the company announced.Chrysler’s announcement Wednesday comes after US lawmakers last week failed to agree on a $14 billion emergency loan for the US car industry. Chrysler and General Motors Corp have said they do not expect to survive without federal aid.

Chrysler said its dealers are already over-stocked as car sales over the past months have plunged about 35 percent to 25-year lows in the United States. Buyers have struggled to get car loans amid a massive financial crisis that has kept banks from lending to each other and to consumers.

Chrysler said the failure by consumers to get loans has had a “dramatic impact” on the industry, costing them about 20-25 percent in monthly sales.

The plant closures, 30 in total, will “keep production and dealer inventory aligned with US market demand”, the company said in a statement.

Executives from GM, Chrysler and Ford Motor Co have pleaded for federal aid to keep the industry alive. US lawmakers failed to agree on the loan, arguing the carmakers’ downturn was part of a long-running failure to modernize and build more fuel-efficient cars.

The Bush administration, which supported the bail-out, is weighing whether to provide the emergency funds from a separate financial rescue package passed by Congress in October.

The crisis is also hampering the carmakers’ plans to build greener models. GM Wednesday said it was temporarily halting the construction of its prestigious Chevy Volt - a plug-in hybrid car they hoped to unveil in 2010.

GM last week said it would close 30 percent of its North American plants for the first quarter of 2009, citing a 36 percent drop in sales in November and a 41 percent decline in 2008 from the previous year.

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