Chrysler's viability plan calls for $7 billion emergency loan before 2009

Just as Detroit compatriots General Motors and Ford are revealing their strategies for future viability - and need for funding in the meantime - Chrysler has come out with its plan for the future, both near-term and long-term. An immediate need for $7 billion in emergency loans before the end of the year is primary among the requests, with another $6 billion coming from the pre-allocated Department of Energy loan funds through 2009.

Beyond the immediate aid and longer-term help through the DOE loans, Chrysler thinks it will need only a 'reasonable level of support and concessions' from its constituencies, i.e. suppliers, to make it through to profitability by 2012. One move that's put right out of the question by the company is bankruptcy, which it feels would effectively mean the end of its business, since reformation and liquidation of its debts would not be practical in the current economic climate.

Like GM and Ford, industry volume predictions reflect an assumption of a continued slow 2009 with a turnaround mounting in 2010, and a return to near-2007 levels by 2012, though Chrysler's forecasts are slightly lower than its competitors', peaking at 14.7 million vehicles in 2012. Based on these assumptions, Chrysler thinks it can raise its cash balance from a current near-zero balance (without the government emergency loan) to 12.5 billion by 2012, even with a $1 billion repayment of the loaned money in that year.

The key steps Chrysler will take to get there include a reduction in expenses through continued reduction in production capacity. Since 2007, Chrysler has cut 1.2 million units of capacity, or about 30%, and since the start of 2008 has reduced its fixed costs by $2.4 billion. Further reductions will see a total of 32,000 employees leaving the company by the end of the year, including the 5,000 salaried employees eliminated before the Thanksgiving holiday.

Pursuing alliances and partnerships is another part of Chrysler's longer-term plan, using as an example its ongoing truck and small-car-sharing relationship with Nissan, and its minivan-sharing agreement with Volkswagen.

Looking further into the future, product development predicated on electric and hybrid vehicles. The $6 billion in loans sought from the DOE are designed to cover this development plan, which includes 24 product launches through 2012, including Neighborhood Electric Vehicles (NEVs), such as those produced by Chrysler's GEM subsidiary, Range-extended EVs (ReEVs), City EVs (CEVs), and full-function Battery EVs (BEVs).

The first production Chrysler BEV to hit the streets will come in 2010 - several years earlier than previously expected, and will be expanded to additional models by 2013 according to the plan released to Congress. A test fleet of 100 vehicles will be made available to business and government agencies by the end of 2009. Chrysler has set a goal of producing over 500,000 electric-drive vehicle by 2013.

Leading the way in the short term, Chrysler sees its 300 and Dodge Charger easily clearing rising CAFE standards, reports Automotive News. The cars will not be available until 2010 as 2011 model-year cars, but they will be ready for the 4% increase in fuel efficiency required by then.

All three of the Detroit automakers go before Congress this week to plead their cases and prove they have what it takes to remain viable should the bridge loans be approved.