LLC says it could get an almost-immediate sales lift from the $1.5 billion loan package doled out today to Chrysler Financial by the U.S. Treasury Dept., with the results beginning to show as early as January’s sales report.
Steve Landry, executive vice president-North America sales, saysdealers contend the lack of retail-loan availability from Chrysler Financial has been costing them 20%-24% of their business, and he expects the new credit availability ultimately could boost vehicle sales by that amount.
“We could see a lift between now and the end of January,” Landry says, though he declines to predict volume for the month.
Chrysler says the money will go directly to finance new-vehicle sales and back a new incentive program offering 0% financing on loans of up to 60 months on 11 ’08 and ’09 vehicles.
But executives say there’s more than that to come on the incentive front, promising an expansion of the “Driving America” program within the next 48 hours.
The money will be released to Chrysler Financial in stages, but Vice Chairman and President Jim Press says the Treasury Dept. is willing to speed up payments if needed.
“They told us if the demand is higher than the per week (distribution) amount, we within a week can ask and get additional flow,” Press says.
The loan will allow Chrysler Financial to begin to offer loans to buyers with credit scores as low as 620, the auto maker says. Some financial institutions have been restricting credit to those with scores of 700 or higher, but Press says the bigger problem for Chrysler has been the overall lack of funding available from Chrysler Financial.
“It hasn’t been as much the spectrum of credit available, but the capacity,” Press says. “Chrysler Financial wasn’t able to extend many loans over last 45 days.”
The $1.5 billion isn’t expected to last beyond March 31, the deadline for Chrysler to restructure in order to secure another $3 billion in direct government loans.
“It may go sooner than that,” Press says of the $1.5 billion. “I don’t think it would go beyond that.”
Chrysler has no plans to revive its leasing programs as a result of the new financing package.
Meanwhile, Press says work is progressing on the restructuring plan it must deliver to the government Feb. 17.
“Right now, we see no show stoppers,” he says. “There’s a good dialogue going with all our constituents. There are a lot of questions and issues and barriers that have to be gotten through, but right now it looks good.”
He says the prospects of the $3 billion government loan, plus concessions from Chrysler stakeholders and additional Department of Energy money the auto maker is seeking for advanced technology development represent a “nice flow of capital that would make us not only viable but give us a path toward prosperity.”