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Chrysler Shuts For A Month and Chevy Volt Engines Delayed

Posted by: David Kiley on December 17, 2008

Chrysler LLC said Wednesday that it will shut down all its North American production for at least one month starting December 19.

Both Chrysler and GM are having to cut deeply into expenses as they await news on a government loan package from the White House. GM said today that it will delay completion of the engine factory meant to supply the Chevy Volt extended range electric vehicle the automaker hoped to have in showrooms by late 2010. A GM spokesman says the delay of the engine plant should not delay the launch of the vehicle.

The Volt has been held up as a symbol of GM’s future and its innovation. It has run TV ads and bought billboards touting it even though it is two to three years off from being sold to customers.

Both companies are cutting to the bone as they try to avoid reaching such a low cash position that they have to file Chapter 11 bankruptcy. GM is hoping for an immediate infusion from the Treasury of $4 billion, and a total of $8 billion to $9 billion, while Chrysler is hoping for around $6 billion to $7 billion.

Ford is not applying for an immediate loan, though it wants to secure a $9 billion line of credit from the Feds in 2009.

At Congressional hearings this month, Chrysler, owned by hedge fund Cerberus Capital Management, said it would reach the critically low cash reserve level of $2 billion to $2.5 billion by year end.

Chrysler’s sales have been hit hardest among automakers, with drops in excess of 45% the last two months. For the first 11 months of this year, Chrysler sales are down 27.7 percent to 1.4 million vehicles from 1.9 million for the same period last year.

With the U.S. sales slump expected to continue into January, traditionally one of the slowest sales months of the year, the company has little revenue coming in and must pay suppliers $7 billion every 45 days.

Chrysler’s lineup of vehicles is top-heavy with SUVs, and overall its vehicles rank lower for quality and customer appeal than its domestic rivals or Asian brands.

Lawmakers have said repeatedly in the last month that Chrysler has no future as a standalone company. Tennessee Senator Bob Corker, for example, called the company “toast.”

Chrysler is expected to get government loans, but it is widely anticipated that Uncle Sam will facilitate a consolidation of the company with GM, or preside over the sale of assets, like Jeep and the minivan business, to multiple automakers.

It can afford to shut down factories because of the low demand for its vehicles and the inventory that is sitting on dealer lots with no buyers to drive them away.

GM and Ford have extended their usual holiday shutdown as well. GM said this week it was cutting first quarter vehicle production by 250,000, or 30% from a year ago. That is the equivalent of an entire auto factory shutting down for a year.

All auto companies have been severely hit by the scarcity of credit. Even consumers with good credit scores are having a hard time getting loans because banks have stopped lending. The finance arms of the U.S. Big Three have stopped leasing vehicles all together, and GMAC, GM’s loan arm, is hardly writing any business.

Reader Comments


December 17, 2008 7:22 PM

These people are so ill in formed. Can't buy cars if the banks don't give credit which is the problem.Maybe the government sghould set up a private company and give loans at 3% when the banks don't approve good credit customers. My friend works at the bank and was told not to LEND.


December 17, 2008 7:43 PM

Automakers are not suffering because of scarcity of credit, thats just a red herring.

I bet that all the UAW workers not working will still be getting full (maybe only 95%, oh no) salaries while their sitting at home watching their companies go bankrupt crying about how they have to give 'concessions' 2 years from now, and no sooner.

Charles Kirchhoff

December 17, 2008 8:51 PM

Chrysler's lineup of vehicles is "top heavy" with SUVs and Trucks. No argument.
Chrysler may be "toast" No argument.
"Its vehicles rank lower for quality and customer appeal than its domestic rivals or Asian brands" That is a highly subjective and questionable statement which you should retract.


December 17, 2008 8:52 PM

"Pride goeth before the fall".

"Greed blinds even the best of men".

Food for thought the Big 3 should have kept these in mind in running their business. Now just like the dinosaurs of old they will be extinct.

Let the market take its course US$ funding/bailout is just a waste of tax funds. A remedy is no cure.

John McNeil

December 17, 2008 8:53 PM

It is not the credit problem! It is the lack of family wage jobs that is the problem. It takes two people in the service industry to make the equivilent of what one Steelworker,Ironworker,or Foremen made 30 years one gets laid off or misses a commission check and they are behind on the rent.
It is an employment problem!

Paul (Vw)

December 17, 2008 8:56 PM

>>> GM and Ford have extended their usual holiday shutdown as well. it is not unusual to have a holiday shutdown. So when we have a blog title: "Chrysler Shuts For A Month[!]" the reasonable question is, what is their usual holiday shutdown? Should the title have been "Chrysler Extends Seasonal Shutdown"? Granted, it doesn't sound so Armageddon-ish the second way.

In some ways, I wonder if the editorial decisions which go into a title are more important than the content underneath it.

As for the Volt, if gas prices stay low then maybe it makes sense to delay it. If OPEC is able to bring gas prices up in the near future, then maybe the Volt will get resurrected. Didn't Toyota put the skids on Prius production recently?


December 17, 2008 9:05 PM

Chrysler may as well stay closed after the month is up. Nobody will notice and besides, it will save them even more money. But he biggest savings would come if they never reopen. Cerberus, just you now wish that you never stepped into this hellhole of Chrysler and GMAC? Feinberg is a major Republican donor and he had to beg for money from Congress. No, you can't have it, no welfare for you. Go away. Psss, get out of here, don't you see the No Solicitation sign on the door? Pull yourself up by your bootstraps. Put your tin cup away. What part of NO don't you understand?


December 17, 2008 9:11 PM

The 'auto industry' is like the American whaling industry. It rose from humble beginnings off Long island to become an international giant.

In its peak year, 1846, 735 ships and 70,000 people served the industry. By 1971, no American commercial whaling ship sailed the world's oceans.

Industries come and go. It is part of the business cycle. Give the auto industry a burial on a cold winter day and say goodbye!


December 17, 2008 9:42 PM

GM is trying to sell the Volt which isn't even in production. what a joke. i don't buy it and i don't believe in their bail out bs. Detroit doesn't have an electric vehicle but smaller companies not located in Detroit do, and thats where the bail out money should go.


December 17, 2008 10:11 PM

The question is if this shuts will be enough to Chrysler.


December 17, 2008 10:27 PM

HEY! The Volt is not delayed; a PLANT is delayed (, and the engine is available from other sources (currently Austria). Could you people do your f***ing research before publishing such irresponsible headlines?


December 17, 2008 10:45 PM

Shutting down for a month is a smart move but nothing out of the ordinary in the industry (historically and next year). If they're not curtailing work weeks, they are shutting down plants. i.e. Mercedes is shutting down its main plant in Germany for a couple of weeks in February, its plant in Vance, AL for 2 weeks in January, Mitsubishi will suspend production at its Illinois plant for 7 weeks starting Feb. 16th to April 3rd.

There would be a lot of value for ANYONE who has an opinion about the auto industry (politicians alike!) 1) to get a better understanding of the entire global industry before commenting (there are too many commonalities and interdependencies) 2)to get a better grip of the complexity of the industry.

I'm not defending errors made by leaders in this industry in the past BUT I will say it is an incredibly mis-understood industry. Critics should be listening more and focusing on the future.

David,this is not a criticism of you or your team's reporting. Thanks for your commentary


December 17, 2008 11:17 PM

So, the auto execs didn't get their way in Washington, so now they are turning to blackmail as a means to attempt to get what they want -- like screaming children kicking their feet over ice cream that they have been denied. I think it is time to take out the big stick in DC and start swinging it around Detroit and Wall Street. Let these businesses fail. Let these executives go to jail. They committed financial crimes, and now they are wanting bail-outs to cover it up. No thank you.

RJ, Washington State

December 17, 2008 11:29 PM

Move in right direction!

Heres is the rest of the to do list.

and why?

Good luck hope you make it.


December 17, 2008 11:40 PM

You had the chance to make cars America wanted; and you chose not to. Good bye.

Michael Price

December 18, 2008 12:43 AM

Let us hope the factory workers are smart enough to realize that half or more of them will never be called back to work after the shutdown. They should immediately start to hunt for alternate jobs or begin retraining themselves now during the paid lull. GM will obviously announce a similar stoppage shortly while Ford will shutter selective plants.

December 18, 2008 12:57 AM

This is terrible. The auto companies need to survive not shut down! This is the worst timing just before Christmas. I can't believe Bush is waiting so long since he said he would help them out. Help!


December 18, 2008 1:27 AM

What about plants in Mexico and any other countries where the big 3 might be operating, are they shutting them down?

And what about this story where a dealership was sold back to Chrysler for "offer was just too good to pass up from Chrysler Corp"
Sounds like the ole bait and switch. Spend money to show they are running in the red, get money from the government and then make a killing.

Brad Arnold

December 18, 2008 2:13 AM

Chevy's halt to building the Volt engine plant demonstrates that the Big Three automakers aren't serious about abandoning business-as-usual that got them into this mess in the first place. Volt is the car of the future, and if GM was serious about changing it would cut Volt production last, not first. Therefore, the Big Three automakers shouldn't get bailed out, because it will just enable them to build and try to sell us the same big gas hogs. Fine, I'll buy a hybrid or electric car from a foreign automaker (I was waiting for the Volt so I could buy American)-screw GM.


December 18, 2008 2:13 AM

GM has proven again they do not deserve a bailout. The first vehicle people have wanted is the first they put off. Let us have them make more H3's and go under. Smart when OPEC just reduced output. Always USA and its workers first. WE DON'T NEED THEM.


December 18, 2008 2:19 AM

What will happen to our planet without all these mass produced cars?

Pity Pity.


December 18, 2008 2:23 AM

These actions are political theater. It is only the US operations of these companies that are bankrupt. Meanwhile Chrysler Asia is shopping a new partner in China with Great Wall Motors to develop small cars to be made in China under Chrysler brand for export. And GM today opened a new car factory in Shenyang, China, to mass produce the Chevy Cruze.


December 18, 2008 2:25 AM

The question is...are Chrysler execs getting end of year bonuses? They've done such a lousy job and managing that company, they need to give back their salaries. That would compensate the regular workders for any loss wages.


December 18, 2008 2:31 AM

Chrysler can kiss AMERICA'S @#$%.You are a privately owned motor company and you want to show your muscle. Sir, it isn't selling AMERICA on your companies bailout.
We want to help you and AMERICA wants to stay AMERICA.Please help us help you!!
I'm putting my families ass on the line to make sure AMERICA stays that way.

God bless you and your loved ones at this special time of the year.

Jim Stringer


December 18, 2008 2:36 AM

GM is at it again. Only GM and its super-management can promise the Volt will be here on time (2010) while "indefinitely" delaying a critical component plant.

The plain English translation of this is clear: With gas now at unexpected lows not seen in years... to he** with clean green machines, BRING BACK THE GAS HOGS."

Anybody want to bet a dime of taxpayer money otherwise?


December 18, 2008 2:37 AM

Well I say let Chrystler rot. When the rest of the world was trying to come up with more fuel efficient cars and trucks, Chrystler was building bigger and bigger gas guzzlers and force feeding them to the "must have it bigger" American people for irresistable prices. Now they are halting production as a ploy to force the governments hand into lending them more money to continue building garbage. The entire country of Brazil has gone TRI-FLEX fuel vehicles and fueling stations, time to get on board America!! As for Chrystler (yes I know how it is spelled), and the other car companies, show us REAL change, and maybe we will care. And don't cry to me about jobs, blah blah...Unions got us what? That's what I thought. Eliminate the unions, get back to work!

James Katt

December 18, 2008 2:48 AM

It seems so stupid for the Auto Companies to stop writing loans for the vehicles they are trying to sell.

What are they trying to say?

"Don't buy our cars. They are so non-competitive, we don't even want to finance them for you."


This doesn't bode well when the car company isn't confident enough about its own vehicles, that it won't finance loans for its own vehicles.

That is like telling the public to go ahead and buy foreign cars. Buy a Hyundai, Toyota, Volkswagen and even a Porsche or BMW.

These guys will give you a lease. But our own domestic automakers won't.

Hilary Smith

December 18, 2008 3:14 AM

The government in power does not care about working class people, THE PEOPLE! The people that work for the US Auto Industry. The people that work in the few factories that are left in our country. This is treason! The Bush Administration has opened this country up like a can of sardines to be ravaged by the sharks of foreign investment and greed and I want to see Administration decision-makers in orange jumpsuits for it. They have opened America up to have its historical companies run bankrupt and cannibalized by multi-national corporations. Tax statistics on foreign-owned corporations used to be kept by the IRS, but that stopped in 2002. I guess the American Public doesn’t need to know about foreign-owned corporations operating on our soil and using our market.
The fact is we won’t have any control over our country until we get control of trade. Barak Obama has pledged to support legislation by Charles Schumer to close a loophole in the Foreign Agents Registration Act so that companies with foreign operations would be required to register as foreign agents. If we, the People choose self-governance we can make ourselves heard and I think President Obama can help us free ourselves from the slavery that is “Free Trade”. The business lobby industry compares the legislation to a scarlet letter. That’s a very dramatic interpretation but I, as one woman, am ready for my elected representatives to represent my interests when they make laws, not the interests of multi-national corporations. The new law could be seen as a reason for other governments and corporations to stop investing in the US. What that means is that foreign investors won’t want to invest in America unless they can buy-off the representatives of THE PEOPLE OF AMERICA. Our government has become so impotent that it can actually be threatened by investors. Just like the poor people in Africa; ever hungry for investment. Governments can’t or won’t protect the people. The world over, the authority of the nation state has been usurped by the authority of powerful-unelected-rich people with powerful-unelected-rich-people interests.
If you’re scared of a one-World government you’d better be scared of one-market Free Trade. Free Trade makes all markets one market so if you enjoy competing for peanuts, you’ll be all for it. If America doesn’t use protectionism at this time in our history, we will be eaten alive by the global market. It’s the truth: we have been defeated by the forces of multi-national industrial-competition where humans are component products, just part of the machine; a progressively obsolete part of the machine.
There’s no getting around it, we’ve got to take our licks for the excesses of no-holds-barred Free Trade. We need to suck it up, cut all ties to multi-national corporations, and take control of our own existence. We’ll probably be poor for a while but better to be poor with democratic representation and the law on your side than poor as a slave of the global market without an institutional authority to protect your interests. We’re looking at lean times ahead either way, but if we’re smart we’ll be able to fall back, start regulating imports properly, and in a few years we’ll be back up on top. Remember: Free Trade creates one giant market between America and our trading partners and then forces Americans to compete for jobs with all of the workers in the one new market that we share with our trading partners. If some of the workers in the one new market earn a very low wage, Americans will be forced to compete against those workers for wages and we won’t be able to compete unless we accept even lower wages.
As a country, our best bet is to trade only with countries that maintain the same standard of living that we maintain. That’s called Fair Trade or Protectionism. By requiring compliance with regulations that prioritize civilized employment conditions for the working-class, we raise standards across the board no matter who our trading partners are. The bar is simply raised and the expense is felt comparatively business to business and competition remains intact. If a country can’t assure that its workers are being treated like men, then America shouldn’t trade with them. Simple as that. Forcing Americans to compete with workers here and abroad earning 1/10th what we earn, in our own land, slaves in our own land; that’s what Free Trade dreams are made of.
Finally, I want to say that Free Trade is the only rule that many of us have ever been taught. For a long time I believed that “Free Trade is good”. Well now a lot of us are learning a lesson that we don’t particularly want to learn. I’m sure that Free Trade is quite fine in moderation, but right now we need to change our trade policy in favor of Fair Trade in order to defend the welfare of our People. That doesn’t mean that we can’t change our policies in the future, as necessary. If there’s one thing we should know by now it’s that we can’t afford to be ideological. It’s OK to be scared of change, but it’s not OK to let your fear keep you from seeing reality and taking action on your own behalf and on the behalf of your country men.
Fair trade protects working-class Americans. Let’s make Fair Trade the law of our land. The government is us and we are the government so let’s do our part to get honest citizens elected. Attend local party meetings. Start your own party. Speak out against greed and corruption and incompetence and the dangers of Free Trade extremism. But first, write to your representatives and tell them that you Fair Trade only and that you support Charles Schumer’s amendments to the Foreign Agents Registration Act (because multi-national corporations are not American and don’t care about America). Happy New Year!


December 18, 2008 3:14 AM

There's that forward thinking again that put them in the place they are in.

"We will show you, we will delay production of the very vehicle we hope will turn this company around. You will see!"

I salute you - mavericks of mediocrity. Wherever you are going, may someone else point you in the right direction and may you get there expediently.

Post Toasties

December 18, 2008 5:45 AM

"Tennessee Senator Bob Corker...called the company 'toast.' "
And our entire nation will be toast if we don't do something to save our industrial base. Combine Chrysler with GM if you must. Run all Big 3 through bankruptcy to shape them up. Please. But don't let what's left of our industrial base die. Those of you who say, "I don't care if they all die. They deserve it." Mostly, you're right! But it doesn't matter. The mercantilist Asian economies will take all that they can get, but they never reciprocate. In the world we live in, it's no longer company vs. company in a free marketplace --it's nation vs. nation in a competition of national interests. The U.S. needs a national economic policy, because everyone else already has one. Employer/corporate based health care is broken. A national health care option is needed to compete with all the other countries that already have it. No Kyoto Protocol nonsense, since China and India, aren't held to the same standards, and all the signatories that pointed their fingers at us, never fulfilled their own commitments anyway. Most of all, no access to our wonderful consumer market for ANY country that is not offering full reciprocation. The world's economy is already being turned upside down. What are we afraid of that we can't draw up new rules for fair play? We all can't end up just flippling hamburgers for each other. Yet that's exactly the road we're headed down.


December 18, 2008 6:42 AM

I am concerned that the Government financial help to Car manufacturers is a waste of money,especially to Chrysler.

My reasoning is that very few buyers are out there and the prospects seem to be much worse for the next 12 months, at least?

R. Haworth

December 18, 2008 7:02 AM

There is no functional prototype of the so called "Volt". It simply does NOT exist. So to delay it is a bad joke. GM refuses to meet with the makers of the functioning "Tesla" because it would cut their profit margin. They have had since the oil embargo of 1973 to re-tool.
As of Chrysler (the only auto with brakes that have failed me) their owners are setting on over 34 Billion dollars in assets. So let them both go beg to China for more money! Or get a refund from their lobbyists.

Auto Industry Bailout

December 18, 2008 9:48 AM

The plant closures at Chrysler illustrate why a bailout will not work. Consumers will not be buying cars in the kind of numbers needed to recoup the bailout money. The money would be better spent in the form of cash stimulus payments to individual taxpayers.

Protest the bailout by signing the petition at:

Look to the Future

December 18, 2008 12:47 PM

I haven't had any trouble at all getting unsolicited credit and loan offers with a Transunion 800ish credit score. My understanding is that credit scores can go much higher than that, so I would just be considered merely a 'good' credit risk, especially since I own my own business and my income fluctuates greatly on both sides of red to black from one year to the next. Maybe I'm just very blessed with miraculously generous credit offerings, but I live in a county that is always in the top 5 in unemployment and bottom 5 in wages for the whole country. My primary bank even went belly-up. But, I have people calling to offer me loans regularly, others mailing me cash loan checks with lots of fine print all over them, and credit card lenders offering 0% for 6 months to 2.5 years on $15,000-25,000 limit cards in the mail 3 to 4 times per week. Everywhere I read, the credit lines were supposed to be drying up even for those with better credit than mine...and this is the supposed cause of all our problems, itself the result of bad home loans. It seems the media keeps reporting how people with good credit scores can't get loans. I'd be interested in someone coming up with an article with a lot more detailed information about what is going on with credit availability, because what I read doesn't seem to jive with daily life. Such questions as "Who exactly with good credit isn't qualifying for loans?" and where these people live and what kinds of loans they're getting turned down for would be nice...Include some examples of median credit scores being turned down. So far it all just seems like an unsubstantiated thing being passed around by the media...


December 19, 2008 2:48 AM

CERBERUS Is Leveraging Billion Dollar Connections In Congress

For Chrysler, if the bailout was Structured effectively, the Cerberus share position would be rendered irrelevant.

The Deal Structure is always, always the key.

Robert Wilson

December 20, 2008 11:04 AM

R. Haworth I guess you didn't see that the CEO of GM drove a Volt to the lastest meeting in Washington. There is a functioning Volt, in fact, there are quite a few of them.

Also for those of you that are simply uninformed - there has been a delay in breaking ground in Flint Michigan on construction of a new plant to build the gas engine component of the Volt, but the Volt Vehicle program is on track. You should catch up on your facts.

Also to the person who things that the autocompanies finance their own vehicles GMAC is a finance operation that must borrow money to lend and there are very tight restrictions on borrowing and lending period this is not a decision of auto companies.

Also if you haven't checked the sales of all auto companies are down at least 30% from last years numbers. That means everybody.

And Tesla and GM have met and it was not for GM to gets with Tesla it was for Tesla to figure out how to mass produce their car - seems it is a very difficult and complex task.
Robert Wilson

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