Chrysler Launches 0% Financing With Government Help
January 16, 2009
By Michelle Krebs
DETROIT -- Within hours of its credit arm obtaining $1.5 billion in federal loans, Chrysler LLC announced incentives of zero-percent financing for up to 60 months on select 2008 and 2009 model year Chrysler, Jeep and Dodge vehicles through Chrysler Financial, effectively immediately.
In addition to the incentives, Chrysler Financial will loosen its previously tightened credit requirement to now include customers with scores in the 620 range.
Zero-percent interest financing will be available on 11 Chrysler models, and in many cases for up to 60 months. They include Chrysler Town & Country, 300 and 300C, Jeep Grand Cherokee, Commander, Wrangler, Dodge Grand Caravan, Charger, Magnum, Challenger, Ram Pickup and Ram Heavy Duty.
Chrysler Financial Receives TARP Funds
On Friday afternoon, Chrysler Financial received a $1.5 billion, five-year loans from the U.S. Treasury, part of the $700 billion Troubled Asset Relief Program (TARP) to ease the credit crisis. Chrysler Financial has been pushing the Treasury for funds, pointing out its sales were being hurt by the lack of credit.
As part of the loan deal, Chrysler Financial agreed to limits on corporate governance and executive compensation. The loan will be secured by a pool of new consumer auto loans, the Treasury said in a statement. The TARP funds for Chrysler Financial are in addition to $4 billion from the federal government to keep Chrysler afloat.
Chrysler follows the lead of General Motors, which virtually overnight launched a host of attractive incentives after its affiliated lending company, GMAC became a bank holding company and received $6 billion in TARP funds in December.
Chrysler Needs Lift
Perhaps more than any automaker, Chrysler needs to spur customers. Rumors persist of the automakers' imminent demise and its sales are in a slump more than any other automakers'. In December, Chrysler sales plummeted 53 percent -- the largest drop of any automaker. Its sales were down about 30 percent for the year.
Chrysler has said about around 25 percent of its sales were lost due to a lack of available credit for consumer car loans. Chrysler has also been hurt by the fact that Chrysler Financial bowed out of the leasing business In August.
Some Plants Stay Closed
In response to deeply falling sales and mounting inventory of unsold vehicles, which has climbed to a 100 day's supply versus the more preferrable 70 or 80 of late, Chrysler announced in December it was closing all 30 of its North American plants until at least January 19.
This week, Chrysler extended the shutdown of five plants. While 23 plants resume operation next week, down an additional week "unless otherwise notified," Chrysler said in a statement, will be plants in: Sterling Heights, Michigan, that makes the midsize Chrysler Sebring and Dodge Avenger sedans; Belvidere, Illinois, where Chrysler assembles the Dodge Caliber and Jeep Patriot and Compass; in Toledo, Ohio, where Jeeps are made; and in Toluca, Mexico, where the Dodge Journey and Chrysler PT Cruiser are built.
Chrysler's plant in Windsor, Ontario, where minivans are assembled, and its Detroit plant where the Viper is hand-built are not scheduled to reopen until February 2. Engine plants in Trenton and Dundee are also down an extra week.
Photo by Chrysler
The Jeep Grand Cherokee is one of 11 models for which Chrysler is offering zero-percent financing.
Posted by Michelle Krebs at 12:13 PM under Business , Chrysler , Featured , News | Comments (0) | digg this | Seed Newsvine
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