Chrysler Cuts Production, Too, Following GM and Honda

(MoneyWatch)  First-quarter auto production for the U.S. market keeps falling, as Chrysler announced today it will extend its holiday shutdown an extra two weeks.

All told, Chrysler said it will close its manufacturing operations from Dec. 19 to at least Jan. 19. The announcement left the door open to extend the shutdown, since it said, "impacted employees will not return to work any sooner than" Jan. 19.

Chrysler's holiday shutdown originally was to have been from Dec. 24 to Jan. 4, a spokesman said. The company had already extended it once. Chrysler's announcement follows cutbacks in North American production for Honda and GM, with still more companies likely to follow suit and quit building more cars and trucks than they expect to sell, in a slow first quarter.

Chrysler blamed the lack of available consumer financing. That glosses over a couple of factors.

One, Chrysler sales were already off, before the credit crunch began this fall. Second, Chrysler Financial, Chrysler's captive finance company, has been forced to cut back more than rival Ford Credit, and more than most import-brand auto finance companies, because Chrysler Financial itself is having trouble borrowing money. GMAC Financial Services is having similar problems.

Chrysler Financial quit offering leases completely in August. Other auto lenders have cut back on leasing, but so far Chrysler Financial is the only captive finance company to quit leasing entirely.

"Due to the continued lack of consumer credit for the American car buyer and the resulting dramatic impact it has had on overall industry sales in the United States, Chrysler LLC announced that it will make significant adjustments to the production schedules of its manufacturing operations," the company said in a Dec. 17 announcement.

Chrysler said the extended vacation will "keep production and dealer inventory aligned with U.S. market demand."

In November, Chrysler's U.S. sales fell 47.1 percent from the year-ago month, to 161,088, according to AutoData Corp. After 11 months, Chrysler's U.S. sales in 2008 were down 22.5 percent to about 5.6 million, the biggest drop among the Detroit Big Three.