Chrysler Says It Needs An Extra $2 Billion To Survive

(MoneyWatch)  Chrysler insists it can survive on its own as a smaller company, even without its planned alliance with Fiat, but at the same time, the company said that to survive, it will need more government loans than originally expected.

That's going to hand a lot of ammunition to Senate Republicans and other opponents of a government bailout of the U.S. auto industry.

"We are pursuing strategic partnerships," said Chrysler CEO Bob Nardelli. "But our plan is to be viable as a standalone company," he said in a conference call today. The call was timed to coincide with Chrysler's submission of a plan to regain long-term viability to the U.S. Treasury Department.

The submission was a condition of a government loan of $4 billion Chrysler received on Jan. 2. Separately, GM was set to meet a similar commitment today.

Despite Nardelli's seeming confidence, Chrysler increased the amount of government loans it says it needs to survive. In December, Chrysler asked for a total of $7 billion. Following the first installment, Chrysler had until today to submit a viability plan to receive the second installment of $3 billion, to be finalized by March 31.

However, Nardelli upped the ante in today's submission, asking for an additional $2 billion, on top of the pending $3 billion. At the same time, Chrysler cut its forecast for U.S. auto sales to the lowest sales rate in 40 years, for the entire industry and also for Chrysler.

Chrysler's new, more pessimistic U.S. auto industry sales forecast is for only 10.1 million units for 2009, followed by an average of only 10.8 million units for 2009 through 2012. That's 1.8 million units per year lower than Chrysler's previous industry forecast.

Assuming Chrysler can maintain a U.S. market share of about 10 percent, that represents lower sales for the company of about 180,000 units annually, Nardelli said. In 2008, U.S. auto sales were about 13.2 million, down from 16.1 million in 2007, according to AutoData Corp. Chrysler had a U.S. market share of 11 percent in 2008, down from 12.9 percent in 2007.

"Since December, we have continued to see an unprecedented decline in the automotive sector. The continued lack of available credit affects consumers and dealers, leading to reduced wholesale orders for Chrysler," the company said.