• Aug 4, 2008
It's up and down, but nowhere near out for Chrysler, LLC. The Big Three's smallest sibling says that it's ahead of internal estimates and has posted earnings in excess of one billion for the first half of '08. True, the company also posted a $510 million loss in Q1 according to minority shareholder Daimler. And since Chrysler is privately held, it doesn't need to tell anyone whether these earnings put it in the red or black.
But whatever's on the books was good enough to convince lenders to grant Chrysler's financial arm a $24 billion line of credit. Said a Chrysler spokesman, the money will be used to "support our dealers and their retail customers." The pentastar just got out of the leasing business, so the influx of credit will keep the financial arm doing what it needs to do as all those remaining lease vehicles come back with empty tanks and bottomed-out residuals. And believe it or not, those are all good things.

[Source: Detroit News]


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    • 1 Second Ago
  • 7 Comments
      • 6 Years Ago
      This is NOT good news. In fact, this news should be greeted with concern for Chrysler. They fell short of their refinancing targets, implying both that lenders are still extremely concerned about their prospects and that the cost of both their existing and future debt will keep going up, further putting strain on Chrysler's cash.

      On a side note, if I recall the numbers correctly, that billion dollars of "earnings" were operational profits, which is a very vague term. At the very least, it does not account for taxes, depreciation and interest, the last of which is the pressing concern for a highly levered company such as Chrylser.


      http://www.bloomberg.com/apps/news?pid=20601110&sid=aVVSr4kuOAR0
      • 6 Years Ago
      ""Chrysler will be able to escape the bullet that has hit Ford and General Motors, both of which are getting hit hard by declining residual values of vehicles coming off lease. Part of the deal Cerberus made with Daimler leaves the German automaker holding the bag for residual values of vehicles leased before August 2007.""

      http://www.allpar.com/news/#ni1542

      Love it :D
      • 6 Years Ago
      Where can I get myself a $24B line of credit by continually being broke? I'm good at that! Hell, I bet I could pay it back easier than Chrysler could.
      • 6 Years Ago
      Keep in mind this is for Chrysler Financial, not Chrysler Motors.. This is supporting finance customers and dealers, not new vehicle development.
      • 6 Years Ago
      Chrysler Falls Short of $30 Billion Goal in Financing Renewal

      By Mike Ramsey and Bill Koenig

      Aug. 4 (Bloomberg) -- Chrysler Financial's failure to get all of the $30 billion in renewed funding it sought may further restrict the lending unit's ability to support auto sales to Chrysler LLC customers and its dealers.

      Chrysler Financial said yesterday it obtained $24 billion from a group of lenders, 20 percent below its target. The Farmington Hills, Michigan-based lender attributed the shortfall to ``conditions in the credit markets and changes in the company's retail strategy.'' The finance unit stopped offering leases on Aug. 1 because of rising borrowing costs.

      • 6 Years Ago
      I hope they use this, rather than just letting it go up in smoke.

      Debt is no light matter. It is only a tool if you use it very, very effectively and well.

      I hope they do, but I am not so sure they will.

      Sometimes more debt is just more cocaine to a crack addict, and prolongs the inevitable rehab or OD.
      • 6 Years Ago
      What is the line of credit linked to? weren't they leveraging all their assets a few quarters ago?