DETROIT — Chrysler LLC said Wednesday that it is closing all 30 of its manufacturing plants for a month starting Friday as it seeks to counter the most severe downturn in U.S. auto sales in more than two decades.
By extending the traditional two-week holiday shutdown period, the struggling Auburn Hills, Mich.-based automaker can adjust production to slowing demand and conserve cash.
In a statement Wednesday, Chrysler said tighter credit markets are keeping would-be buyers away from its showrooms. The company said that its dealers are unable to close sales for buyers because of a lack of financing and that they estimate that 20 to 25 percent of their volume has been lost because of the credit situation. Sales in November slid 47.1 percent.
Chrysler and larger rival General Motors Corp. have warned they could run out of cash within weeks without financial aid from Washington. Chrysler has said its cash will drop to $2.5 billion by Dec. 31, the minimum needed to meet payroll, pay suppliers and run the company. It would have trouble paying bills after the first of the year.
Chrysler is seeking $7 billion in government loans as it tries to survive the recession and the worst U.S. auto-sales slump in 26 years. For the first 11 months of this year, Chrysler sales were 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.
In the case of some plants, such as the Toledo Jeep plant in Ohio, operations will resume Jan. 26 but with one less shift.
Chrysler’s Jeep Liberty, Nitro and Wrangler are assembled in Ohio. Sales of the company’s Jeep-brand vehicles fell 41.8 percent in November to 20,302 units.
General Motors and Ford Motor Co. have announced extensions of their holiday shutdowns as well.
