Financially strapped Chrysler Corp., in an effort to sell 80,000 cars and trucks backed up in its inventory, today announced a special program for its dealers that would give them discounts ranging from $325 to $1,000 on each car they buy from the manufacturer.
In addition, Chrysler said it would pick up interest charges for up to 90 days on dealer loans to finance purchases of the 1979 Chrysler models.
Chrysler also said that it anticipated it would lay off a number of its 35,000 white collar workers as part of its cost-cutting efforts, but said it was not sure how many workers would be let go. About 24,000 of Chrysler's 110,000 blue-collar work force have been put on indefinite layoffs because the company has cut back production sharply.
In other developments in the continuing saga of Chrysler's financial distress:
House Banking Committee Chairman Henry S. Reuss (D-Wis.), said he would make sure any administration proposals to aid the company would be "acted on promptly by the full House."
Thursday Treasury Secretary G. William Miller said the administration might be willing to propose loan guarantees for the ailing company, although in an amount well below the $1 billion the company has asked for in special government aid.
Chrysler Chairman John J. Riccardo hailed the administration's stance, even though the proposed aid is neither as much nor in the form requested.
Chrysler Financial Corp., which loans many Chrysler buyers the funds they need to purchase a new car, and Household Finance Corp. said they have reached agreement in principle to channel funds into Chrysler Financial.
The Chrysler subsidiary has been having trouble selling its commercial paper because of the problems at the parent company and has had to draw on its lines of bank credit to pay off maturing commercial paper.
The Chicago-based Household Finance said it has agreed to buy $500 million worth of Chrysler's installment loan assets.
Unlike its major competitors - General Motors and Ford - Chrysler builds cars before it has firm orders for them from its dealers.
As a result, Chrysler built tens of thousands of cars and trucks that its dealers would not buy. Only its subcompact Omnis and Horizons are selling, but Chrysler can only make 300,000 of them a year because that is all the four-cylinder engines it has available.
Chrysler is calling its dealer incentive system the "Grand Slam Clearance" program.
Under the new plan, for example, a dealer who buys a compact Aspen or Volare from Chrysler will receive a $325 cash incentive. On Bigger LeBarons, the incentive is $500, on the large Cordoba, the incentive is $1,000.
On utility trucks the dealer will receive $500, while on vans and wagons the incentive is $700.
Although the program will sharply reduce profits to Chrysler, assuming dealers are induced to buy the cars and trucks, it is still better for Chrysler to sell the products than to have $700 million of unsold vehicles on its lots. Analysts estimate the company is paying out $2 million a week in storage and carrying costs for the 80,000 vehicles.
Investors reacted favorably today to the administration's willingness to bail out Chrysler, even on a more limited level than the company had hoped for. Chrysler stock, which closed Thursday at $7.75 a share, closed today at $8.50.
Analysts said that Chrysler stock was also boosted by Reuss' promise of quick House action.
Reuss, in his statement, said however, that the Banking Committee wants to be sure that by guaranteeing loans to Chrysler the government does not created bad consequences for the economy.
He said that in order to get quick House consideration, the committee might offer a bill to the floor but recommend against passage.
Reuss, and Senate Banking Committee Chairman William Proxmire (D-Wis.), have both said they're concerned about setting a bad precedent in the Chrysler case, but said they're also concerned that thousands of persons might lose their jobs if Chrysler folds.