Chrysler Corp. and Japan's giant Mitsubishi industrial and financial complex -- which manufactures popular compact cars sold by the U.S. company in this country -- are at odds on how to continue a business relationship that has given the American firm important strength during a time of crisis.
But a spokesman for Chrysler Chairman Lee Iacocca emphasized yesterday that even if the Mitsubishi agreements collapse, the troubled auto manufacturer will not return to Washington in search of emergency or interim financing.
Under a federal government aid plan approved late last year, Chrysler is eligible to borrow up to $1.5 billion with government guarantees of repayment. But Chrysler's overall financial survival package had assumed that existing credit lines -- including more than $200 million from Japanese banks to finance imports of Mitsubishi cars -- would remain intact.
Yesterday, Chrysler confirmed that the Japanese financial institutions have refused to finance the Mitsubishi imports and the American company also retaliated by telling Mitsubishi to defer the next shipments scheduled to depart Japan today, "pending the establishment of mutually acceptable credit arrangements."
Involved in this week's shipment are some 2,000 vehicles -- mainly Dodge Colts and Plymouth Champs. Chrysler has had the exclusive right to see these Japan-manufactured cars but industry sources said the Japanese company may be seeking to end its agreement and move into the American market on its own.
Chrysler has planned to sell about 150,000 Mitsubishi-manufactured cars this year -- part of a 10-year sales agreement with the Japanese company, of which Chrysler owns 15 percent.
Complicating the Chrysler situation are the ties of Mitsubishi to the seven Japanese banks that agreed to finance the exports. These institutions initially cut back on credit last fall and the lead bank is controlled by a Mitsubishi affiliate. Credit was resumed for a boatload at a time last fall, on an interim basis.
A Chrysler official said yesterday a new agreement still is possible. But if the negotiations fail, "we are not going back to Washington to seek any financial assistance of any kind under any circumstances," the official added. Presumably, if the Japanese credit lines are severed. Chrysler would have to take other actions to shore up its financial condition -- including the sale of subsidiaries or finding other lenders.