Chrysler Corp. said yesterday it will close two plants that make its new K cars for three weeks beginning Monday, a week ahead of schedule, because dealers have a large backlog of unsold cars.
The announcement is further evidence of the severe financial strain on Chrysler caused by a slowdown in sales this fall that followed a sharp rise in interest rates.
The company is expected to announce a new program today to cut its operating costs even further next year in order to qualify for continued aid under the federal Chrysler loan guarantee program.
Chrysler says it will need between $200 million and $350 million in government-guaranteed loans within a month to stay in business next year. To receive the loans, it must persuade the government's Chrysler loan board that it can recover and that the government's backing will not be wasted.
Chrysler officials told the board that the company is not discussing a possible merger with any other carmaker. Some government officials close to the Chrysler situation believe a merger is Chrysler's best hope of survival -- but new loan guarantees cannot be approved if merger negotiations are under way, according to the loan guarantee legislation.
There has been no decision yet on how large a loan Chrysler will ask for this time, said Chrysler Vice President Wendell Larsen.