Chrysler Corp. confirmed today that it has cut off payments to some suppliers until the government decides whether to issue $400 million in urgently needed loan guarantees.
There was increased talk from several quarters that Chrysler's long-term survival depends on a merger or joint venture with a foreign auto company.
No prospects were immediately at hand, though Chrysler has said frequently it would welcome that solution.
Meanwhile in Tokyo, Reuter quoted Mitsubshi Motors Corp. officials as saying that Chrysler has been sounding them out on the possibility of strengthening their linkup, including a joint venture to reconstrict Chrysler. s
They said the bid, which they expect will be followed by a formal proposal, was made by Chrysler representatives who visited Tokyo about a month ago.
The Mitsubishi officials declined to elaborate on further details of Chrysler's proposal, but industry sources in Tokyo said it was unlikely that the two firms would be able to agree to set up a joint venture to save the financially troubled firm.
[And Chrysler officials have told the Treasury Department that it would be hard to conclude a merger unless their loan application is approved.]
A company spokesman said yesterday that the need to guard dwindling cash reserves prompted it to hold up payments to most of its 19,000 suppliers.
The spokesman said the suppliers were cooperating. There was no flat refusal to pay suppliers, the spokesman said.
The company would not immediately confirm reports that some suppliers retaliated by cutting off parts shipments -- an action that could hurt car and truck production.
Both Fraser and Miller reiterated a linkup with another auto company is Chrysler's best prospect, but Miller told The Wall Street Journal that Chrysler's search for a partner is being held in abeyance until its current cash crisis is resolved.
He raised the possibility of a joint venture with an unidentified Japanese auto company.
One of Chrysler's financial advisers, the New York investment firm of Salomon Bros, is helping Chrysler search for a partner.