- The Washington Times - Saturday, January 17, 2009

Chrysler Financial, the credit arm of Chrysler LLC, received a $1.5 billion, five-year loan from the U.S. Treasury on Friday, prompting the automaker to offer no-interest financing to buyers of some of its vehicles.

As a condition of the aid, part of the $700 billion Troubled Asset Relief Program (TARP) passed last year, Chrysler Financial agreed to limits on corporate governance and executive compensation. The loan will be secured by a pool of new consumer auto loans, the Treasury said.

The aid from the bank-bailout program lets the finance company help boost sales at Chrysler, which was rescued from collapse by $4 billion in U.S. assistance. Chrysler’s U.S. sales plunged 30 percent last year, the most among major automakers.

“Chrysler’s sales were down 53 percent in December,” said Tracy Handler, an analyst for economic forecasting company IHS Global Insight Inc. “With more money to lend, sales probably would have been down 30 percent.”

The Auburn Hills, Mich., automaker said Friday that it will offer no-interest financing for as long as five years on 11 models.

Chrysler plans more “aggressive” incentives starting as soon as this weekend, said Steve Landry, the automaker’s executive vice president of North America sales.

Chrysler Financial Chief Executive Officer Thomas Gilman said the Treasury loan “will provide us with increased capacity to help Chrysler LLC and our dealers make new loans available to qualified consumers and sell more cars and trucks.”

Chrysler Financial has had discussions with the Treasury about getting more capital, said James Press, president of the automaker. The company expects the $1.5 billion to provide money for loans through March 31, he said.

Ford Motor Co.’s consumer credit unit is in discussions with the Treasury Department, the agency said Friday. The department declined to characterize what the Ford Motor Credit unit is seeking.

Ford is the only U.S. automaker that hasn’t tapped federal funding in the government bailout of the industry.

Chrysler Financial in recent weeks stepped up its appeals to the Treasury, asserting that sales of Jeep, Dodge and Chrysler vehicles were hurt by the lack of credit. GMAC LLC, the lender affiliated with General Motors Corp., became a bank holding company and received $6 billion in support last month under Treasury’s TARP program.

GM also increased customer incentives after the government announced the aid to GMAC.

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