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Production “Pause” at Chrysler

Manufacturer blames credit crunch, not lack of demand

 |  Dec 18 2008, 5:11 PM

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Chrysler has just announced that starting this Friday (December 19th) it will cease production until January 19th – at the earliest.

The month long “production pause” is not due to a lack of demand says Chrysler, which recently scheduled a meeting with dealers to assess the economic crisis. According to Chrysler dealers, 20 to 25 percent of their reduction in volume can be attributed to a lack of available credit.

This reinforces the belief that it is the instability of the banks and their consequent tight grip on credit that is driving the economy into a recession.

News of the production pause comes just as The Wall Street Journal erroneously reported that Chrysler is back in merger talks with General Motors.

See official press release after the jump:

Chrysler LLC Adjusts Production as a Result of the Deteriorating U.S. Credit Crunch

Auburn Hills, Mich., Dec 17, 2008 -

Due to the continued lack of consumer credit for the American car buyer and the resulting dramatic impact it has had on overall industry sales in the United States, Chrysler LLC announced that it will make significant adjustments to the production schedules of its manufacturing operations. In doing so, the Company will keep production and dealer inventory aligned with U.S. market demand. In response, the Company confirmed that all Chrysler manufacturing operations will be idled at the end of the shift Friday, Dec. 19, and impacted employees will not return to work any sooner than Monday, Jan. 19, 2009.

Chrysler dealers confirmed to the Company at a recent meeting at its headquarters, that they have many willing buyers for Chrysler, Jeep® and Dodge vehicles but are unable to close the deals, due to lack of financing. The dealers have stated that they have lost an estimated 20 to 25 percent of their volume because of this credit situation.

The Company will continue to monitor the production schedules of its manufacturing operations moving forward.