On December 2, 2008, Chrysler LLC submitted its Plan for Short-Term and Long-Term Viability to Congress as part of its request for a $7 billion working capital loan from the U.S. government to support its short term restructuring and long term viability. On January 2, 2009, Chrysler received an initial $4 billion loan from the United States Department of the Treasury, the terms of which require the Company to submit a restructuring plan to achieve and sustain long-term viability, international competitiveness and energy efficiency. The restructuring plan presented demonstrates Chrysler's ability to meet those requirements through its continued focus on implementing cost reductions and modifications to its capital structure to improve its balance sheet, and on developing a fuel-efficient product portfolio that meets customer expectations and governmentally imposed environmental requirements.
The availability of credit for automotive customers and dealers is the single most important element of Chrysler's viability. Because of the credit market crisis and subsequent rating agency actions, restrictions were placed on Chrysler Financial's credit conduits. Because of these restrictions, Chrysler Financial was forced to greatly reduce the level of retail and wholesale financing support for customers and dealers in the U.S., Mexico and Canada. Most significant was the complete discontinuation of lease financing in the U.S. and Canada in August 2008, which led directly to reductions in total sales volumes of 20% and 50% for the U.S. and Canada,.
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The Company's standalone restructuring plan demonstrates viability which could be further enhanced with a strategic alliance that more effectively utilizes its manufacturing capacity and positions the Company for growth. Chrysler and Fiat S.p.A. signed a non-binding letter of intent that is conditioned upon Chrysler meeting all restructuring targets set forth in Chrysler's U.
