The auto bailout bill failed just last night in the Senate, but already things are looking bleak for Chrysler. Following shortly after the failure of the bill was made public, some of Chrysler’s suppliers informed the Michigan automaker that they will now be asking for cash on delivery.
Although many suppliers are now asking for COD as a safeguard against a Chrysler bankruptcy, Chrysler says it is “fending them off.”
“The biggest risk we have is our suppliers coming and saying ‘I want to be paid on delivery,’” Chrysler Chief Financial Officer Ron Kolka told the Associated Press. “We can’t do that. The math just doesn’t work.”
Chrysler will have about $2.5 billion in cash on hand by the end of the year, the bare minimum for the automaker to survive. The first quarter of 2009 will be a difficult time for Chrysler as it pays its suppliers about $7 billion every 45 days.
“January, first quarter is a big problem for us,” Kolka added.
