Chrysler needs a $7bn secured working capital bridge loan by 31 December or it may run out of cash and be unable to operate beyond the first quarter of next year, the automaker said in its submission to the Senate Committee on Banking ahead of the congressional hearing in Washington starting tomorrow (4 December).

"The company makes this extraordinary request to meet a short-term deficiency in our liquidity and working capital created by a perfect storm."

Chrysler blamed its liquidity crisis on the collapse in demand for light duty vehicles (a 2007 seasonally adjusted annual rate of 16.2m versus 10.8m last month); the unprecedented financial crisis restricting access to credit and the general global economic downturn

"These events have jeopardised our ability to complete the dramatic restructuring plan that we began in 2007, before the commencement of the current economic crisis," Chrysler's statement said. "Provision of the bridge loan will allow the company to retain the confidence of its lenders, suppliers, dealers and employees and complete the on-going restructuring which we are confident will place the company on a path to long-term viability."

Chrysler said it ended the first half of 2008 with about $9.4bn in cash but the significant downturn in the US automotive sector in the second half of this year began to deplete its "otherwise ample" cash reserves.

"Chrysler currently estimates that at year end it will have approximately $2.5bn available cash on hand. In order to maintain appropriate working capital liquidity, and to bridge to the completion of the [restructuring and business plans], we are requesting the $7bn secured bridge loan."

It expects to spend almost $12bn in the first quarter, $8bn of which will go to suppliers, and expects sales to be even lower than normal in this traditional period of low sales and cash flow due to the economic downturn, the credit crisis and the inability of dealers and customers to secure wholesale and retail financing, "which places greater pressure on operating cash flows".

Chrysler said it hoped a federal loan would function as additional assurance to suppliers, customers and employees "assuming, among other things, that Chrysler Financial has financing capacity at the wholesale and retail level sufficient to support Chrysler's production volumes.

"With credit markets frozen, our customers... do not have access to competitive financing to purchase or lease vehicles…our dealers do not have access to market competitive funding to place wholesale orders for new vehicles…resulting in the constriction of cash inflows. Chrysler Financial is in need of immediately liquidity support."

Without an immediate working capital bridge, Chrysler's liquidity could fall below the level necessary to sustain the company through the first quarter of 2009, the submission said.

It added that CEO Bob Nardelli now receives only $1 a year from Chrysler with no health care, insurance or other benefits - this commitment made at a congressional hearing last month - was yesterday matched by CEOs at Ford and GM in their congressional hearing submissions.

Chrysler said it did not pay salaried merit increases or performance bonuses in 2008, and has not planned any for 2009.

"Management has no options or restricted stock units. Top management will continue to share in the sacrifices of the salaried workforce and bear 100% of their healthcare premium costs."

It added that quality improvements made since the company was privatised had reduced warranty claims by 29%.

It plans 24 major product launches by the end of 2012, including hybrid electric-drive vehicles in several categories: neighbourhood electric vehicles (NEV), city electric vehicles (CEV), range-extended electric vehicles (ReEV), and full-function battery electric vehicles (BEV).

These will compete with some new models Ford announced on Tuesday and upcoming Volt models from GM. Chrysler told Congress it is already the largest producer of all-electric vehicles in the US through its GEM (Global Electric Motorcars) division which has produced over 40,000 NEVs during the past 10 years with "significant" market growth forecast over the next several years.

"Chrysler's product plan includes the introduction of the first full function electric-drive model in 2010, and expansion to additional models by 2013. Chrysler will have close to 100 vehicles dedicated to testing and development within the company, or assigned to government and business evaluation fleets by the end of 2009. Chrysler's market penetration of electric-drive vehicles will further increase with over 500,000 produced by 2013," the submission said.

Chrysler is assuming "conservative" industry light vehicle sales of 11.1m units in 2009, 12.1m in 2010 and 13,7m in 2011 and 2012. It expects a 10.4% share of the US market next year and 10.7% in each of the three following years.

On those numbers, it expects an operating profit of $400m in 2009, $2.6bn in 2010, $2bn in 2011 and $1.8bn in 2012.

"Industry volumes in this plan are conservative compared to historical results," Chrysler said, adding that, after making a $1bn payment toward the government loan, it would have approximately $12.5bn in cash by 2012, "providing a sound basis to continue repayment of federal loans".

Chrysler said it was "aggressively" pursuing strategic alliances and partnerships.

"Further partnership, restructuring and consolidation is required for the industry to be viable in the long-run.

"Chrysler welcomes the opportunity to have an open discussion with the new administration and Congress on a collaborative approach to restructuring that will ensure any government resources invested in the industry are used efficiently and help achieve important national public policy objectives," the submission added.