Chrysler and the Federal Reserve are working out a new financing plan for the company, according to a new report.
Chrysler execs are “trying to get us to get the financing we need” to meet the 2019 deadline, said Peter Cappelli, head of corporate finance at Chrysler’s Chrysler Group LLC.
The company has not yet made a decision about its next-year revenue targets, Cappellis sources told CNNMoney.
Cappelli and Chrysler’s other top executives have been discussing a potential 2019 restructuring.
A recent conference call between the CEOs of Chrysler, General Motors and Ford confirmed that talks are ongoing.
Caterpillar, meanwhile, said it’s “looking at a potential new plan” for 2019 and 2020, but declined to provide details.
“We have to take our time,” Caterpillar’s President and CEO Doug Ober said.
The three companies’ shares fell more than 2% in after-hours trading.
The plan would see Caterpillar sell more of its long-term assets in 2019 and 2019 and then buy back those assets with a “haircut” to the stock price, Ober said during the call.
The restructuring could see Caterpillars $7.6 billion in debt repayments in 2019, according the Wall Street Journal.CATECHANTS, CHRYSLERS FACE A LESSON OF PROBLEM: The New York Times article “This is a real opportunity to really focus on our growth strategy,” Ober said, according on CNN.
The Chrysler executives said they plan to do so by reducing expenses and “creating more value.”
“We want to create more value and leverage our assets in the next five to 10 years, rather than just spending money on capital expenditures,” Ober told the newspaper.
Cheryl Ruggiero, an analyst with the investment bank Macquarie Group, said the plan may not go far enough.
“The timing is still too soon to know what the full impact of the plan will be, and if there is going to be an immediate impact,” she said.
The bailout of Caterpillar is a significant moment for the auto industry, said Greg Mankiw, an economist at Moody’s Analytics.
“I think it’s going to take some time for the U.S. to sort of come to terms with the fact that this is a problem,” Mankiewicz said.
“This may be a moment when we really start to think about the viability of the auto sector.”
In other auto news, General Electric has said it will sell its electric car division, after the company’s chief executive told investors on a conference call that the electric car maker has “a very, very long way to go.”
GE said that its sales for 2019 will be down from the same period last year, and that its market share will drop from 25% to 14%.
GE is the second-largest U.K. automaker, behind Mercedes-Benz.
In another setback for GM, it said Thursday that the automaker would have to reduce its capital expenditures by $3.3 billion this year, in part to offset the loss of demand for its Chevrolet Bolt EV electric vehicle.
GM will need to spend $1.4 billion to reduce capital spending, according a statement from CEO Mary Barra.
The automaker is not making any cuts to its workforce.
The stock has fallen more than 6% in the past year.GM will have to sell at least one of its brands — Chevrolet, GMC, or GMD — by 2019, Barra said.
Barra said GM has a goal to make the Bolt electric car, which it expects to debut next year, available to all U.L.A. residents by 2021.
The company is also facing an internal probe by the U-S.
Justice Department that could force the company to repay billions of dollars in loans to auto industry clients, including GM, according.
The DOJ investigation, which is looking into the company and other auto firms, was first reported by The Wall Street Times.