Critics suggest reeling Chrysler is a lost cause

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The Bush administration provided a $4 billion loan. Now, Chrysler is counting on an additional $3 billion in aid for its financing arm, Chrysler Financial.

Some lawmakers say automakers need time to wring out the concessions, and point out that the recession and nearly frozen credit markets are at least partly to blame for poor sales.

“You could make a car that could run on air or could fly and people wouldn’t buy it,” said Senate Banking Chairman Christopher Dodd, D-Conn. “I’m hoping that we may see some of that investor consumer confidence come back.”

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Chrysler, based in Auburn Hills, Mich., and Ford Motor Co., in nearby Dearborn, are also waiting on a decision from the Federal Deposit Insurance Corp. on whether they can become industrial loan corporations. That would mean the government could guarantee their debt, making it more appealing to investors, whose cash Chrysler could use to make more car loans at better terms.

Some lawmakers have noted that foreign automakers, including Japan’s Toyota Motor Corp. and Germany’s BMW AG, have the industrial banks, placing the domestic auto industry at a disadvantage.

Sen. Carl Levin, D-Mich., whose state is home to Chrysler, GM and Ford, said much will depend on how the Obama administration executes the terms of the auto bailout.

In his presentation to Congress, Nardelli used charts that showed Chrysler could post an operating profit of $400 million this year if Americans buy about 11 million light vehicles overall. But in this economy, analysts predict the figure will come in smaller.

Nardelli said Chrysler will improve fuel economy on 19 models this year, about three-quarters of its product line. Besides the electric car, it also has a deal with Nissan to produce a Chrysler subcompact in 2010.

Last month, Chrysler showed off prototypes of a new 300 sedan, Charger performance car and Jeep Grand Cherokee, as well as new, more luxurious interiors under development for nearly all of its products.