Nardelli: Chrysler is close to running out of cash

Chrysler LLC CEO Bob Nardelli told a Senate hearing today that the automaker will burn through $5 billion to $7 billion in cash in 2009 during another tough year for auto sales.

That would be on top of $5 billion in cash consumed in the first three quarters of 2008, including $3 billion in the third quarter. Nardelli said that at that rate of cash burn, Chrysler is in danger of reaching its minimum safe level of operating cash by year end.

Nardelli’s comments echo those of General Motors CEO Rick Wagoner, who warned on Nov. 7 that his company is in danger of running out of cash as U.S. vehicle sales plunge to 25-year lows.

Chrysler, owned by the private equity firm Cerberus Capital Management LP, isn’t required to reveal its financial information.

Nardelli said Chrysler ended the third quarter with about $6.1 billion in cash.

Under aggressive questioning from senators, Nardelli said Chrysler’s portion of the $25 billon request for low-interest loans was $7 billion.

Wagoner said GM is seeking to obtain $10 billion to $12 billion of the prospective package. Ford Motor Co. CEO Alan Mulally said Ford’s portion would be $7 billion to $8 billion.

Several members of the Senate Banking Committee said they were worried that the carmakers might have to come back for additional loans in 2009. They also expressed concerns that the Detroit 3 won’t be able to pay back the money.

Wagoner said GM would burn through about $15 billion in 2008. That rate would slow to about $10 billion in 2009 as the company continues its restructuring and work force reductions.