(Reuters) - Chrysler withdrew an application on Thursday for a U.S. government loan worth more than $3 billion to help it make more fuel efficient cars and trucks.
The automaker said in a statement it was confident in its ability to adopt new technologies and make competitive products without new government assistance.
"The decision will not impact Chrysler's ability to achieve its previously announced business plan targets," the company said.
Chrysler -- bailed out by the government in 2009 and now a unit of Italy's Fiat SpA -- did not comment on the status of its Energy Department loan application, which had been pending for some time.
The Energy Department could not be immediate reached for comment, but Chrysler had in the past wrangled with the administration over financing terms.
The decision is likely seen as a political plus for the Obama administration, whose overall Energy Department loan practices have come under scrutiny by congressional Republicans.
The department's $25 billion advanced technology auto financing program has not been the subject of specific criticism. But two of its loans have gone to startups producing electric cars, a target of Republicans who believe the administration has overpoliticized and overspent on battery technology.
One of those small companies that received financing, Fisker Automotive, said this month it had suspended work at its U.S. manufacturing plant and was renegotiating terms of its $529 million Energy Department loan.
With Chrysler dropping a loan bid to upgrade factories needed to make more efficient vehicles, the administration also can end questions about the wisdom of more taxpayer financing for a company that received $12.5 billion in bailout and bankruptcy help.
The auto bailout is a key topic on the Republican presidential campaign trail ahead of this month's Michigan primary.
By withdrawing, Chrysler is following a path set by General Motors Co. GM withdrew a loan application last year, saying it could finance the infrastructure needed to improve the gas mileage of its vehicles without new federal help. GM received $49.5 billion in bailout and bankruptcy aid.
Ford Motor Co and Nissan Motor Co Ltd have each received billions from the Energy Department's advanced technology loan program. It was established by Congress in 2008 as Washington's first response to Detroit's financial distress.
Chrysler's decision comes as it again is profitable, joining its bigger Detroit rivals with restructured balance sheets, new products and confidence to take on traditionally more nimble overseas rivals.
Even if the administration favored Chrysler's financing proposals, the government was unlikely to have awarded the entire $3 billion due to political pressure to find budget savings.
(Reporting by John Crawley and Megha Mandavia; Editing by Andre Grenon and Steve Orlofsky)