Late last Aug. 5, the Sunday after New York buyout firm Cerberus Capital Management LP bought Chrysler LLC, the automaker's public relations team was huddled at headquarters in Auburn Hills, Michigan. First on the list was rewriting speeches to introduce the new top brass.

For chief executive officer, they inserted the name of Robert Nardelli, who'd been a Cerberus consultant since Home Depot Inc.'s board ousted him as CEO in January.

Next, they deleted Wolfgang Bernhard, who'd also been hired as a consultant and was slated to become chairman. During his tenure at Germany's DaimlerChrysler AG, Bernhard, 47, had struggled for four years as chief operating officer to increase Chrysler's production.

Nardelli, 60, gave his Cerberus bosses a different take on their $7.4 billion purchase.

The worst U.S. housing crisis since the 1930s was spilling into car buying. Chrysler, which had survived past struggles thanks to a 1980 federal loan guarantee and Daimler-Benz AG's $36 billion purchase in 1998, needed to face reality and forget about making more cars. The U.S. would be lucky to sell 15.5 million vehicles in 2008, 9 percent fewer than Chrysler's forecast.

Nardelli's bearish assessment helped win him the top job, and Bernhard quit, according to people familiar with the matter.....

Late last Aug. 5, the Sunday after New York buyout firm Cerberus Capital Management LP bought Chrysler LLC, the automaker's public relations team was huddled at headquarters in Auburn Hills, Michigan. First on the list was rewriting speeches to introduce the new top brass.

For chief executive officer, they inserted the name of Robert Nardelli, who'd been a Cerberus consultant since Home Depot Inc.'s board ousted him as CEO in January.

Next, they deleted Wolfgang Bernhard, who'd also been hired as a consultant and was slated to become chairman. During his tenure at Germany's DaimlerChrysler AG, Bernhard, 47, had struggled for four years as chief operating officer to increase Chrysler's production.

Nardelli, 60, gave his Cerberus bosses a different take on their $7.4 billion purchase.

The worst U.S. housing crisis since the 1930s was spilling into car buying. Chrysler, which had survived past struggles thanks to a 1980 federal loan guarantee and Daimler-Benz AG's $36 billion purchase in 1998, needed to face reality and forget about making more cars. The U.S. would be lucky to sell 15.5 million vehicles in 2008, 9 percent fewer than Chrysler's forecast.

Nardelli's bearish assessment helped win him the top job, and Bernhard quit, according to people familiar with the matter.....

Poornima Gupta
REUTERS


Jul 23, 2008


DETROIT – Chrysler LLC said Wednesday it plans to cut 1,000 white-collar jobs by the end of September to slash costs and survive a deep industry downturn.

The privately held auto maker, controlled by Cerberus Capital Management, also said its liquidity position through June was unchanged from December "as a result of aggressive programs to reduce working capital, the sale of non-core assets, and volume-related manufacturing reductions."

Liquidity concerns for Chrysler have been rising as evidence grows that the downturn in U.S. auto sales that began earlier this year has accelerated in the face of record gas prices and a consumer defection from trucks and SUVs.

Chrysler, which lost $1.6 billion in 2007, has said it ended the year with $9 billion in cash.

Chrysler employees were informed of the latest job cuts through a staff memo sent by Nancy Rae, Chrysler's chief spokesperson and head of human resources.

"To respond to the current market conditions, an incremental manpower reduction of 1,000 salaried employees by September 30, 2008, will be required," Rae said in the memo, according to a company spokesperson.

The job cuts will be achieved through a combination of retirements, special programs and attrition, the company said.

Chrysler, pushing to turn around its operations nearly a year after being acquired by Cerberus, previously said it would close a minivan plant and eliminate one shift at a Dodge Ram truck plant in Missouri to cut excess capacity.

With U.S. auto sales at 15-year lows, Chrysler and larger rivals General Motors Corpand Ford Motor Cohave been forced to expand restructuring plans.

GM detailed plans last week to slash costs by $10 billion through a number of steps, including white-collar job cuts, in a bid to shore up cash, while Ford is the midst of cutting its white-collar employee expenses by 15 per cent.

DETROIT (AP) -- Chrysler LLC has told dealers that the automaker's financial arm plans to get out of the auto leasing business before the end of the year.

A dealer who asked not to be identified says the reason is that the company has experienced losses on leased sport utility vehicles and pickup trucks because their residual values have dropped.

Chrysler spokesman Stuart Schorr declined to comment on the issue but said Chrysler executives will hold a conference call Friday afternoon.

Word of Chrysler Financial's move comes a day after Ford Motor Co.'s (F, Fortune 500) credit arm took a $2.1 billion charge because of the drop in the residual value of leased vehicles.

The Chrysler dealer did not want to be identified because the company had not made an official announcement.

Chrysler LLC's financial arm Friday said it would stop offering vehicle leases to U.S. consumers, a sharp break in strategy in response to plunging resale prices for gas-guzzling trucks and tighter credit.

“We are shifting our strategy to focus on retail products,” said spokesman Bill Porter. “Effective August 1, we will no longer offer lease products in the United States.”

Mr. Porter said the move by the unit of the No. 3 U.S. auto maker, which is controlled by private equity firm Cerberus Capital Management, was prompted by the tough market conditions.

Chrysler Canada Inc. spokesman Jack Sulymka said the announcement does not apply in Canada.

“They have their incentive strategy, we have our incentive strategy,” he said. “Our incentive strategy remains unchanged from the program we announced July 2.”

“It's two separate marketplaces. When we set up our incentive strategy for Canada it's basically based on the buying practice of Canadian consumers and what Canadians want. We're 23 months year-over-year increase as far as sales go in Canada, and we're very proud of that statistic. We've got a product lineup that caters to that. And part and parcel with that product offering is an incentive strategy that goes along to support it, too.”

U.S. auto sales have dropped to their lowest level in 15 years, and the sudden premium on fuel-efficiency in the face of record gasoline prices has forced consumers to abandon SUVs and other light trucks.

The result has been a sharp decline in the resale prices for light trucks that has forced major auto makers and related lenders to take large losses to write down the value of leases on those once-popular vehicles.

“You have got the dropping of the used car vehicle prices. You have got people that are struggling with the credit crunch,” Mr. Porter said. “It is very difficult right now to offer competitive lease products. So we are switching our strategy.”

Chrysler's larger rival Ford Motor Co. this week took a $2.1-billion (U.S.) charge for its finance company when it reported second-quarter results, in large part because of the hit it took on the declining value of SUV and truck leases.

Nissan Motor Co. Ltd. chief executive officer Carlos Ghosn said this week that the reserves needed to cover losses on vehicle leases had been the one major surprise of the downturn for the Japanese auto maker.