"Operationally Bankrupt"

[Ponch ®]

 Chrysler CEO: We're 'operationally' bankrupt

Automaker scrambling to sell assets just months after private equity buyout as credit crunch deepens - report

December 21 2007: 7:26 AM EST

NEW YORK (CNNMoney.com) -- Chrysler Corp., the troubled automaker bought by private equity just four months ago, is scrambling to sell assets amid indications of huge losses, as access to cash becomes increasinglly
scarce, according to a published report Friday.


"Someone asked me, 'Are we bankrupt?'" the Wall Street Journal quoted Chrysler boss Robert Nardelli telling employees at a meeting earlier this month. "Technically, no. Operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with."
To raise money, Chrysler is looking to sell over $1 billion in land, old factories, and other holdings, even if it has to let those properties go for under book value, the Journal said.
In an interview with the Journal, Nardelli confirmed the comments and declined to give a financial forecast for 2008, saying only that Chrysler "will make a pretty significant improvement" over the $1.6 billion the company is set to lose this year. The Journal said Nardelli originally hoped to turn a profit in 2008.
The rush to raise capital comes amid constricting access to money as more banks and other lenders face heavy losses related to subprime mortgages.
Chrysler's owner, Cerberus Capital Management, is now facing serious subprime-related losses from GMAC Financial Services, which it bought from General Motors (GM, Fortune 500) for $12 billion, and is also trying to walk away from a now pricey deal to buy United Rentals Inc., (URI) the Journal said.
Cerberus bought Chrysler from German automaker Daimler in a deal that closed in August.
In the arrangement, Daimler (DAI) essentially paid Cerberus to take the automaker, which fell to No. 4 in U.S. sales behind Toyota Motor (TM) in 2006, in an effort to get out from under a $1.5 billion loss from last year, along with continued obligations to union members and retirees.

http://money.cnn.com/2007/12/21/news/companies/chrysler/index.htm?postversion=2007122107

[Ponch ®]

I think it's all bull's fault due to his incessant bad mouthing of the company's products.

[bull]

I think it's all bull's fault due to his incessant bad mouthing of the company's products.

If they had only listened to me they'd be in the black.

[TruckDriver]

I hope I'm wrong, but all the same, it wouldn't suprize me if they are totally gone in the next couple of years.

[Ghoste]

I agree with Bull.   

[70charginglizard]

I think it's all bull's fault due to his incessant bad mouthing of the company's products.

If they had only listened to me they'd be in the black.

Listen to the very last line in this video-
http://www.youtube.com/watch?v=JkA1uAJlbzU&NR=1

[moparstuart]

I think it's all bull's fault due to his incessant bad mouthing of the company's products.

If they had only listened to me they'd be in the black.

Listen to the very last line in this video-
http://www.youtube.com/watch?v=JkA1uAJlbzU&NR=1

yeah negitive input from charger , so the made it more retro

[Ponch ®]

I think it's all bull's fault due to his incessant bad mouthing of the company's products.

If they had only listened to me they'd be in the black.

Listen to the very last line in this video-
http://www.youtube.com/watch?v=JkA1uAJlbzU&NR=1

yeah negitive input from charger , so the made it more retro

Say what you will about the hated "Abomination", but along with the 300 and the Magnum, it's probably the reason why the company is still around at all.  God knows nobody (except car rental companies and Brock) was buying those underpowered and stylistically uninspired FWD Intrepids, 300M's, Stratuses, and LHS.

[Highbanked Hauler]

I hope I'm wrong, but all the same, it wouldn't suprize me if they are totally gone in the next couple of years.

  Na,   They will be the first to come out with the first   personal flying platform,  that will replace cars all together,  gotta look to the future

[dukeboy_318]

I hope I'm wrong, but all the same, it wouldn't suprize me if they are totally gone in the next couple of years.

i sure hope not but i wouldnt be surprised either

[bull]

I think it's all bull's fault due to his incessant bad mouthing of the company's products.

If they had only listened to me they'd be in the black.

Listen to the very last line in this video-
http://www.youtube.com/watch?v=JkA1uAJlbzU&NR=1

  yeah negitive input from charger , so the made it more retro

Say what you will about the hated "Abomination", but along with the 300 and the Magnum, it's probably the reason why the company is still around at all.  God knows nobody (except car rental companies and Brock) was buying those underpowered and stylistically uninspired FWD Intrepids, 300M's, Stratuses, and LHS.

Whachutalkinbout Willis? Those things are everywhere. And you don't think there are about 600,000 '06 "Charger" taxis, rental cars and cop cars? Don't you find it curious that Chrysler was doing quite well before the Germans took over (pre-'06 "Charger") and promptly ran the company into the ground after that model was released. I'm not simplistic enough to believe the '06 is the reason but I do think DCX's general design philosophy during that time did them absolutely no good. I'd say the downhill slide began late in '03 (with models like the '04 Durango) and snowballed thereafter. If you click on Lizard's youtube link you'll hear the actual Chrysler designers talking about the backlash created by the new "Charger" and how it reshaped their design philosophy. Too little too late though I'm afraid.

[Ghoste]

I also wouldn't be too quick to include the Magnum in a list of cars that are keeping the company afloat.  Poor sales numbers are the reason it's being dropped after all.

[greenpigs]

Guess I better go buy a Ford..at least they will have dealerships 5 years from now.

[Ghoste]

Or maybe the Big Three will merge into the "New American Motors" corp and try to stop the Japanese juggernaut. 

[Mike DC]

 
There's too much capacity in the worldwide auto industry these days.  Somebody American is gonna go under sooner or later.  The problem is that it will likely be Chrysler when it should have been GM. 


I'm not just saying that as a Mopar fan either.  I think GM's still less healthy than Mopar in the big picture.  GM has been a mess for the last 30 years, but they've been able to coast this long because of a combination of reasons.

   

[Ghoste]

I can't help wondering if Toyota will succumb to the same kind of ills that plague GM today as they grow.  (complacency being the first of them)

[BigBlackDodge]

I think it's all bull's fault due to his incessant bad mouthing of the company's products.

If they had only listened to me they'd be in the black.

Listen to the very last line in this video-
http://www.youtube.com/watch?v=JkA1uAJlbzU&NR=1

  yeah negitive input from charger , so the made it more retro

Say what you will about the hated "Abomination", but along with the 300 and the Magnum, it's probably the reason why the company is still around at all.  God knows nobody (except car rental companies and Brock) was buying those underpowered and stylistically uninspired FWD Intrepids, 300M's, Stratuses, and LHS.

On the contrary, I've talked with several salesmen who miss those cars because they sold very well. You can also add my name to Brocks as an LH owner.

BBD

[70charginglizard]

I think it's all bull's fault due to his incessant bad mouthing of the company's products.

If they had only listened to me they'd be in the black.

Listen to the very last line in this video-
http://www.youtube.com/watch?v=JkA1uAJlbzU&NR=1

  yeah negitive input from charger , so the made it more retro

No...Id say they are revamping the new charger this time to "making" it more close to retro because of the input from the classic mopar owners stating that is what they should have done from the beginning.

The test of time (being when the challenger comes out) and it's sales in direct comparison to the new chargers sales in the beginning should tell the tale as to what the public truely wants to see in a new age classic mopar muscle car.

No judging should start before that point.

[T3/RT]

QUOTE (Chrysler)
Robert Nardelli Responds to Media Reports

Posted Dec 21, 2007, 05:33 PM by Robert Nardelli

Chrysler Chairman and CEO Expresses Confidence in Chrysler's Operations, Products, Finances and Employees

* Long-term support from Cerberus Capital Management, L.P. and Daimler AG

Auburn Hills, Mich. - "There have been several recent media reports that have painted an inaccurate picture of Chrysler LLC's current financial position. Therefore, the management of Chrysler and our parent company, Cerberus Capital Management, L.P., felt it imperative to correct the record since such misinterpretations and misperceptions are misleading and could leave the wrong impression in the minds of investors and other interested parties.

First and foremost, it is important to note that Chrysler is not only meeting, but, in many cases, exceeding its financial targets heading into 2008.

Importantly, Chrysler has ample liquidity. We are fully funded with working capital to meet our present and future needs and objectives. We are doing what any other prudent company is doing during this challenging economic environment. We are trying to instill a sense of urgency throughout the workforce, putting our capital to work effectively and efficiently, streamlining inventory, improving current products and developing new and innovative vehicles. Our dealer body is quite pleased that our inventory of vehicles was down another 4 percent in November.

In a 13-hour meeting this week with the Cerberus board of directors, Cerberus praised and was highly complimentary of Chrysler's progress to date and unanimously approved our 2008 plan. We have a solid strategic direction to return the company to long-term profitability. We are on target and have the unwavering support of Cerberus, as well as our other key partner, Daimler AG.

Cerberus met with its investors last Thursday to share the progress that has been made and to convey to these investors that the company was meeting – and in many cases – exceeding – its targets. The report was well received.

Like many companies in today's uncertain economic environment, Chrysler is moving aggressively to improve its business. We recognized in advance the increasingly competitive vehicle market heading into 2008. With that, we have been moving aggressively to make our company leaner. The steps we are taking include previously announced volume-related reductions at several North American assembly and powertrain plants and the elimination of four products from our lineup, which is very customary in the auto industry.

However, we are very excited about the new products coming in 2008. These include the legendary Dodge Ram pickup truck, the Dodge Journey crossover, the relaunch of the historic Dodge Challenger – which has already generated 8,851 customer orders – and two, all-new, large hybrid SUVs, the Chrysler Aspen and the Dodge Durango, demonstrating our support for the environment and more fuel-efficient vehicles.

For our current vehicle line-up we have already approved more than 260 line item improvements to enhance our products – most for the 2008 calendar year.

The recently completed national labor agreement with the United Auto Workers – which includes the establishment of an independent retiree health care trust – provides a framework to improve the long-term competitiveness of the company.

Since August and the first day of the new company, the management team has been working to improve Chrysler's working capital, disposing of non-core (or non-earning) assets and reinvesting this cash into product development, new technology and new innovations for our customers."


The following related statement can be attributed to Mark Neporent, Chief Operating Officer and General Counsel of Cerberus Capital Management L.P.:

"We remain extremely enthusiastic about our investment in Chrysler. Our underwriting assumed, and fully planned, that Chrysler would incur losses in the near term. Under the leadership of Bob Nardelli, Tom LaSorda and Jim Press, Chrysler is already on track to exceed its multi-year restructuring and recovery plan on virtually all key metrics. We met with the management team this week and fully endorse their strategic direction and their plan to meet the challenges of the current environment. We are confident that Bob, Jim and Tom are taking the right steps to bring Chrysler to profitability. Our mutual resolve to restore Chrysler to its leadership position as an iconic brand is unwavering."

[Ghoste]

In other words, the earlier report on poor cash in hand was really meant as a softener for some decision that we are about to announce that we know will upset somebody.

[70charginglizard]

"However, we are very excited about the new products coming in 2008. These include the legendary Dodge Ram pickup truck, the Dodge Journey crossover, the relaunch of the historic Dodge Challenger"

[hemihead]

I know a way they can save some cash . Get rid of some of the overpriced white collar dead weight and slash the overpriced salaries, benefit packages and stock options. Oh , instead this is were they want to rape the blue collar guys .

[68charger383]

Sounds like Ford just before they started closing some of the US plants and had major layoffs. Chrysler has some nice profitable subsidies...could be the set up to allow them to sell off some of these subsidies for some quick cash...

[hemihead]

On a side note -  So many of you people hate   DCX ( me included ) and the Charger / Magnum but you drool all over the new Challenger ? It is the same car just dressed up. A pig is still a pig in my book. I'll wait until a couple years until the American designed Mopars come out.

[J-440]

  Didn't the UAW pretty much screw GM and Chrysler all to hell?  From what I've been hearing, when they all re-negotiated a few years back, the employees got a ridiculous settlement contract that basically screwed the companies that they were working for.  I'm not too keen on the details but bought contracts, outrageous health benefits and basically money for nothing in certain instances were part of the deal.  Now I'm all for paying a worker a fair salary for a fair day's work but how much should a guy make working on an assembly line tightening the same nut over and over.  It might be the white collar corporate greed or the UAW that is forcing the Big 3 to assemble their cars in Mexico, Canada, and other places abroad. 
  I do know that the Japanese laugh at our business practices when we fire or hire someone.  Take for instance that nice lady CEO for Hewlitt-Packard that was let go a couple years back.  She started off making a ridiculous salary, got fired within 3 years and was prompty rewarded with $20 million and stock options.  What the hell kind of business are they running?  Anyway, we need to get back to the America of old and start whooping some ass again.  Our country is going into the toilet because of this crap.

[Todd Wilson]

  Didn't the UAW pretty much screw GM and Chrysler all to hell?  From what I've been hearing, when they all re-negotiated a few years back, the employees got a ridiculous settlement contract that basically screwed the companies that they were working for.  I'm not too keen on the details but bought contracts, outrageous health benefits and basically money for nothing in certain instances were part of the deal.  Now I'm all for paying a worker a fair salary for a fair day's work but how much should a guy make working on an assembly line tightening the same nut over and over.  It might be the white collar corporate greed or the UAW that is forcing the Big 3 to assemble their cars in Mexico, Canada, and other places abroad. 
  I do know that the Japanese laugh at our business practices when we fire or hire someone.  Take for instance that nice lady CEO for Hewlitt-Packard that was let go a couple years back.  She started off making a ridiculous salary, got fired within 3 years and was prompty rewarded with $20 million and stock options.  What the hell kind of business are they running?  Anyway, we need to get back to the America of old and start whooping some ass again.  Our country is going into the toilet because of this crap.

A deal is a deal. A contract is a contract. What has happened is neither side has looked to the future until recently. The old retired UAW people need to continue to get their benefits. A deal is a deal and a contract is a contract. What they need to do is re negotiate the future contracts. The new people simply are not gonna get what the older people that hired years ago are getting. As for rediculous settlement contracts the older workers probably had one of their benefits bought out. As an example if over the course of 30 years I will pay you an extra amount that will total 300,000$.  Or I can pay you 150,000$ now and you dont get anymore money. Most will jump on that deal and it actually saves the company money.

The biggest problem I would imagine is health care costs have gone up terribly bad. This is something they did not see in the future and its biting them now. Just recently on the radio when GM was the topic of discussion for a few weeks they interviewed some 80 year old retired GM worker and he was pissed about maybe loosing his health care for himself and wife and grand daughter.  My questions is WHY is a 80 year old guy on the health insurance plan. He should be on medicare with the option to be on GM's health care plan if he would like to PAY the monthly fee. Also why is his grand daughter on the plan. This is an example of whats killing the auto makers. A deal is a deal and a contract is a contract and this GM worker is taking full use of what was negotiated by the UAW and the Company. Both sides need to stop this if they are going to survive.  The railroads saw this and made changes in 1985. The few railroaders on this forum know what I am talking about. The old guy I work with makes roughly 100$ a day more then I do. Do I like it? No! But on the flip side I have an extremely good job and those changes have put the company in a better position then it was which will allow it to remain a company providing jobs.

As for the Big 3 building stuff in Mexico theres 2 sides to that.  It allows them to cut costs involved with building a vehicle and increasing profit per vehicle. Is this corporate greed or are they simply trying to stay afloat. I would be curious to see if the extra profit made from a mexican built vehicle is carrying the US built units. Profits have to be used for the future to buy/build/retool and redesign to keep advancing and make vehicles better. Early on it was probably corporate greed as costs have not come down on anything built outside the US now it may be the only way they can figure out how to cut costs.

As for people not liking the new design of Chryslers vehicles thats all fine. I actually think most of their new vehicles look good and for the most part they have not fell into the cookie cutter look so many other cars have fell into. They are different then most of the other companys. The muscle car days are overwith folks. Its a new time and era. Reliable and cheap (mpg) transportation is what most people are looking for nowadays. Yes the prices of new vehicles are very high but they are safer and get better MPG and run a lot longer then the old muscle cars could ever think about doing.


As for Chrysler being broke and going under I dont think I would sweat that just yet. Its probably a bunch of stuff happening right now to get the company turned around and running again. End of year is a good time to show loss's when its time to take care of taxes and stuff.  I think if you dig into it the new Chrlsyer Bosshog isnt getting paid stupid amounts of money and bonus's and stock options as he will get paid those on Chryslers performance so its in his best interest to see to it things go good.


Todd
 

[nh_mopar_fan]

Really good post, Todd.

[hemihead]

 The solution  always seems to be cut the the little guy . Is it better to cut 10,000 UAW jobs or one guy who is an overpaid dead weight ? How can you expect to sell new cars if nobody working can afford one ? That what happens when Corporate greed takes over. Blue collar people working minimum wage jobs cannot afford to buy a new car so then the company cries that they can't sell any. Look what happened to the pet food companies that bought the food ingredients from China. They bought from China to make a bigger profit.They didn't care if it killed your pet.All they cared about was their own bottom line. If the labor is cheaper in other countries, why aren't the car prices lower? Because some white collar guy hiding behind a desk found a way to make more money for the company so he could further his career. There's nothing wrong with making a profit. That is what business is for , but come on , isn't there a drop of morals left anymore ? Society today worships the almighty dollar.

[HeavyFuel]

Say what you will about the hated "Abomination", but along with the 300 and the Magnum, it's probably the reason why the company is still around at all.  God knows nobody (except car rental companies and Brock) was buying those underpowered and stylistically uninspired FWD Intrepids, 300M's, Stratuses, and LHS.

You might want to rethink that.  I have seen about 1/2 dozen Mags, Chargers, 300s around town. 

Top selling vehicles through May 07. 


May 07
RANK   VEHICLE              2007     2006  '06 RANK  %Chng
1  Ford F-Series P/U       290,282  334,725   1       -13.3
2  Chevy Silverado-C/K P/U 265,941  258,378   2       +2.9
3  Toyota Camry            193,900  177,090   3       +9.5
4  Toyota Corolla          165,722  159,992   6       +3.6
5  Dodge Ram P/U            154,143  150,799   4       +2.2
6  Honda Accord            153,431  145,529   5       +5.4
7  Chevrolet Impala        144,541  114,014   13      +26.8
8  Honda Civic             137,288  138,744   7       -1.0
9  Nissan Altima           114,318  102,785   9       +11.2
10 Dodge Caravan            94,220  103,876   12      -9.3
11 Honda CR-V               84,464   59,660           +41.6
12 GMC Sierra P/U           84,106   80,957   10      +3.9
13 Ford Eco'ine/Club Wagon  80,641   74,876   21      +7.7
14 Chevrolet Cobalt         79,257   93,023   15      -14.8
15 Ford Focus               77,732   80,559   17      -3.5
16 Toyota Prius             76,747   38,460   33      +99.6
17 Ford Escape              73,058   74,978   22      -2.6
18 Toyota-RAV4              72,447   61,811   35      +17.2
19 Chrysler Town & Country  66,951   68,943   19      -2.9
20 Ford Fusion              66,260   57,398   34      +15.4

[T3/RT]

Wow! I did not realize how much they make off these cars. I knew they sold a lot for SRT8`s but the cash. Wow!

From Oh20 on Allpar:

As of the end of business circa 12/20/2007:

8,851 Challengers pre-sold to retail customers... and counting

That's almost THREE HUNDRED MILLION DOLLARS at wholesale!!

GREAT NEWS for Chrysler. GREAT NEWS for the SRT division, 2008 is going to be their highest sales year to date.

[T3/RT]

More SRT8`s from Dec. 3-20 than any one year previously. They would be smart to keep making these. As many as they can as fast as they can.

[Mike DC]

 
The prices of cars are never gonna come down no matter what happens withe UAW or Mexican plants or anything else. 



The simple fact is that when American car buyers have $15,000 to spend, they'll more often buy a higher-end $30K car that's several years old. 

Too many people would rather do this than buy a brand new lower-end car for $15K.  So except for a segment of penny-pinchers (who really do buy new $15K econobox cars), there's pretty much no market to produce new cars/trucks in the $15K range.

.  .  .  And the longer this goes on, the more the $30,000 buyers will dominate the car market .  .  .  and the more expensive features/safeties they'll make "standard" on everything  .  .  .  and the more the Fed will mandate these things to appease the "Dateline NBC" expose shows .  .  .  and the harder it will be to produce ANYTHING for $15,000 even if people actually began wanting cheap new cars again. 


Vicous cycle.