Automotive News - May 19, 2008 - (Page 31)

MAY 19, 2008 • 31 TA L K F R O M T H E T O P LaSorda steers Chrysler’s global ventures efore Cerberus Capital Management LP bought 80.1 percent of Chrysler last August, Tom LaSorda was the top dog at the Chrysler group. After the Cerberus takeover, LaSorda lost his CEO title to Bob Nardelli. And in September, Cerberus also brought in former Toyota executive Jim Press, with whom LaSorda now shares the titles of co-vice chairman and co-president. Nardelli now refers to manufacturing wizard LaSorda as Mr. Supply and dealer guy Press as Mr. Demand. Since then, LaSorda has forged a product-sharing partnership with Nissan that will produce a Chryslerbadged small car for Latin America next year and another for North America in 2010. He also is overseeing Chrysler’s joint venture with Chery Automobile Co., of China, and is looking for other partners. LaSorda spoke recently with Editorial Director Peter Brown, News Editor Dave Guilford and Staff Reporter Bradford Wernle at Chrysler LLC headquarters in Auburn Hills, Mich. Everybody thought you would leave Chrysler. What has kept you here? I’ll tell you three major reasons. Number one: I’m a fourth-generation LaSorda for Chrysler, and so that’s pretty cool. Second, when I talked to (Cerberus Chairman) Steve Feinberg, he told me that he wanted to bring Bob Nardelli in. I said to him, “I’ve heard a lot about him, read a lot about him, and I’d like to meet him.” I said to Steve, “If I like him, I’ll stay; if I don’t, I’m not.” And, I liked him a lot. (Third), he wanted me to stay. That was important, that Bob said, “I’d like you to stay,” and Steve wanted me to stay. When you look back on it, this sort of predated you, but you know Chrysler was a pioneer in China and then completely gave it away. What happened? Well, I looked at the data that backtracked to the early mid-’90s, almost right up through ’97-’98. The volumes in there were pretty nice volumes at the time, you know, 50,000 to 60,000 units. It might not seem like a lot, but back then we were the first players there. And then the merger took place, and then Chrysler fell into trouble in 2000-2001. So all capital, all focus, got shifted into the NAFTA region. And, therefore, we didn’t put the capital, the product plans into China to get ready for the explosive growth that took place. Do you look at that now with regret? When you’re hemorrhaging, you almost put all your capital, all your resources with focus on fixing the 90 percent profile of the company. Looking back, the decision should have been made to separate certain regions from the wrath of trouble in another region. We’re hearing from suppliers that there’s a lot of pressure to source some low-cost countries, but specifically in China. Is that accurate? What we’re saying to them (is) here’s where we’re moving, which is us to buy it and joint-venture with them rather than to do it on our own. You’re seeing that worldwide. Everyone’s hooking up with everybody. What are you going to do to make the new CAFE regulations? I’ll get in the bicycle business (laughs) — see what kind of margins I can get on that. We’re in the midst of doing a major analysis on that change of legislation, if you will, and to determine what has to change in a portfolio. The perception from the outsiders is that you’re really in a tough spot. You have a limited amount of cash, no capacity to issue debt, and Daimler’s view is that their 20 percent is worth a lot less than they thought it was. I’m not going to talk about Daimler’s reporting because it’s off a different accounting. But I do want you to know that we ended last year with a billion more in cash — way better than what the lenders thought and what Cerberus thought. In the first quarter, we’re ahead of those particular targets as well. How would you characterize the mood at Cerberus? We meet on an ongoing basis. There’s no doubt in their crystal ball they would not have expected this huge economic crisis. Having said that, the mood is excellent, and it mainly is excellent because we are on plan. Secondly, they’ve seen our strategic plan, and they know ’08 is going to be troubling. They understand the ups and downs in the business cycle, and we’ve met their expectations. Do you need two minivan plants going forward? We have four shifts of minivan production right now. Part of that was helped by the fact that VW is entering in the picture — here this summer — which hasn’t entered into the market in the volume that it would take. So that’ll help our capacity. Can I ask, since you’re already building something for VW and since a lot of European automakers are looking for North American capacity, do you have any other discussions with European automakers about doing production for them or them using any facilities you’re not using? My phone number is available, and I would accept a call from anyone that would like to look at our facilities, yes. Have there been any talks so far? No. In what countries or regions might you not be a major player? I don’t see us in 10 years being a big player in Korea. I don’t see us being a big player in Japan. Those are big global markets, but not for us. Latin America is something we’ve got to relook at because we keep going in and out, and we’ve got to either go or stay. And then, of course, Russia’s bigger — a big market. I think that would be a bigger play for us long term. India is still a decision we have to make. c Tom LaSorda How’s the Chery project proceeding? Slowly. But we’ve got some good, strong support from the government. Hopefully, we’ll have some conclusions — I thought by the end of the first quarter — but I would suspect it will go on at least another couple months. primarily a bigger presence in China. We said, “You could source where you want, but we’re going to tell you now what we should be paying for the components.” With your efforts to put more people into China for purchasing and engineering, is that the prelude to a factory there? We already have the 300, the Sebring there and, of course, with regards to other products that we may want to enter into the market, we’d like to have a good presence for engineering and procurement. And then some of the discussions we’re having with Chery, we’d like to have the technical people ready to go as well, to validate any export potential of any of the products. We’re branching into not only the vehicle purchasing, but we’re going into tooling. Will the Nissan small car be here before the Chery small car? For NAFTA and Western Europe, yes. And are those cars comparable size? No. The first one that we’re working on with Chery is much smaller. It’s a lot narrower, so it’s in the B category, but I call it a B-minus. But it wouldn’t necessarily be for North America? It will not be for the United States or Canada or Western Europe. Did Nissan bring up pickup trucks, or did you say, “Maybe we could build that”? We discussed their portfolio and ours. They had heard of our new truck and said, “My God, this is a pretty nice truck.” So that helped solidify the fact that Chrysler is here to stay. I think it’s a vote of confidence that they’re going to buy the truck from us right now. Did the slow progress of the Chery talks contribute to the urgency to get a small car from somewhere else? The bottom line is we need small cars, meaning U.S. and Western Europe, NAFTA standards. And Chery’s cars are still not ready for that exposure into these markets and will not still be for, Phil Murtaugh (head of Asian operations) has stated, three years or more. As you’re looking at trying to outsource various things, what do you have to keep to be more than just a collector of components and assembler? In my 30 years in the business, that continues to be the question every three, four or five years. You can’t be an expert in everything. The Europeans are pretty darn good in diesel engines. Transmissions, again, some are core. Others, we need to find a partner, like we did with Getrag (dual-clutch transmission), because it was an advancement of technology. We did not have that technology, and it was better for

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Automotive News - May 19, 2008 Ford eyes smaller F-150 cousin Sonic: Mercedes tries to 'extort' store upgrades Chrysler seeks 25% slash in parts prices Dealership managers pushed Chrysler's latest incentive Crain names 4 new VPs Automotive News staffers win Wheel Awards GM will keep cutting sales to fleets GM studies the future of full-sized trucks American Axle plans to expand in Asia At Lexus, the sales laggards are cars VW positions Tiguan as 'GTI' of small SUVs Tata enters race for 100-mpg car Harley Earl was the daddy of auto design Focus will follow Fiesta as a global vehicle Lexus shows how it sweats details Industry slows tide of state CO2 rules Chevy tweaks Cobalt to add fuel economy Be careful; don't do anything dumb Looking ahead to different industry They thought they knew everything Cerberus doesn't belong in autos Dealers as scapegoats Smart, steady growth works best for suppliers Farley's smart to value Ford's heritage Absurd logic in the U.S., cowardice in Germany BMW, Daimler keep a wary eye on U.S. economy James Franey Dealers' approach can lessen pain of staff cuts GM plans to distinguish Opel with image makeover Make or buy? Software can estimate costs for company Honda, Toyota see robots in their futures Bosch aims to lead in hybrids technology King of hearts Clarke aims to get GM back on track in N.A. Fields navigates Ford through 'white water' LaSorda steers Chrysler's global ventures Toyota's Lentz: A crash course in hard times Truck sales fall 13% in April Modine sells Thermacore unit Alcoa to close Mexico plant Toyoda Gosei expands in Mexico Hayes Lemmerz plans to close Georgia factory Japan's sales slide 2% in 1st quarter; output climbs Dealers Hyundai let U.S. direct Sonata freshening After .com and .edu, is it time for .car? Panoramic sunroof of Lincoln MKS boosts Inalfa sales Chrysler hedged gas price bet Smart phones help dealerships retain customers CAW completes pacts with GM, Chrysler early GM, UAW resolve 2 disputes New media buyer for Chrysler Visteon names Stebbins CEO Convertible registrations drop Ferrari: From denial to debut Buildings Porsches in U.S.? Depends whom you ask Toyota will go slow in Tupelo Ghosn is glum on prices, U.S. sales prospects Pischetsrieder has earned a celebratory cigar NHTSA spins VINs, averts meltdown F_RD GU_S WI_ BUI-_KS 50 PEOPLE FOR 50 YEARS Yutaka Katayama Clarence Talley Jim Morton Pete Brock Marvin Runyon Yoshikazu Hanawa Bill Bruce Shin Maki Jack Collins Mitsuya "Scape" Goto Bob Link Soichi Kawazoe Jerry Hirshberg Takashi Ishihara Roy Rogers John Parker Bob Thomas Teruo Uchino Morrie Sage Bob Thomas Nobe Wakatsuki Earl Hesterberg Carlos Ghosn Lee Clow Jerry Benefield Yutaka Kume Doug Betts Tim McCarthy Jed Connelly Atsushi Nakatsuji Dave Hubbard Joe Opre Patrick Pelata Yoshiyuki Kimura Diane Allen Mad Mike Taylor Chuck King Larry Dominique Mark Igo Mitsuhiko Yamashita Shiro Nakamura Tom Mignanelli Dick Roberts William Cushing Emil Hassan Chester Luby Jane Nakagawa Louis Schweitzer MR. K Ray Lemke Richard McCutcheon

Automotive News - May 19, 2008

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