Automotive News - November 3, 2008 - (Page 25)

NOVEMBER 3, 2008 • 25 TA L K F R O M T H E T O P Nardelli: Bailout not perfect — but needed erberus Capital Management LP stunned the industry in August 2007 when it made industry outsider Bob Nardelli the chairman and CEO of Chrysler LLC. Critics doubted he was up to the job, but Nardelli surprised them by holding his management team together amid rumors of discord. Nardelli and co-Presidents Tom LaSorda and Jim Press forged a working relationship. They made strides, unloading nonperforming assets and trimming payroll. Despite difficult business conditions, Nardelli guarded Chrysler’s cash hoard and kept the company on target to meet Cerberus projections. But sales continued to plummet. In a letter to employees last month announcing reductions in Chrysler’s salaried work force, Nardelli acknowledged, “These are truly unimaginable times for our industry.” Nardelli spoke with Editor-in-Chief Keith Crain, Editorial Director Peter Brown and Staff Reporter Bradford Wernle. The interview took place before news surfaced that Chrysler and General Motors were in merger talks. You know Wall Street better than most folks in the auto industry. Was the bailout plan a good one? Why haven’t we seen any impact? It was the only thing going. My public position was — and I’ve said it to a number of people who were responsible for voting and making those decisions — that it may not be perfect, it may have some partisanship in it, but at the end of the day, doing nothing was not an option. If you look at the energy bill for autos that was written in 2005 — not my statement, the (treasury) secretary’s statement — not a dollar has been distributed of the 2005 bill. And so, look, I’m tickled to death it was approved. What will be your first application? Obviously, the first and the easiest will be the ENVI (electric vehicle) products. You said you don’t expect to receive money before 2010? It’s the general consensus now that it could be 2010 before there’s distribution. Does that mean you can’t really spend it before you know you’re going to get it? No, we have to spend it. We’re spending today because of the legislative requirements to hit CAFE by 2015. You have mentioned cooperation with General Electric. What is involved in that? Were you the point man, having once worked there? Because I did have some familiarity there, I was able to get (Executive Vice President of Product Development) Frank Klegon and our engineers working with their corporate research and development group. Those guys carried the water. I mean, all I did was make the contact. They got approval through the (Department of Energy) for a grant on battery development. And I think Frank talked to you about using two different technologies that would be linked together. One for distance, one for propulsion — two different battery technologies So it would be two kinds of batteries in one vehicle, basically? Correct, correct, exactly. What type? Are both the same type of battery? No, they are two different technologies. Two different technologies; and they would be circuited, if you will, blended together based upon distance, based upon torque. And we think that there’s some invention in there that would give us a competitive advantage. By way of range? By way of range. dealers hard and suddenly. Could that have been handled differently? Obviously, you would rather have had a much more gradual transition period. But if you look at the lease numbers today, I guess we were the most forthright. And I don’t mean that in an arrogant way, but we didn’t mask the realities of the liquidity market, the lenders. We said, “We’re out of it.” The others kind of winked and blinked. But if you look at the numbers, I would say they’re kind of out of it, too. So how do you launch the Ram truck? Boldly. That segment is where it is. I’d much rather be selling into that segment with the best truck this company has ever produced than continuing to sell a product that’s on the backside of the decay curve, OK? We made the investment. It is what it is. I can’t do anything about that. It’s bolted down. Surveys have shown you guys are still at the bottom on supplier relations. Chrysler is taking a couple of suppliers to court. Is that productive? It’s a decision of last resort. I think Tom LaSorda and (purchasing chief) John Campi are working as hard as they can to build the relationships. The last thing we want to do is come across as confrontational, condescending, arrogant with our supply base. And, unfortunately, after lengthy deliberations or reaching an impasse, we felt there was probably no alternative on some of these situations. But I would tell you it’s a decision of last resort. What’s the strategy on dealership consolidation? I think, you know, Jim Press brings a plethora of experience on this thing. And equally, maybe more important, is tremendous confidence on the part of the dealers in him when he talks about the Genesis program. And so this program will evolve. It is not going to be a forced march to some predetermined number. You know, there’s a lot of emotion about consolidation. A lot of it deals with family legacy. A lot of it is second, third generation. So that’s not something you force. And it’s not something that you just spill money on. JOE WILSSENS Bob Nardelli Are you reconsidering what’s a core business within Chrysler now that you’re talking about alliances with a lot of people? If you look at the talent base that we have here, certainly we have the talent to do a lot of things, right? I think for us it’s going to be focus and prioritization. We knew that, for example, for rearwheel drive we have very good technology — our 300, our Challenger, our Charger — pretty good technologies. If you look at the minivan, not only for ourselves but I think the rollout of the Volks- Jim Press some time ago talked about being a smaller, profitable company. One of the numbers that others have banged around is a million and a half units annually at profitability. Do you have an idea of what the right size is for Chrysler? I think Jim said it exactly right. We’re not chasing share, as evidenced by how we consciously reduced fleet year over year because that was an issue of profitability. For some, auto shows for the last two or three years have been less exciting because companies aren’t wasting money anymore on really fabulous concept cars with huge V-8s and things. But in fact the shows are evolving. You see real cars. I appreciate you saying that because that’s another paradigm of how over the years you just got very comfortable. That was kind of the tradition. The competition was who had the most exotic concept car, not who really had the most advanced production car. And so there’s a lot of self-gratification going on there. I think it’s becoming more pragmatic. That’s where I want to go with our show, with our booths. So what would you do at the Detroit show? You don’t really have the Ram and Challenger — what could you do as a follow-up? We won’t disappoint you. I think that we’ll have some great technology for you that we haven’t revealed quite yet. It’ll be exciting.c Will your technology-sharing agreements with Daimler fade away? Many of these agreements are multiyear agreements, both on the supply side and on the technology side. Nothing rules out the opportunity to re-up with them. wagen (Routan) has been an equally big hit. If you look at where we had a void in our product line technology, it would be in the A, B, kind of C platforms. And so we said publicly because of where we are, because of the de-merger, we have to go out and form a partnership, an alliance. You know, we may have to acquire product in the short term to make sure that we have product for our dealers. When Chrysler went out on leasing, it hit the

Table of Contents Feed for the Digital Edition of Automotive News - November 3, 2008

Credit? Come and get it, industry groups say GM's product delays signal dire health Ford sticks with small-car plans Mitsubishi CEO: Let's halt Galant production in U.S. A dealer â and his reputation â on the ballot Help vehicles shed pounds American Axle posts loss UAW hires bailout adviser Ford to spend $200 million to upgrade 2 Ky. plants No off-lease cars? Certified will find others Arlena Sawyers China's stock market plunge has spooked car shoppers Advantage, Ford: Mulally likes owning Ford Credit Supplier execs join innovation panel at congress Quietly, Mini seeks 500 drivers to lease electric car for a year Reynolds bolsters document business Winterkorn: Audi needs to build in U.S. The great revenue drop of 2008 Bidders bet they can rebuild Heard 1 size fits all NADA: Give us tax incentives, dealer loan guarantees Campaigns' climate, energy plans hit economic wall Detroit 3 need and deserve U.S. help now Chrysler needs a buyer, but not GM Dealers pay fair share of taxes Washington hurts, not helps, electrics Compressed natural gas is the best fuel New ads aim to raise Suzuki's low profile Suzuki's new ad strategist: This brand has soul Fuel efficiency is coming â it just takes time Electrics edge closer by 2010 Tougher CAFE standards loom R&d chiefs shift gears for an electric future Japan carmakers lead charge into electrics Buffett backs BYD's sketchy plan for U.S. electric car Q&A: BYD envisions 2010 exports to U.S., Europe Girding the power grid for an electric fleet Hype powers plug-in vehicles Coachbuilders see salvation in electric cars Electric vehicles are charging into Europe Expect stop-start's big start to arrive in 2010 Flexibility will help Honda survive the storm Nardelli: Bailout not perfect â but needed Audi goes high-tech to boost service Acura offers quick service to win business Toyota's fashion fan Picture this Hondaâs N.A. operating profit falls 80.6% in quarter Aug. RV shipments fall 44% VW drops hints about car for new Tenn. plant Mexico sales fall 10.7% in September Honda to boost CR-V, end Civic output in Ohio Ford and GM jockey for steel discounts Dealers Ford Credit seeks to tap $700 billion package GM will end a used-car incentive early Nissan, Mitsubishi, Mazda recast fiscal 2009 forecasts Metaldyne to bondholders: Take 30% or Chap. 11 looms Detroit 3 ties hurt profits of dealer groups GM takeover would eviscerate Chrysler ranks, model lineup Mitsubishi plans electric hauler To match Toyota, Nissan offers 0% loans Sticker, sticker at the mall, what's the cheapest of them all? The Versa Waiting is what it's all about, Alfa Buy Chrysler? GM should sell Buick to SAIC Pickups pumped up by pump price plunge Chrysler hybrids, we hardly new ye Ghosn: Your best partner is a president in your pocket Sonic wins, but Mercedes wants last word

Automotive News - November 3, 2008

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