Chrysler LLC Chairman and CEO Robert Nardelli announced Thursday he will step down as head of the automaker, which is filing for bankruptcy protection.
“I announced to Chrysler’s Board of Management and our senior leadership as well as the U.S. Treasury that I plan to leave the company and return to Cerberus Capital Management as an adviser,” Nardelli said in a letter to employees.
Read the rest of this entry »
General Motors has failed to motivate the government in incentivizing it’s takeover of Chrysler LLC owned by Cerberus Capital. The U.S. Treasury is not interested in funding the deal, which GM needs badly in order to survive and come up with the much needed funds to complete the takeover.
According to the White House, automakers should tap into the $25 billion allocated to the re-tooling of production lines, which has been available to them for quite some time. The $25 billion is to be used exclusively in order to make automotive production more fuel efficient. The U.S. Treasury does not want to begin a trend of bailing out businesses as it has been receiving bad press over it’s bailout of the financial industry.
General Motors in recent months has been losing $1 billion a month amidst a decline of sales. Future developments have been put on hold including the Suburban/Tahoe, Corvette, Malibu and Chevrolet Cruze models.
GMAC, the financial arm of General Motors is in the process of trying to change it’s commercial classification to become a bank in order to take advantage of the $250 billion bailout package, which has been allocated to the banking industry. Seems that is the only change GM has of taking over Chrysler in its entirety at this time and saving itself.
According to previous discussions even if GM does take over Chrysler, all but 7 models of Chrysler will be cancelled and about 50% of it’s current production plants will be shut down. Maybe it is best for Chrysler employees and the economy if this deal does not take place after all.
We’re beginning to think that the offices of Chrysler charge by the hour, by the amount of foot traffic it gets. The company seems to be so good at something that it keeps getting traded like ummm… a seasoned veteran of automotive bliss.
The latest scoop is that General Motors is in talks with Cerberus to “trade” Chrysler’s automotive operation for the remaining 49% stake GMAC Cerberus did not buy previously.
Seems that Nardelli’s military style worked wonders in a Home Depot merchant style environment, but did absolutely nothing for the auto industry.
Chrysler had the largest drop in sales in the previous year with 25% of it’s sales disappearing. Cerberus does not make it’s books public, but industry analysts estimate Chrysler lost in the neighbourhood of $1.5-1.7 billion this past year.
The amount is staggering, but is not significant compared to the losses that General Motors have been experiencing as of late.
Chrysler promises new models for 2010 and 2011, but information on upcoming models have been scarce. General Motors has seen it’s stock price erode in the past week or so, with the recent downgrades to near junk status.
It will be interesting to see what happens and what role the federal government plays in all of this, as both Ford and General Motors will most likely run out of operational funding sometime next year.
Could there be another bailout on the way? What part is the $25 billion recently awarded to the auto companies play in all of this?
These are questions that will have to be answered really soon, as J.D. Power has announced that the auto sector will tank in 2009. What a suprise.
In the meantime, enjoy your GM and Ford stock hit all time lows, and thank you for buying American.
