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Executive sees Chrysler viable by around April
A top Chrysler LLC executive says the automaker should be viable by springtime because of its restructuring, introduction of new and improved vehicles, and higher sales due to loosened credit and sweetened incentives for buyers.
- AP
- Published: 23:25 January 25, 2009
New Orleans: A top Chrysler LLC executive says the automaker should be viable by springtime because of its restructuring, introduction of new and improved vehicles, and higher sales due to loosened credit and sweetened incentives for buyers.
Vice-Chairman and President Jim Press defined "viable" as remaining solvent and continuing to invest in new products, with an ability in the future to repay government loans.
But he told reporters on Saturday at the National Automobile Dealers Association annual convention that he doesn't know when the privately owned Auburn Hills, Michigan-based company will return to profitability.
Press said Chrysler can be viable if the US light vehicle market shrinks from last year's 13.2 million in sales to just over 10 million. As recently as 2007, the market exceeded 16 million.
The struggling Chrysler has received $4 billion (Dh14.69 billion) in government loans so far to hold off bankruptcy, and it expects to get $3 billion more after it files a viability plan with the government by February 17. Without the loan money, its executives have said it would run out of cash.
Press told reporters that the country was living off loose credit and fast spending for years, and a correction probably is good. But that means automakers have to be prepared to make it on sales that are far lower than in previous years. "Good business people will see this as normal and calibrate ourselves and our organisations as if today was the way life is going to be," Press said. "We shouldn't bank on some of these easy monies." He said Chrysler's retail market share through January 22 is 10.1 per cent, the highest it's been in recent months. Sales, he said, have been better than in December, and a normal seasonal uptick in March, April and May should help Chrysler become viable, he said.
Chrysler's sales were down 30 per cent last year compared with 2007, and they were off 53 per cent in December. The poor showing led several industry analysts to predict the company could not make through 2009 without a merger, alliance or some other combination.
Earlier last week Chrysler announced a nonbinding preliminary deal for Fiat Group SpA to take a 35 per cent stake in Chrysler in exchange for small-car and small-engine technology that will help Chrysler bring out smaller, more fuel-efficient models faster.
But it could take two years for the Fiat products to arrive in the US, which is Chrysler's primary market. Fiat is not putting any cash into the deal. Chrysler employs about 66,000 people worldwide, with the bulk of them in the US.
Chrysler on Thursday announced employee pricing, plus an incentive, plus low-interest loans to help move its vehicles.
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