Chrysler in crisis

By Liz Turner, in the US

Motor Industry

02 March 2007 04:28

The trouble with Chrysler: the background

In 1996 when Chrysler opened its $1.1bn headquarters in Auburn Hills, 30 miles north of Detroit, executives joked that if things didn’t work out, they could always sell it as a shopping mall. Following DaimlerChrysler’s annual press conference on 14 February, local realtors are, no doubt, sneaking in to take measurements. Chrysler Group announced a staggering operating loss of $1.5 billion for 2006, and in the subsequent question time, DaimlerChrysler’s CEO Dieter Zetsche said the company ‘will examine far-reaching strategic options with partners’. When pressed he confirmed: ‘This means all options’. The suits are mulling over a sell-off of the Chrysler Group. Since then Tom LaSorda has been frantically trying to get attention back to his Recovery and Transformation plan, insisting that the company can be back in the black by 2009. His personal email to employees on 22 February stressed that the press was prone to whipping up rumours. Reading between the lines, it also indicates LaSorda thought Dieter should have kept his mouth shut.

Details of voluntary redundancy and early retirement schemes landed in employees’ mailboxes on 23 February. On the same day, LaSorda (above) held a conference call to dealers in which he reiterated that the Chrysler Group plans to spend $3 billion on new engines, transmissions and axles to build more fuel-efficient vehicles, and that 20 all-new vehicles and 13 refreshed models are in the pipeline to arrive by 2009. He said: ‘Do these sound like the actions of a company uncertain about its future? Obviously not.’ But then a man in the corner has to make some promises – if he’s to survive.

By Liz Turner, in the US