Chrysler
Please fill in the blank (This is a very important part of the interview – to know why you are interested):
List 2-3 reason why you are interested in this industry?
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List 2-3 reasons why you are interested in Chrysler?
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List 2-3 reasons why you are interested in this position?
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Company Snapshot
The divorce is final: Daimler got the Mercedes and Chrysler got the minivan. After almost a decade of
trying to make the most audacious merger in automotive history work, DaimlerChrysler is now Daimler
and Chrysler. In 2007 private equity concern Cerberus Capital Management bought Chrysler for about $7.4
billion -- or about one-fifth of the $37 billion Daimler paid in 1998. In addition to its eponymous Chrysler
brand, the company also controls the Dodge and Jeep marques. Specific models include Chrysler 300,
Dodge Ram pickups, and Jeep Grand Cherokee. The company offers financing to both consumers and
dealers through Chrysler Financial Services LLC.
It looked good on paper. The plan had been to leverage Chrysler's mass market expertise with Daimler's
engineering prowess and quality. But none of that ever came to fruition. Throughout their tumultuous
relationship, Daimler and Chrysler were never simultaneously healthy, and in 2007 the cries of angry
DaimlerChrysler investors became impossible to ignore any longer.
That year Daimler agreed to sell the company to Cerberus after months of speculation and haggling with
labor forces, primarily the United Auto Workers (UAW).
So what's next? Cerberus says it is in the car business for the long haul. Although there is plenty of room
for skepticism, a look at some of the companies in Cerberus' portfolio evidence a commitment to things
automotive: GDX Automotive (sealing systems, vibration controls, glass modules), Blue Bird (school
buses), and Tower Automotive (automotive stampings). Cerberus is also said to be interested in Ford's
Jaguar and Land Rover brands as well.
More potential synergies include automotive financial services. Cerberus led a group of investors in 2006
that bought a 51% stake in GMAC, GM's financing arm. GMAC combined with Chrysler Financial
Services could create competitive advantages for both carmakers and both lenders.
Some speculate that Cerberus is transforming itself into the GM of the 21 st century. In the early 20th century
GM bought up distressed rivals and other competitors to build a carmaking colossus that dominated the
industry for 80 years (since dethroned by Toyota). Other's think Cerberus will do a Flip-This-Car-Company
and just slap on some fresh paint, shampoo the carpets, and bail out via an IPO.
Whatever Cerberus plans to do with it, Chrysler has a long way to go. Cerberus inherits Chrysler's labor
contracts and pension liabilities. Chrysler lost $1.5 billion in 2006, and Cerberus has to find a way to stop
the bleeding. This will be hard, as much of the carnage is being caused by something that can't be fixed
quickly - a lack of small cars. The Caliber is the smallest car Chrysler makes, and it's not very small.
As fuel prices climb ever higher, drivers flock away from large, American-made trucks and SUVs and into
smaller, usually Japanese, cars. To address this issue Chrysler is doing what no one in the North American
car industry wants to do - including Chrysler itself: it will be the first company to import cars from China
into the US market. In 2006 Chrysler struck a deal with Chery Automobile of China for the building of
small cars. Profit margins for small cars are so razor thin, it's almost impossible to make money building
them with US labor. Chery will build a small car based on modifications to one of its domestic models, and
All information gathered from Hoovers
it will be branded as a Dodge, Chrysler, or Jeep. The cars, to debut sometime after 2007, will be sold in
Europe, India, and China in addition to the US.
Again, this deal looks like a good solution on paper, but in reality bringing a Chinese car to the US will be
fraught with very serious challenges. The cars will have to meet stringent US environmental and safety
requirements. Chinese engineering and design capability is backward by American and European
standards, and relies heavily on Chinese-born engineers and designers that were educated in the West.
Retaining these employees in pollution-choked Chinese cities when they could make more money
elsewhere is proving to be a challenge. Then we have the ultimate wild card, the zany Chinese government
itself which owns Chery and most other car makers.
So for Chrysler to succeed all it has to do is: 1) profitably bring small, Chinese-made products to market
that are so great people won't be able to ditch their Camrys fast enough. 2) Build only as many trucks and
SUVs as there are people who want to buy them. 3) Keep the UAW and the Chinese government happy.
To pull all of that off Cerberus has tapped someone the business world had largely given up on. Cerberus
didn't own Chrysler for long before naming Robert Nardelli as the new CEO. The former GE executive,
who left The Home Depot under a cloud in early 2007 (with an extremely generous severance package),
succeeded Thomas LaSorda as CEO of Chrysler; LaSorda was named vice chairman and president. While
Nardelli doubled Home Depot's sales during his six years as chairman and CEO of the giant home-
improvement chain, his imperious ways with shareholders, his alienation of customers and employees, a
steadily declining stock price, and the size of his hefty compensation package (which he was unwilling to
reduce, when requested to do so by the board) led to his ouster at Home Depot.
As chairman and CEO of Chrysler, Nardelli effectively will have to answer to only one big shareholder,
Cerberus. He becomes the second CEO among the Detroit Three to come from outside of the automotive
industry, along with Ford Motor's Alan Mulally, who previously served as the boss of Boeing Commercial
Airplanes.
To trim some fat Chrysler is considering shutting down or selling some assets it considers non-core to its
long-term strategy. The company wants to jettison Mopar, its storied high performance auto parts division,
and Chrysler Transport, which manages the flow of parts and supplies to Chrysler's plants. Not
surprisingly, the UAW is opposed to any such move.
Cerberus owns about 80% of Chrysler; Daimler retains about a 20% stake.
Headquarters: Auburn Hills, MI
Employees: Private Company – Not Available
2006 Sales: Private Company – Not Available
2006 NI: Private Company – Not Available
Operating Segments
Chrysler
Cirrus
Concorde
Sebring
Town & Country
Dodge
Caravan
Neon
Ram
Stratus
All information gathered from Hoovers
Viper
Eagle
Talon
Jeep
Grand Cherokee
Jamboree
Plymouth
Breeze
Grand Voyager
Neon
Voyager
Chrysler do Brasil Ltda.
Chrysler Financial Corp. (loans and leasing plans)
Chrysler Japan Sales Limited
Chrysler Motors de Venezuela, SA
Chrysler Realty Corp.
Chrysler Sales & Services (Thailand) Ltd.
New Venture Gear Inc. (64%, auto parts)
Current News:
What Chrysler and the UAW have been negotiating
Fresh off of a deal with GM, the United Auto Workers (UAW) has struck Chrysler. The company is
arguing for the same type of health care concessions that the UAW gave to GM last month. As of right
now the UAW believes that these concessions are unnecessary because it believes Chrysler to be in a better
financial position than GM.
Chrysler LLC Reports Trio of Records for September 2007 Certified Pre-owned Vehicle (CPOV) Sales
Chrysler has reported a slight (.4%) increase in pre-owned vehicle sales compared to September 2006. The
company also saw an increase in these sales of 5% for the third quarter when compared to the same quarter
of 2006.
Facts:
Key People:
Chairman and CEO Robert L. (Bob) Nardelli
Vice Chairman and Co-President Thomas W. (Tom) LaSorda
Vice Chairman and Co-President James E. (Jim) Press
SVP and CFO Ronald E. Kolka
VP and CIO Jan A. Bertsch
Largest Competitors:
Ford (Annual Sales: $160.123 Billion)
General Motors (Annual Sales: $207.349 Billion)
Toyota (Annual Sales: $202.864 Billion)
All information gathered from Hoovers