So here it is: Chrysler’s turnaround plan. And while you’re digesting that, Automotive News [sub] gives us the takeway: ChyCo will have $2.5 in cash by the end of the month. That’s not enough money to pay its suppliers, never mind anything else. “The bridge loan will help cover an estimated $11.6 billion in expenditures it [Chrysler] will have in the first quarter of 2009. The biggest chunk of those expenditures will be an estimated $8 billion tab from component suppliers.” Hang on; $2.5b plus $7b is $9.5b minus $8b is $1.5b. So, by it’s own reckoning, Chrysler will be back for more money by the second quarter of 2009. And why wouldn’t it? Profit! “Chrysler assumes it will have a 10.4 percent share of the U.S. market in 2009 and 10.7 percent in each of the next three years after that. Based on those numbers, Chrysler estimates it will have operating profits of $400 million in 2009, $2.6 billion in 2010, $2.0 billion in 2011 and $1.8 billion in 2012.” That’s IF the suppliers play ball and DON’T demand cash on the nail. But wait! There’s more! “Nardelli cautioned that the federal loan will work only if Chrysler Financial can support Chrysler with wholesale and retail lending. ‘Chrysler Financial is in need of immediate liquidity support,’ the Chrysler statement said.” So how much is THAT boondoggle going to cost us? Not specified, but I wouldn’t bother checking your wallet for twenties. Anyway, why isn’t Cerberus paying for all this? They can afford it. Anyone? Bueller?
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Nice work, Robert.
I’ve been watching the Talking Toads on CNBC all evening, and not one of their reporters has a clue that there are two bailouts in play here: one for the car companies, and another for the captives controlled by Cerberus.
The latter which may ultimately wind up being the big ticket item of the two.
I wonder if any mainstream reporter will catch on to this.
With what product does Chrysler believe they will increase market share from 10.4 to 10.7 per cent?
The report says Nardelli makes $1 per year from Chrysler. Nice sleight of hand, as I’m sure his other millions come from Cerberus.
But yeah, why the hell isn’t Cerberus floating the loan to Chrysler?
Robert, just deducting the expense for the suppliers from the cash at hand seems to be wrong – the supplies are being used to manufacture cars, and Chrysler would have income from selling these. It may not cover all expenses, but to leave it out totally seems to me clearly incorrect.
Where are the specifics for cutting plants?
A modern assembly plant can crank out about 250,000 vehicles a year. Chrysler today has 14 assembly plants. One of those, Newark, is closing down soon and Connor which makes the Viper is a craft facility. So, that’s 12 plants that can produce 3M vehicles today.
Yet, by 2012 Nardelli expects to be selling only 2.15M vehicles worldwide under his base operating assumption. That sounds like 4 plants too many in 2012 and about 6 too many now.
Interestingly, his 2012 assumption includes an 8% increase in international sales between 2009-2010 and a 15% increase between 2010-2011. What’s this based on?
Also, with weak C and CD sedan offerings and seemingly nothing in the pipe how does he expect to maintain a 10% market share?
That is the most incomplete non plan I have ever read! I can’t believe allegedly competent business executives wrote that drivel. Like GM’s plan, it has no specifics, mild platitudes, and a serious threat of bankruptcy. Like GM, Chrysler plans to burn any near term loan on continuing operations, with none going to restructuring or product development.
GM and Chrysler have just shown that they are not only bankrupt financially, but also product development-wise, and their leaders have no idea how to fix the mess they are in.
These non plans wouldn’t provide any sane person a shred of assurance that the loans would be repaid.
This gets good at about page 10 refuting the bankruptcy option.
what does the bankruptcy lawyer say to this seemingly well argued information?
I might be mistaken, but I thought each of the automakers had planned to submit two documents: one public, the other confidential. If that’s the case, perhaps a far more detailed plan is floating around in Washington, yet to be published on the Internet. I’d like to give Chrysler the benefit of the doubt, anyway.
To paraphrase an old professor of mine, there are 3 types of untruths….lies, damned lies, and Chrysler bailout plans. By the third page, I stopped counting the facetious, self-serving unrealistic assumptions and outright gross mis-interpretations of the market. 24 new model introductions by 2012? Exactly who do they think they are kidding? If they don’t have the money to pay their bills, well, I won’t even finish the rhetorical question because it is too silly to put into words….
And I seriously have read better papers from senior undergraduate management case studies. This document alone should be prima facie evidence that Chrysler is DOA.
But how do you say no to Chrysler and yes to Ford and GM?
Motowner, the “reporters” of MSM have no more knowledge of the auto business than they have of WMDs in Iraq. They just read sound bites off a teleprompter.
And Robert, spot on! Whatever MSM allows public input neds to be showered by messages about how Chrysler is different from GM and Ford.
Daimler must be happy that they are not involved in this mess… sure, they lost billions in the Chrylser purchase, but, they could have lost much more if they had stayed on. Cerubus got Chrysler for a bargain and and let it die or sell it off to teh Chinese… no biggie for them.
To answer getacargetacheck’s question on how Chrysler will maintain its 10% market share. Well, there’s the Durango Hybrid – no, wait . . .
Oh, well the cars will be getting the dual clutch transmission. Oh, they won’t? Um, well, there’s the, uh, new 300 ser – Nope? Um, maybe they could come out with a Levi’s Caliber.
Profitable in 2009? Are these people from GM? I think it is time for Chrysler to license a Magnum mens fragrance and a W P Chrysler line of golf attire. Makes as much sense as the product plans I’m reading about.
I wonder how many drunken dinners the guys at Cerubus had when they were talking about buying Chrysler? I’m sure buying a car company sounded simple and fun after a few drinks! I’d want Jeep myself! LOL
Holy fuck.
“Chrysler has been the one of most agile and innovative of the three Detroit automakers.”
What the hell. What the sweet fucking hell.
You’re asking for seven billion dollars and you cannot even construct a sentence properly??
FAIL. FAIL FAIL FAIL!
Nonce–
What the hell in your context should be followed by a question mark. “what the hell.” means something completely different than what you’re attempting to communicate.
FAIL. FAIL. FAIL.
Sweet fucking fail.