Wednesday, May 16, 2007

Chrysler looking for global partners

Tom LaSorda

LaSorda: Brands won't be broken up

Dale Jewett | Automotive News
May 15, 2007 - 1:08 pm

UPDATED: 5/15/07 3:34 P.M.

DETROIT -- A liberated Chrysler Corp. will be on the prowl for new global partners, CEO Tom LaSorda said today.

An agreement with Chinese automaker Chery Automobile Co. to develop small cars for Chrysler has been approved by the DaimlerChrysler supervisory board, LaSorda said at a news conference at Chrysler headquarters in Auburn Hills, Mich. Approval from the Chinese government is expected soon, he said.

That deal will not change with Cerberus Capital Management taking control of Chrysler, LaSorda said.

Chrysler needs a bigger international presence and will look for partners to reach that goal, he said. The automaker will look to expand its partnership with Chery, but it also will consider other partners.

"It is in our interest to find partners," LaSorda said. "We're not big in Southeast Asia, we have no presence in India, and our presence in Russia is low."

LaSorda said Chrysler will not develop small cars and powertrains for emerging markets in-house.

The news conference was LaSorda's first meeting with U.S. journalists since Monday's announcement that Cerberus will take majority control of the automaker from DaimlerChrysler AG for $7.45 billion. Cerberus will hold 80.1 percent in a new holding company, Chrysler Holding LLC, while Daimler will hold the remaining 19.9 percent. Chrysler Holding will comprise Chrysler Corp. and Chrysler Financial Services LLC.

When the deal is completed this fall, the ownership change will make Chrysler a privately held company. As such, Chrysler will no longer need to publicly disclose financial data.

LaSorda did not directly answer when asked whether the automaker would continue to report monthly auto sales. He said that issue would be decided within the next few weeks.

But LaSorda welcomed private ownership.

"Look at how well-run private companies are," he said. "We got a win-win here. Daimler has some of the best research and technology, and now we'll be tapped into a great financial company.

"We still need to make the right decisions because we face the same economic factors and competition."

Brands to stay together

Chrysler's brands will not be broken up, LaSorda said. "It's important that they be kept together," he said.

Chrysler and Daimler will continue to cooperate, LaSorda said. Areas of cooperation include hybrid technology and purchasing.

LaSorda said no job cuts are planned with the change of ownership.

"It's been an exhilarating couple of days for me, LaSorda said. "But frankly, it has been six months since I've been working with Dieter (Zetsche) on this project. I can tell you, it is in our best interest.

"I'm pretty excited about this. Soon we'll go private and show the world this American company is on the way back."

Other subjects addressed at the news conference:

  • Former Chrysler COO Wolfgang Bernhard, now an adviser for Cerberus, won’t be a member of the automaker’s management team. But LaSorda said he plans to meet with Bernhard when needed. The two were scheduled to meet this afternoon, LaSorda said.

    “He’s a great guy, and we’re close friends,” LaSorda said. “This guy is talented. I’d be crazy not to tap and use him. I can use him if I need to.”

  • Chrysler will seek from the UAW the same concessions on pension and health care benefits that the union granted last year to General Motors and Ford Motor Co.

    “We’ve got to close the gap between us and the other two companies,” LaSorda said. “Then we’ll see what happens in September,” when new master contracts are negotiated with the UAW.

    LaSorda pointed out that Chrysler officials, not Cerberus officials, will negotiate with the UAW.

  • Asked about the factors that made Cerberus’ bid the top pick, LaSorda said: “When you look at transactions like this, you want someone who had an inherent desire to grow this business and see its potential and bring cash and help the balance sheet and allow us to grow. That was very important to us.

    “Cerberus brings operational expertise. It has great financial resources. It runs a separate financial business. Chrysler Financial Services will be split out as a separate company. Going forward, this is a great way to go.

    “Cerberus has a real blue-collar background. They knew what it was like, they studied the industry, and they saw growth here.”

  • LaSorda said Chrysler will not change the recovery plan it announced in February, including its $3 billion investment in new plants and powertrains, and still plans to reduce the number of dealers. Nor does it plan to accelerate any product development programs.

  • The future Daimler AG will have no role in the day-to-day management of Chrysler, LaSorda said. “They are a minority holder. They may have some board seats on the holding company. We’ll have to wait to see what comes out.”

  • Chrysler still will have access to advanced technologies developed with Daimler, including low-emission diesel engines and the Two Mode rear-drive hybrid powertrain.

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