Chrysler to reduce bloated inventories in 4Q

Automotive News
October 10, 2007 - 9:36 pm ETLAS VEGAS – Chrysler LLC is taking 82,000 units out of its fourth-quarter production plan to get rid of excess inventory, Co-President Jim Press said late Wednesday.

Press said it was the right move, but it will cost the No. 3 U.S. automaker “over a billion dollars of cash flow.”

Cutting the bloated inventories that have plagued Chrysler is a key priority, he said. Speaking at a press event here, he said the decision to idle several plants last week was made “in a seven-minute conference call” by CEO Bob Nardelli in consultation with owner Cerberus Capital Management LP.

The move illustrated a theme Press hit repeatedly in his remarks to a dealer meeting here – that private ownership of Chrysler will allow the company to move quickly.

“One of the things that we have with our new ownership, our management structure, is velocity,” he said. “We can do things very quickly – we can do things that will affect the product next year.”

Press also said Cerberus has approved a $3 billion capital expenditure budget for powertrain research.

Press reiterated recent statements that management has been studying the product plan to eliminate overlapping vehicles and develop a strategy for the next decade. He said more than 200 engineering changes have been requested already, some affecting current vehicles.

Press would not give specifics about what models might be cut. But he did suggest that the Jeep brand will return to its rugged off-road focus after experimenting with the Compass crossover.

“If you want a crossover SUV that’s really a SUV, that’s a Jeep,” Press said. “If you want a crossover SUV that you’re not going to take out of the garage because it’s raining, that’s not going to be a Jeep.”

Press, meanwhile, declined to answer questions about Chrysler’s surprise contract agreement with the UAW late this afternoon after a brief six-hour strike by the rank-and-file.