Chrysler, Ford prepared for downturn

NEW YORK (AP) - If the economy continues to worsen and U.S. auto sales nosedive, the top executives of Ford Motor Co. and Chrysler LLC say they are prepared to weather the downturn.

Speaking at separate events in New York on Wednesday, Ford CEO Alan Mulally and Chrysler Chairman and CEO Bob Nardelli said their restructuring plans have cut factory capacity and other costs so they can make it through a deeper slowdown.

'We also stress-tested our business plan ... if everything gets much, much worse, to go down lower and still be able to keep implementing our plan,' Mulally said at the Morgan Stanley (nyse: MS - news - people ) Global Automotive Conference. 'So we have the cash, we have the liquidity. We just need to absolutely stay on our plan now.'

Nardelli said at the New York International Auto Show that Chrysler prepared for a downturn in U.S. sales this year with layoffs and cuts in manufacturing and inventory.

He said Chrysler did not assume the economy will recover in the second half of this year as many automakers have.

The company, he said, is seeing some success outside North America, where sales rose 10 percent in the first two months of this year. Nardelli also said the automaker increased the number of dealerships outside North America by 17 percent between 2004 and 2007. Chrysler wants to nearly double its international sales to 400,000 by 2012.

Chrysler, which lost about $1.6 billion last year, became a private company in August after Cerberus Capital Management LP became the majority owner, buying an 80.1 percent stake from German automaker Daimler AG.

Mulally told industry analysts that Ford, too, is ready even if U.S. auto sales drop to the low-15 million vehicle range this year.

He told the group Ford planned for overall U.S. market sales of 15.7 million for the full year, but during the first two months it's running around 15.3 million.

That's at the low end of what Ford predicted for the first part of the year, but Mulally said the company's restructuring efforts are on or ahead of plan, preparing it for trouble.

'As hard as it is, as many people and facilities that it affected, it's really going well,' he said of the plan.

On Tuesday, automotive information company J.D. Power and Associates lowered its 2008 forecast for U.S. new light vehicle sales from 15.7 million to 14.95 million, the lowest level since 1994.

Westlake Village, Calif.-based J.D. Power said lower consumer confidence and spending, financial market turmoil and the industry's slow performance in January and February prompted it to update the forecast it released late last year.

Ford lost $12.6 billion in 2006 and $2.7 billion last year. It has mortgaged assets to continue operations and expects to burn up $12 billion to $14 billion until 2009, when it plans to return to profitability.

Ford shares rose 16 cents, or 3 percent, to $5.45, in afternoon trading.

AP Auto Writer Tom Krisher in Detroit contributed to this report.