Report: Automaker may also cut production
June 11, 2008 - 12:01 am ET
UPDATED: 6/11/08 9:31 a.m. EDT
NEW YORK (Reuters) -- Chrysler LLC CEO Robert Nardelli said on Tuesday that the private equity buyers of auto maker Chrysler weren't second guessing their decision to buy Chrysler, and that the business was ahead of target.
Nardelli said at a Wall Street Journal conference on Tuesday that Chrysler LLC finished April with more liquidity than planned, and was ahead of overall financial performance and liquidity targets in May.
Chrysler has been withered this year by continuing sales declines. U.S. sales fell 25.4 percent in May and are down 19.3 percent for the year to date compared with the same period a year ago.
Chrysler "may have to go back and resize" production again, Nardelli told the Journal in an interview at the conference. The company already made significant cuts in production in late 2007.
Asked at the conference if the private equity buyers of Chrysler would have bought the company if they had known what would happen to oil prices, Nardelli said it was "hard to say, but no one is second guessing the decision, no one is looking back".
"We are guarded but optimistic," Nardelli added. "We are very encouraged in what we have accomplished."
Asked at the conference if he expected the business to still be independent three years from now, he said that he did. He said there were clear advantages to running Chrysler under private equity ownership rather than as a public company.
Former Home Depot Inc. chief Nardelli was installed to run the automaker after Cerberus Capital Management LP last August bought an 80.1 percent stake in Chrysler from former parent Daimler AG in a $7.4 billion deal.
When asked what the endgame was for Chrysler under private equity ownership, he said that was Cerberus' decision, while he was entrusted to run the company. Private equity investors typically invest for about three to five years and then look to cash out by selling or floating their investments.
Chrysler closed last year with $9 billion in cash, Nardelli told CNBC in an interview after the conference on Tuesday, adding that the company was "still in very good shape."
He also said Chrysler will "absolutely not" sell its Jeep brand to raise cash. "Jeep is a crown jewel in our company," he said.
Commenting on the high gas prices, he said the "speed with which it happened" created a challenge.