Dec. 22 letter from Bob Nardelli to Chrysler employees

Dear Employees,

As this eventful year draws to a close, I'd just like to take a moment and once again express my personal appreciation and thank you for your commitment and dedication to Chrysler LLC. Reflecting back on the year, I'm sure we can all agree that this one stands out for the extraordinary challenges we faced, as well as for the many accomplishments we can look back on.

We are grateful to the U.S taxpayers and the U.S. Treasury Department that they will provide a loan to Chrysler to help bridge the current financial crisis. And we appreciate that the Government of Canada and the Government of Ontario have offered to provide financial assistance as well to protect Canadian manufacturing. This support underscores their confidence in Chrysler's plan for future viability and their recognition of the importance of the automotive industry to North America.

Despite the difficult economic conditions and financial crisis we faced this year, we continued to make significant progress in improving the fundamentals of our business, while strengthening our focus on customer first and quality period.

We continued to invest in and deliver great new products, launching the crossover Dodge Journey, the exciting Dodge Challenger and Challenger SRT8, the Liberty re-launch and the all-new Dodge Ram, which has received glowing accolades from the media, including a nomination for North American Truck of the Year. We also celebrated the 25th anniversary of our invention of the minivan, which still wears the crown as the world's best-seller.

Chrysler's ongoing commitment to safety is evident in government ratings.

For the 2009 model year, more than 88 percent of Chrysler vehicles achieved NHTSA's highest possible rating - five stars for frontal crash tests.

Eighty-six percent of Chrysler vehicles achieved the Government's highest rating for side-impact protection.

We continue to boost the fuel economy of our vehicles. For the 2009 model year, 73 percent of our products offer improved mileage compared with 2008 models, with six vehicles offering 27 mpg or better highway fuel economy:

the Caliber, Patriot, Compass, Sebring, Sebring Convertible and Avenger.

And in September, we shocked the industry with the unveiling of our ENVI family of all-electric and range-extended electric vehicles, a major step on the path to national energy security and reduced environmental impact.

We will put our first electric-drive vehicle into production for North America by 2010 with three additional models by 2013.

Our long-range product plan is robust, realistic and green. The plan features 24 major launches from 2009 through 2012. Many of you had the opportunity last week to attend the future products open house in the Design Dome and saw the all-new versions of key models such as the Chrysler 300, Dodge Durango, Dodge Charger, Jeep Grand Cherokee, our electric vehicle prototypes and the sketches of other products like a new fuel-efficient small car. You also had a chance to see the tremendous strides we are making in the quality of our interiors, which will have a major impact on pleasing our customers, as well as the latest generation of our uconnect family of consumer technologies for in-vehicle information, communications and entertainment. Our future plans also include a hybrid Ram truck.

We made steady progress in productivity and quality this year. According to the Harbour Report, we have increased our manufacturing productivity by 32 percent over the past seven years and now equal Toyota as the most productive automaker in North America as measured by hours of assembly per vehicle. Due to a focused product quality improvement effort during the past year, we've seen our warranty claim rates drop by 29 percent and the improvement trend continues.

Since the economic downturn began in 2007, we have faced this harsh reality and consistently acted quickly to reduce operating costs, adjust production schedules and prioritize product investment to mitigate the effects of this historic recession and financial crisis. We've taken out 1.2 million units of capacity, eliminated 12 production shifts and closed two manufacturing plants. We've reduced our fixed costs by $2.4 billion. The difficult restructuring, combined with the recent retirements and voluntary terminations, has reduced Chrysler employment by 32,000 since 2007. We've all said good-bye to many colleagues and friends who have served Chrysler so well over the years.

However, these and other difficult but necessary actions have positioned Chrysler to begin 2009 as a leaner, more efficient and focused organization characterized by fewer layers of management with broader spans of control.

We have a realistic and achievable plan to turn Chrysler around and return the company to profitability. With the government bridge loan forthcoming, we'll have the financial backing to implement that plan. In the weeks ahead we will continue to work with all of our stakeholders to achieve the shared sacrifice that we need in order to achieve long-term viability.

Throughout the government loan request process, I've received many letters, calls and e-mails of support from our extended Chrysler family, our customers and many Americans who support the automotive industry. To show our appreciation, we will be placing an advertisement in several national newspapers today, thanking America for investing in Chrysler. A link to a copy of the advertisement is attached.

In closing, I wish you and your loved ones the happiest of holiday seasons.

Enjoy your family time together, wherever your travels may take you. I look forward to rejoining you in January to take on 2009 with a resolve to return our business to profitability and viability.

God Bless you all. Best wishes and warmest regards,

Bob