Chrysler to stop assisting salaried workers with tuition

BY TIM HIGGINS • FREE PRESS BUSINESS WRITER •

Chrysler LLC is suspending its tuition-assistance program that has helped salaried workers pay for higher education, the Free Press has learned.

"Considering current economic conditions, and consistent with our continuous actions to improve our business and return to profitability, we have had to make the difficult decision to indefinitely suspend the tuition-assistance programs for all salary" non-bargaining-unit employees, a message to white-collar workers said.

Max Gates, a Chrysler spokesman, confirmed the announcement was made late Tuesday.

Workers already in classes or already approved for classes will get their reimbursements, Gates said.

But workers who are midway through a degree program will have to figure out another way to pay if they want to complete the program.

"There will be no new course work approved," Gates said.

Gates said the company hopes the program will be reinstated, but "if and when, of course, is still to be determined."

Chrysler isn't the first company to cut its tuition program. Ford Motor Co. has done the same.

Chrysler declined to say how many of the 14,400 eligible employees took advantage of the program or how many people would be affected. The company also declined to say how much the perk was worth.

Chrysler is struggling to fix its business amid dramatic U.S. sales drops.

So far this year, the Auburn Hills automaker's U.S. sales are down 22% -- more than twice the industry rate -- and Chrysler has indicated that its auto business lost $431 million during the first 3 months of this year. Chrysler executives insist the company is meeting its financial goals and has plenty of cash to operate, fighting off rumors of possible bankruptcy.

Since February 2007, the automaker has announced the elimination of more than 28,000 jobs and plans to close two assembly plants.

Last week, Chrysler announced it would stop offering new leases to customers through its financial arm as the resale value of SUVs and trucks plummets, making such transactions riskier.

Chrysler plans to exit leasing business on Aug. 1

Bradford Wernle
Automotive News

Chrysler Financial, the finance arm of Chrysler Holding LLC, will get out of the leasing business, the company said on Friday, July 25.

"We are shifting our strategy to focus on retail products," said spokesman Bill Porter. "Effective Aug. 1 we will no longer offer lease products in the United States."

Porter said the move by the unit of the No. 3 U.S. automaker, which is controlled by private equity firm Cerberus Capital Management, was prompted by the tough market conditions.

U.S. auto sales have dropped to their lowest level in 15 years, and the sudden premium on fuel-efficiency in the face of record gasoline prices has forced consumers to abandon SUVs and other light trucks.

The result has been a sharp decline in the resale prices for light trucks that has forced major automakers and related lenders to take large losses to write down the value of leases on those once-popular vehicles.

"You have got the dropping of the used car vehicle prices. You have got people that are struggling with the credit crunch," Porter said. "It is very difficult right now to offer competitive lease products. So we are switching our strategy."

The move comes a day after Ford Motor Co. took a $2.1 billion charge because of a drop in residual values of its leased vehicles.

And earlier today, Honda Motor Co. said it expects falling residual values of big used vehicles in the United States to shave another 25 billion yen ($231.8 million) from its operating profit in the year to March 2009.

Earl Hesterberg, chairman of Group 1 Automotive Inc., the nation's fourth-largest dealership group, reacted to the Chrysler news by saying:

"Their credit arm has been a competitive weakness before this action. I really don't see how they can be competitive at all in the marketplace with this kind of action. I have no idea how they can be competitive without any leasing at all."

Group 1 owns eight Chrysler LLC dealerships.

Sid DeBoer, chairman of the Lithia Motors Inc. dealer chain, said the Chrysler move is positive for his company, which owns 38 Chrysler dealerships.

DeBoer said he believes he will now have more retail financing options to offer customers. DeBoer said his dealerships only do about 100 leases a month combined.

"We're going to see more zero-for-72 and a lot of other tools. That helps Lithia sell more cars. If they put zero-for-72 on more products and more cash on the hood, we're going to do better. We've never been big on leasing. Most of our customers are from lunch bucket America."

Reuters contributed to this report

Chrysler unveils more aggressive incentives

Bradford Wernle
Automotive News

DETROIT -- Chrysler LLC on Friday, July 25, unveiled major new incentives, including 0 percent financing for 72 months on remaining 2008 Jeep Grand Cherokee, Jeep Commander, Dodge Durango and Chrysler Aspen SUVs.

The 0 percent for 72 months financing is for the most creditworthy customers. Chrysler is offering 0 percent financing for 60 months on the same four vehicles for customers with slightly lower credit ratings.

The incentives were effective today through Thursday, July 31.

Chrysler has added incentives to help dealers boost sales as skyrocketing gasoline prices have bludgeoned the company's pickup- and SUV-dominated product lineup.

Chrysler sales plunged 35 percent in June. Chrysler's $2.99 gasoline purchase incentive, which expires Thursday, has failed to boost sales. Earlier this month, Chrysler began offering 0 percent financing for 72 months on remaining 2008 Dodge Ram pickups.

The redesigned 2009 Ram 1500 is to go on sale at the end of summer, and many dealers are being very cautious about ordering them because they have so many 2008 trucks still on their lots.

Top Chrysler executives, including co-President Jim Press and Chrysler North America sales chief Steven Landry were scheduled to unveil more details about the company's incentive strategy at 3:30 p.m. today.

Chrysler in tie-up talks with Tata, Fiat

DETROIT (Reuters) -- Chrysler LLC is in talks with a range of overseas partners, including India's Tata Motors Ltd. and Italy's Fiat, as it seeks to raise cash and open doors to faster-growing markets outside the United States, according to people briefed on the talks.

Chrysler, the No. 3 U.S. automaker, controlled by private-equity firm Cerberus Capital Management, has been in discussions with Tata about arrangements to sell its Jeep Wrangler SUV in India and possibly other Asian markets.

In addition, Chrysler has been talking to Fiat about leasing production capacity from Chrysler in North America and cooperating in retail distribution in the U.S. market, the people familiar with the talks said.

Representatives from Chrysler and Tata had no immediate comment. Cerberus and Fiat representatives could not be immediately reached.

Report: Chrysler may also partner with Nissan by Mike

DETROIT (Reuters) -- Chrysler LLC is exploring a deal to make trucks for Japan's Nissan Motor Co. as part of a move to prop up the U.S. firm's finances with foreign tie-ups, the Wall Street Journal said on Thursday, citing people familiar with the matter.

In April, Chrysler and Nissan entered a deal under which Nissan would build a small car for Chrysler using the North American automaker's design and Chrysler would build a new full-sized pickup truck for the Japanese automaker using Nissan's plans.

Thursday's news comes a day after Reuters reported Chrysler is in talks with several overseas partners, including India's Tata Motors Ltd. and Italy's Fiat , according to people briefed on the talks.

Chrysler has been in discussions with Tata about arrangements to sell its Jeep Wrangler SUV in India and possibly other Asian markets.

Chrysler has also been talking to Fiat about leasing production capacity from Chrysler in North America and cooperating in retail distribution in the U.S. market, the people familiar with the talks said.

Chrysler and Nissan did not immediately return calls or e-mails seeking comment.

Private equity firm Cerberus Capital Management LP, the majority stakeholder in Chrysler, is now more concerned about Chrysler's ability to turn around on its own and has stepped up efforts to reach out to foreign car companies, the Journal said, citing people familiar with the matter.

Chrysler is tightening spending and rethinking some development projects, the Journal said, citing people close to the company. In one such scrutiny, Chrysler is reconsidering how many of the so-called Phoenix engines it will need in the future, they said, according to the newspaper.

Chrysler has also started exploring whether other auto makers would be interested in using part of a Dundee, Mich., plant that makes four-cylinder engines, Automotive News first reported this week.

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This Day in Auto History:

This Day in Auto History: 7.31.1902 The Circuit des Ardennes staged near Bastogne, Belgium and often cited as the first true circuit race is won by Charles Jarrott in a Panhard et Levassor 7.31.1922 Wolfgang Klemperer publishes test results showing the advantages of Paul Jaray’s aerodynamic automobile bodies 7.31.1936 The last 1936 Pontiac Deluxe Eight is produced 7.31.1954 Onofre Marimon is killed at age 30 when his Maserati 250F crashes during a practice run for the German Grand Prix at the Nurburgring 7.31.1972 Ferrari announces its withdrawal from racing

Source: Automobile History Day By Day, by Douglas A. Wick