Can Chrysler Cut Their Way To Profit?
Cerberus may have deep pockets, but BusinessWeek notes the company is "loathe to invest more cash" into its automotive acquisition. It makes financial sense: the less they put into Chrysler, the more profit they make when they sell it. Oh, that's right… they're in it for "the long run," not to strip and flip. Sorry. Anyway, Chrysler is looking for any way they can cut costs or save money. Frank Klegon, Chrysler's VP for product development says they're looking for low-cost providers for "components only a mechanic would touch," with the savings paying for the stuff you can see. What building a car with the cheapest brakes, steering, drivetrain and electronic controls made will do for their warranty claim costs (and product liability insurance) remains to be seen. In the meantime, the Wall Street Journal reports they'll be offering a new round of incentives next month to try and clear out slow-selling 2007 models. So while they're cutting quality under the skin to save money, they're paying consumers to buy their products. That's one helluva recovery plan there Bobby boy.