Chrysler to Lose $1.6b
The Detroit News (DTN) reports that Chrysler CEO Boot 'em Bob Nardelli told his troops that the automaker will lose $1.6b this year. That's $.6b more than Steven Landry, executive vice president of North American sales, let slip to some students in Halifax last month. It's also a signal that Cerberus is about to start the "strip and flip around Christmas" program mentioned by Mr. Nardelli at another employee "pep talk." [Note to Bob from the Motivational Speakers Association: don't quit your day job.] While DTN spends most of its article soft-pedaling the red ink revelation– "A loss on the magnitude of $1.6 billion is not unexpected for Chrysler, said Joe Phillippi, principal of AutoTrends Consulting Inc. in Short Hills, N.J."– the problem isn't this year. It's next. And next year is looking to be a bitch. Whatever exit strategy led Chrysler's private equity taskmasters to buy the automaker in the first place– we're still thinking MAGNA is on Cerberus' speed-dial– is sure to be accelerated by the new numbers.
From Peter Delorenzo's column this week: Despite the positive pronouncements, the word from inside the Cerberus empire is that they bit off way more than they can chew, and now they're officially sweating the whole deal. Not good.