Chrysler: We've Got Plenty of Dough
TTAC newcomer Ken Elias reckons his most excellent Chrysler Suicide Watch 37 flushed Auburn Hills' proverbial grouse from its metaphorical heather. Whatever the cause, ChryCo to reassure the world that it's not about to swan dive by revealing some of its financials. Automotive News [sub] reports that the ailing American automaker claims "operating income" of $1.1b for the first half of 2008. Jim Press, Chrysler co-president, said the $1.1 billion was Chrysler's earnings before interest, taxes, depreciation and amortization. Chrysler also had $11.7 billion 'in cash and marketable securities.'" CFO Ron Kolka claimed the number included $2.3b in "restricted cash" and excluded $2.3b in Voluntary Employee Benefits Association assets. The overall number is higher than a lot of analysts expected, but it includes the $2b ChyrCo borrowed recently. The main question: is Chrysler playing silly buggers with the books?
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Plenty of cash for Campi and Nardelli to take with with they get sold or BK'd. Do they think we are stupid.
When you borrow cash it is not yours in the way it is when you earn it and wheelbarrow it to the vault like Toyota, Honda, Daimler to name a few. One of the crushing things that will soon put all three of the (we have plenty of money companies)away is that word interest. A good credit worthy company has to pay say prime rate for borrowed money, a badly rated company has to pay much more and sign all kind of clauses triggering advanced repayment of the money if they cross under the guidlines set by the lender (again we say this is not really the big Three's money). Like the Government, a huge and useless for developement of future products (or improving existing ones) is that monthly interest weight payment around their neck. And just like Joe Sixpack who borrows against his house, the auto makers are putting up the real estate also (and anything else of auctionable value). So, unless they turn the corner like old fashioned stemming the losses in market share and finally going positive, the taking or more money is counterproductive to survival. As another blogger said, if you are shrinking your way into profitability (because you can't grow your way there) then why need more money all the time?
"prousa1 : August 2nd, 2008 at 2:02 am listen if chrysler wanted to be anything more than average they better make a change at the top this whole canadian looking out for canadian makes me ill.closing plants in the usa to build vehicles/vans in canada that sell mostly in the usa seems short sighted. in a world where the word loyalty is almost nonexistent chrysler seems ready to show theirs to canada. if you dont build it in the usa dont sell it here!!!" You don't know much do you? They have already made a change at the top, LaSorda is not in charge, Press and Nardelli are in charge. Furthermore, remember that they cut four vehicles last year. Not one of those cuts was at an American facility. Two were Canadian sourced, one from Mexico and another from Germany. So no, Chrysler has not shown its loyalty to Canada. At least no moreso than it has to the US, Mexico or anywhere else. It is a business after all and loyalty means far less than the almighty dollar.
"mirkothetruthaboutcars : August 2nd, 2008 at 10:30 pm i was likely asleep, but did Cerberes buy GMAC?; i thought it was KKR" Cerberus bought 51%. GM retained the rest.