http://money.cnn.com/2007/12/21/news...ney_topstories


NEW YORK (CNNMoney.com) -- Chrysler Corp., the troubled automaker bought by private equity just four months ago, is scrambling to sell assets amid indications of huge losses, as access to cash becomes increasingly scarce, according to a published report Friday.

"Someone asked me, 'Are we bankrupt?'" the Wall Street Journal quoted Chrysler boss Robert Nardelli telling employees at a meeting earlier this month. "Technically, no. Operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with."

To raise money, Chrysler is looking to sell over $1 billion in land, old factories, and other holdings, even if it has to let those properties go for under book value, the Journal said.

In an interview with the Journal, Nardelli confirmed the comments and declined to give a financial forecast for 2008, saying only that Chrysler "will make a pretty significant improvement" over the $1.6 billion the company is set to lose this year. The Journal said Nardelli originally hoped to turn a profit in 2008.

The rush to raise capital comes amid constricting access to money as more banks and other lenders face heavy losses related to subprime mortgages.

Chrysler's owner, Cerberus Capital Management, is now facing serious subprime-related losses from GMAC Financial Services, which it bought from General Motors (GM, Fortune 500) for $12 billion, and is also trying to walk away from a now pricey deal to buy United Rentals Inc., (URI) the Journal said.

Cerberus bought Chrysler from German automaker Daimler in a deal that closed in August.

In the arrangement, Daimler (DAI) essentially paid Cerberus to take the automaker, which fell to No. 4 in U.S. sales behind Toyota Motor (TM) in 2006, in an effort to get out from under a $1.5 billion loss from last year, along with continued obligations to union members and retirees.

 

The major banks are getting bailed out by foreign investors; maybe someone from Asia or the Middle East will end up owning Chrysler a few years sooner that what I'd thought.

 

GMAC was sold?? Wow, that's news to me.

I wonder if they're talking about the United Rentals for construction equipment.

I can see some oil-rich skanky bastard from islam-land owning it too. Damn.

 

Yep, it's that United Rentals. A judge just ruled that Cerebus doesn't have to follow through with the sale, though. They'll probably need that $4B to start cleaning up other messes.

That's a classy statement.

 

just hard times for a fledgling company..

 

Hmmmm, I wonder if its time for bonuses...You know, to keep the good execs on staff.

 

What are the chances that Chrysler would cease to exist as a company?

 

IDK, but the brand isn't going anywhere. I could definetly see a Chinese or Korean company buying the rights.

 

I was wondering when the morgage crisis would start to affect Cerberus, and how in turn it would affect Chrysler. Guess now I know.

I'd still rate Ford quite a ways ahead of Chrysler as the US car company most likely to die next.

Ford's lack of new product is the result of nothing more than poor, shortsighted management. Ford certainly had the money for new products and say what you will about Jac Nasser's management style and the good will he may have jepordized, he left behind very aggressive and industry leading new vehicle portfolios in the pipeline... almost all inexplicably vanished shortly after he left the company.

Although, Ford has a new CEO who is by all acounts, asking the right questions and moving towards the right goals, alot of the same executives that ruined Ford are still there. Plus, it's hard to make up for years of lost development time and killed off programs.

Finally, Ford has had to sell off everything that wasn't nailed down just to raise money to keep themselves operating.

PAG is all but gone. Mercury is nothing but Fords with more trim. Lincoln is turning into Buick instead of running with Cadillac. Ford actually killed off engineering that would have made the Aussie Falcon export capable to LHD countries to protect the Crown Vic. Ford walked away from leadership in the small pickup and econocar (Focus) market in the US. They walked away from the Taurus name. They walked away from the Zephyr name. They essentially killed the Crown Vic redesign. They tried to kill the Town Car. They killed off the money making SVT. They decimated their entire new product program save the F series, Mustang, and a couple SUV lines.

Compare all of that to Chrysler having too many dealers and needing to speed up the real Neon replacement and quickly redoing the Sebring and Avenger to today's NVH and quality levels to build up volume in retail sales (as opposed to fleet), and between the 2, I'd put my money on Chrysler.

Chrysler isn't really in bad shape. They have alot of product in the pipeline due out sooner than the bulk of Ford's. They have mastered flex assembly, and build multiple models in the same plant. They have created development and production alliences with other manufacturers in Europe and China as well as Mitsubishi in Japan. Thier pension fund is being paid by Daimler. And if memory serves correctly, Chrysler needs the fewest people per car made than anyone else in the US.

That said, they are at a point where they have to turn around within a couple of years, or things will start to get ugly.

 

Good writeup. Thanks for the information! Even though there isn't anything in Ford or Chrysler's lineup that I would consider owning at this moment, losing another major US employer wouldn't be a great thing.