http://i2.cdn.turner.com/money/galle...lli.jpgPainful recovery from Cnn.Money fortune Aug. 2008
Chrysler's new owner, Cerberus Capital Management, helped structure gas price futures that made possible the "$2.99 Gas Guarantee" incentive program, shown here in a Chrysler promotional photo.
• Chrysler's hits and misses
Cleaning up some of the messes left behind by Daimler is also keeping Nardelli busy. Under its ownership, Chrysler extended credit to marginal customers and built vehicles that dealers didn't want, didn't order, and couldn't sell. The result: a portfolio of dud loans and expensive inventory that quickly deteriorated.
Eight years of foreign ownership also left Chrysler stripped of traditional corporate functions: human resources, legal, and finance were all run from Germany.
"They got the house and the china," says a rueful Nardelli, "and we got the napkins."
The new owner, Cerberus, has been low-key but active, sending 20 to 30 employees to Detroit to tackle specific assignments. Since Cerberus has been investing in auto parts companies, for example, its analysts can help Chrysler identify financially troubled ones and adjust its sourcing; Chrysler recently pulled its business from a struggling plastics supplier and moved it to another one.
Cerberus also played a key role in creating Chrysler's $2.99 gas price promotion for new-car buyers. It structured the gas price futures that will limit Chrysler's exposure to future price increases, and it helped arrange the processing of the complex credit card transactions required for the program.”
Can Chrysler survive?
CEO Bob Nardelli and co-presidents Tom LaSorda and Jim Press spent hours driving cars at Chrysler's Chelsea Proving Ground, shown here in a photo taken later. (Photo by: Allpar.com
At today's Chrysler there is an emphasis on working fast. Nardelli moved quickly to halt production of money-losing vehicles like the Dodge Magnum and Chrysler Pacifica, even though doing so meant factories ran out of work.
Along with co-presidents Jim Press and Tom LaSorda, Nardelli has spent hours at the test track ordering more than 400 changes to vehicles already in production. That's a process that can take months at other companies
There is a premium on not being bound by old practices. Chrysler was the first of the Detroit Three to pull back on leasing in the tight credit market. Cerberus is betting it can get the company back to the break-even point by fixing its operational problems and cutting costs.
Nardelli has taken a Recovery and Transformation Plan put together by Chrysler's previous management and amped it up by creating a war room and adding visual aids to identify and rank money-saving ideas.
Take material costs. Steel prices have risen steeply.
"This is the big chestnut," Nardelli says.
Nardelli's goal is to break even by 2009, though he adds, "If this thing keeps eroding under us, it will be challenging."
lastic surgery
The interior of 2009 Dodge Ram is the first fruit of Chrysler's new Interior Design Studio. In addition to the appearance, material quality and construction are also improved..
• Chrysler's hits and misses
Customers are clamoring for fuel-sipping vehicles, but Chrysler stopped the production of its best-known small car, the Neon, more than a year ago. Competitors laughed when a Chrysler executive said the company would introduce an electric vehicle in three to five years -- later than just about everybody else.
A more immediate priority is improving the quality of the cars Chrysler builds now, ranked by Consumer Reports as the worst among 15 automakers.
Last October, Chrysler recruited quality expert Doug Betts from Nissan, named him "chief customer officer," and told him to make better vehicles. Betts created 18 cross-functional teams to address problems with brakes, steering, ride, and handling.
Cost cutters during the Daimler era replaced ornamentation in some models with less expensive materials that looked cheap. Nardelli has given chief designer Trevor Creed the leeway to spend more money on higher-quality materials and precision assembly.
"We've got to raise our own expectations about what customers should receive," Creed says.
Where a modest freshening won't do, the new team is going for a total overhaul.
Although the midsized Sebring sedan has been on the market less than two years, management has created a team to perform a complete redesign.
By intensely studying customer preferences early, as the Japanese have long done, the team hopes to limit changes late in the design cycle.
”
