Chrysler was the last of the not-so-Big Three to reveal their plan for long-term viability with an ask of $11 billion to sustain operations into the new year. But for what?
As recently as September, Chrysler said they had seven-to-nine new models for 2010. For the life of us, we can't figure out what those vehicles are considering the company's stopped development on every single product line. Are they talking about the Chrysler EV electric car family? Because seriously, that's smoke and mirrors. There's nothing new coming out of this company at any time in the next year.
But hey, Chrysler CEO Bob Nardelli also pledged to take a $1 salary and no kind of health or insurance benefits until the crisis is resolved. Well, he's earned it.
Because once you get past the huge $11 billion number and the fact that they're apparently going to be forced out of business in January without it, when you take a look at the automaker's plan, there isn't much in the way of specifics there. On the whole, the plan is less substantial than what GM or Ford are offering. I mean, although we may not agree with the sale projections they make, at least the other automakers are making a guess as to what sales numbers in the United States will look like for the next year. All Chrysler was willing to say was "Chrysler anticipates sales to be even lower than normal due to the economic downturn." What, did Chrysler can its market analysts already?
It's almost as if they're saying "buy us some time until someone else buys us." Actually, I think they may have said that on page three somewhere. Anyway, full highlights from Chrysler below.
Highlights of Chrysler LLC Plan Submitted Today to the Senate Committee on Banking, Housing and Urban Affairs and the House Committee on Financial Services* Chairman and CEO Robert Nardelli looks forward to testifying before the committees later this week
* Chrysler will urge the immediate adoption of legislation that will allow domestic automakers to weather the current national economic crisis and continue to invest in industry-leading products, technologies and vehicles of the future
* Full plan attached as pdf file* The first question is, what changes has Chrysler made to help itself? Since Chrysler became an independent company in 2007:
o We eliminated over 1.2 million units of capacity, or 30 percent;
o We reduced fixed costs by $2.4 billion and, separated over 32,000 employees – including 5,000 on the Wednesday before Thanksgiving. And at the same time …
o We invested in product improvements – over half a billion dollars in our first 60 days;
o We improved our latest JD Power quality scores, and reduced our warranty claims by 29 percent;
Part of our business model transformation includes alliances and partnerships – for example – the agreements to produce vehicles for VW and for Nissan. As a result, through the first six months of the year, Chrysler met or exceeded our operating plan, ending the first half with $9.4 billion unrestricted cash.* Why does Chrysler need the funding? We need to address the unprecedented drop in vehicle sales caused by the financial crisis. U.S. sales are down from a 17 million unit selling rate in early 2007, to an estimated 11 million unit selling rate for the fourth quarter of 2008 – a 38 percent decline. We lost 20 percent of our sales virtually overnight when the financial market crisis forced us out of the consumer lease business. With customers not buying … with dealers not ordering … with our plants not producing … Chrysler’s cash inflow has suffered.
* So how will the bridge loan be used? Cash will support ongoing operations as we continue to restructure the business, including in the first quarter alone:
o $8.0 billion in payments to parts suppliers
o $1.2 billion for other vendors
o $900 million in wages
o $500 million in healthcare and legacy costs
o $500 million in capital expendituresWithout an immediate working capital bridge, Chrysler’s liquidity could fall below the level appropriate to ensure operations in the ordinary course by the first quarter of 2009.
* So, who is contributing to saving Chrysler? First and foremost, Chrysler and its extended enterprise will. That starts with me. I receive a salary of $1 a year. I have no employment contract, no change of control agreement, no “golden parachute,” and receive no health care or life insurance benefits from the company. We are committed to negotiate concessions from all of our constituents.
* The next question - Does Chrysler plan to build cars and trucks that consumers want to buy, and that support the country’s energy security and environmental goals? Our product plan features 24 major launches from 2009 through 2012. For the 2009 model year, 73 percent of our products will offer improved fuel economy compared to 2008 models. We plan on launching additional small, fuel-efficient vehicles. ENVI is our breakthrough family of all-electric … and range - extended electric vehicles – similar to the one parked outside. Chrysler’s product plan includes the introduction of the Ram Hybrid and our first electric-drive vehicle in 2010 with three additional models by 2013.
* Does Chrysler have a viable plan? With our requested bridge loan – absolutely! I also believe that further partnership, restructuring and consolidation would make the U.S. auto industry even more viable and competitive in the long run. Further opportunities for technology sharing would provide fuel-efficient cars and trucks more cost effectively and faster to market. The three-company alliance that developed the dual-mode hybrid is a good example. As a Country, we should not trade our current dependence on foreign oil for a future dependence on foreign technologies.
* The final question is, when will Chrysler pay back this loan? We believe we will be well positioned to begin repayment of the federal loans — in 2012. I recognize that this is a significant amount of public money. However, we believe this is the least costly alternative considering the depth of the economic crisis and the options we face.
[Source: Chrysler]
If you need more proof Chrysler is going to have a rough future, check out the bankruptcy filings for Getrag Transmission Manufacturing. The non-Ford US arm of transmission manufacturer Getrag filed for bankruptcy protection because it will be unable to pay for an Indiana plant it was supposed to build with Chrysler. We reported last year about the $530 million plant that was going to build a six-speed DSG gearbox for future Chrysler cars. Chrysler is suing Getrag for failing to secure $300 million in debt financing as part of the joint-agreement. As one can imagine, getting credit in this market to build a plant for future Chrysler cars isn't easy.
Though the plant is 80% complete, it isn't clear who could come in and pay for completion of the plant or if Chrysler will have cars to put the new transmissions in for the future since the company has few new cars coming down the pipeline. This is more bad financiapocalypse news for Indiana, a state in need of those extra jobs. (Thanks J. Katz For The Tip) [IndyStar]
According to California's Orange County Register, the world's largest Lamborghini dealer, Lamborghini Orange County, has closed its doors without explanation from either the dealership owners or Lamborghini parent company Volkswagen. The sudden shuttering of the dealership and its satellite showrooms comes on the heels of the closure of more mainstream "world's largest" dealers like Bill Heard Chevrolet. The owner of the Santa Ana based Lambo dealer, and reinforcer of every Lamborghini stereotype you've ever heard, Vik Keuylian, commenting on the matter said "I can't talk about anything."
When reached for comment, VW hinted that poor business decisions on the part of Lamborghini OC, more than the general downturn in the market, had led to the closure of the dealer, but VW offered no further specifics. All the cars on the lot have been removed, the offices have been more or less stripped and the gates padlocked. No direction has yet been given for owners dealing with Lamborghini Orange County. Gallardo owner Joe Madeuplamboowner commented "Son of a b***h. Where am I gonna get my baby serviced now? I got a load a strippa's I got lined up to show this car off to an the damn thing has one a dem idiot lights on." [Further details and photo credit at OC Register]
According to Fisker Automotive, the company has emerged the victor in a lawsuit that pitted the niche hybrid automaker against Tesla Motors, the niche electric car automaker. The original lawsuit, brought by Tesla, alleged that Henrik Fisker stole designs for the Tesla Model S for his Fisker Karma Hybrid. Fisker claimed this was false and, using a clause in his contract with Tesla, sought arbitration. The arbitrator agreed with Fisker, essentially piling on more bad news for Tesla, which has had to cut staff, close an office and panhandle from investors. Fisker's statement below the jump.
Fisker Statement On Arbitration
Fisker Automotive Inc, and Fisker Coachbuild, LLC today announced that a JAMS Arbitrator has issued an interim award finding in favor of Fisker Coachbuild, LLC, Fisker Automotive, Inc., Henrik Fisker and Bernhard Koehler and against Tesla Motors Inc. on all claims.The Arbitrator selected by the parties to decide Tesla's allegations ruled in favor of Fisker Coachbuild, LLC, Fisker Automotive Inc., Henrik Fisker and Bernhard Koehler. In so doing, the Arbitrator expressly found that "the evidence is overwhelming that Fisker did nothing wrong" and that "Tesla's assertion of violations of the Uniform Trade Secrets Act by Fisker were baseless and neither brought nor pursued in good faith."
"The finding by the Arbitrator says it all," said Thomas Newmeyer of Newmeyer & Dillion, Fisker's lawyers in the case. "My clients have been completely vindicated of any wrongdoing."
"We are very pleased with the ruling in favor of Fisker Coachbuild, LLC, Fisker Automotive, Inc., Bernhard Koehler and myself," said Henrik Fisker, CEO of Fisker Automotive Inc. "Despite the burden and expense of Tesla's lawsuit, Fisker Automotive, Inc. has been able to continue with its business plan and production schedule. We are still on schedule to deliver our first production vehicle, the Fisker Karma plug-in hybrid, 4 door luxury sports sedan by 4th Quarter 2009. Today's world needs new alternative energy vehicles and the focus should be to build and deliver these vehicles as soon as possible."
[Source: Fisker]
