Rattner: Chrysler’s survival depended on dumping Cerberus management

Steve Rattner, former head of the Obama Administration’s Auto Task Force, said replacing the management team installed by Cerberus Capital Mangement was one of the task force’s objectives in restructuring Chrysler.

Rattner, who was speaking at Council on Foreign Relations-sponsored forum about the global auto industry, told the audience, “We wanted to have a completely fresh management team. You can’t come to any conclusion that management is not a huge ingredient, a huge determinant of success.”

In fact, Rattner also said the task force’s motivation for supporting the Chrysler-Fiat alliance “was frankly to get new management and to get what we thought was one of two or three best management teams in the world.”

Cerberus’ management team consisted of Robert Nardelli, ex-CEO of Home depot, former Chrysler CEO Tom LaSorda and Jim Press, former CEO of Toyota’s U.S. operation. Nardelli left Chrysler when the new company emerged from bankruptcy. He then took a consulting assignment with Cerberus. LaSorda retired from Chrysler on May 1, 2009 and took a job advising Penske Group on the planned purchase of Saturn from GM. Press is due to leave Chrysler at the end of this month.

Bruce Nussbaum, writing in BusinessWeek’s August 2007 edition, said, “Picking Robert Nardelli to save Chrysler is the most bone-headed idea of 2007.”

Apparently the President’s Auto Task Force agreed.

Dodge Journey mailing, deals sent

Dodge has arranged heavy publicity for the neglected but popular Dodge Journey, with over 250,000 targeted letters arriving in early November. The package includes postcards and various offers, including a $25 debit card for a test drive, and cash back for both Chrysler owners and defectors from other brands. People who get the offer can forward it to friends who can then register for a $500 cash allowance.  The promotion is good through the end of January, 2010.

The mailing is targeting current owners, owners of Saturn and Pontiac vehicles, and owners of key competitor vehicles.

Dodge Charger: no-charge AWD

Dodge is adding no-charge all wheel drive on Charger SXT and R/T, using the advanced new system that disconnects the front axle when it’s not needed, increasing gas mileage to around the same level as rear-drive systems.  The promotion is to be made during the winter months, highlighting the advantages of Dodge’s AWD system in winter weather.

The axle disconnect system is used on all Chargers with all wheel drive; the front wheels are independent of the powertrain until they are needed, and the system seamlessly engages all wheel drive, shifting up to 38% of torque to the front axle.

Top safety picks: Chrysler 4, Toyota 0

Four Chrysler vehicles were named Top Safety Picks for 2010 by the Insurance Institute for Highway Safety while Toyota failed to place a single car or truck on the list. Chrysler also had more domestic models on the list than either Ford or General Motors.

Chrysler got the nod for the Avenger and Sebring sedans when equipped with optional Electronic Stability Control, the Dodge Journey and the Jeep Patriot with optional thorax side air bags.

Ford got the largest number of picks with six, but four of those went to Volvo. Only the Taurus and Lincoln MKS made the grade for Ford’s domestic brands. GM was represented by the Buick LaCrosse and Chevy Malibus made after October 2009.

Subaru got five picks, Volkswagen got four, plus one for the Audi A3. Two Hondas made the list along with one each for Kia, Mercedes-Benz and Nissan.

Chrysler may cut more dealers in credit crunch

Chrysler Group may have to cut another 145 dealers unless they can find a new source of financing. That’s because the dealers have been unable to qualify for financing from GMAC, Chrysler’s primary financing source.

The dealers have been caught in the in the transition from Chrysler Financial to GMAC. They have existing mortgages and floorplan debts through Chrysler Financial which refuses to give up its rights to first call on assets. In addition, much of the mortgaged real estate is now worth less than the mortgages. Chrysler Financial is no longer offering floorplan financing for Chrysler products.

Dealers had until the middle of this month to qualify for GMAC funding or obtain ongoing financing from another source.

Chrysler to invest $179 million in Dundee plant

Chrysler will invest $179 million in the Dundee, Michigan plant it formerly shared with Mitsubishi and Hyundai in the Global Engine Manufacturing Alliance which was dissolved earlier this year. The funding will be used to covert production to building Fiat’s 1.4-liter, four-cylinder engines. The plant is expected to produce about 250,000 engines each year and will add an estimated 155 new jobs to the plant.

THe change will also help Fiat SpA to achieve one of the goals set by the government for increasing its ownership of Chrysler. By building an engine in the U.S., Fiat can increase its stake to 25 percent. It’s anticipated that Fiat will be able to achieve all the benchmarks to have a 35 percent controlling ownership of Chrysler by the end of 2011.

Michigan Congressman defends Chrysler aid

Gary Peters, Democratic Congressman from Bloomfield Township, has taken issue with remarks made by former Republican Presidential candidate John MacCain. While serving as grand marshal at a NASCAR event in Arizona, McCain said, “Anybody believes that Chrysler is going to survive, I’d like to meet them.”

Peters accepted the challenge in a letter, saying he “will meet with you at your convenience to discuss the future of Chrysler and the contribution they make to our nation’s economy.” Peters added, “Better yet, I’d be more than happy to bring you to my district to meet with thousands of Americans who are working hard every day to design new and exciting vehicles and ensure the continued future of the American automobile industry. Hopefully then you might choose to be a partner in the continued success of an industry critically important to our country.”

Peters also contested McCain’s claim the United Auto Workers refused to renegotiate existing contracts. In fact, the UAW agreed to a number of contract changes, including an agreement to allow new workers to be hired at half the existing contract rate, to help Chrysler and GM before they filed for bankruptcy.

McCain declined to back down, other than to clarify his remarks, changing “Anyone” to “Any objective observer.” In a reply to Peters’ letter, McCain said, “As I am sure you know, I have spent a considerable amount of time in Michigan over the years, and have seen firsthand the great work achieved by the citizens of Michigan. Their perseverance merits praise.”

McCain’s remarks seem to be part of a GOP effort to discredit the efforts of Chrysler and General Motors to recover and become profitable again. Michael Steele, chairman of the Republican National Committee, seized upon GM’s announcement of a third-quarter loss, saying this was “further proof that President Obama’s economic experiments are wrong for America.”

Steele’s comments ignore the fact that the bailouts were started under President George W. Bush after he and Treasury Secretary Henry Paulson engineered an almost-no-strings-attached, $750 billion bailout of Paulson’s cronies on Wall Street. Furthermore, at the beginning of the third quarter, General Motors was in bankruptcy. In addition, GM’s sales in the most recent reported month were actually ahead of October 2008, marking the General’s first month-over-month improvement in almost two years.