Bob Nardelli’s reaction to the White House report

Dear Employees,

Today’s announcement by the Administration represents an important step forward on our path to viability. The Administration, U.S. Treasury and the President’s Auto Task Force have recognized Chrysler’s viability as an important part of the U.S. auto industry and overall economy, and have provided a critical vote of confidence in our alliance with Fiat S.p.A.

We are appreciative that the government has supported a global alliance with Fiat. By providing Chrysler with product and platforms, technology cooperation and global distribution, the alliance with Fiat strengthens our ability to create and preserve U.S. jobs; to give U.S. consumers more choices of environmentally advanced vehicles; to give our dealers more of the products they need to succeed; to help stabilize the supplier base; and to pay back government loans sooner.

While the Administration’s findings released today recognize our progress in reducing structural costs and improving quality, the report also cites the challenges that continue to face Chrysler in the areas of scale, quality, product mix, manufacturing and geographic concentration. However, the important point is that the task force concludes that the Fiat alliance will go a long way toward addressing these concerns. Going forward, the Administration has committed to provide working capital for the next 30 days as we achieve the necessary stakeholder concessions, and further our restructuring efforts.

So while today’s news is a step in the right direction, we need to continue to manage our business through the current downturn. We need everyone to focus on controlling costs while improving quality and customer satisfaction. There also is much work remaining to achieve required concessions from important constituents to reach the restructuring targets that the government has established.

In addition, as we add more exciting, fuel-efficient vehicles to our showrooms it will be important that our customers have access to credit. That’s why we continue to advocate further government support for Chrysler Financial in order to make reasonable loans available to many more consumers.

I want to thank you for the hard work and dedication that you have given to Chrysler during the past 18 months. While we know our quality is not yet where it needs to be, our improvement is clearly evident in the 30 percent reduction in warranty claims over the last 12 months, and the fact that Chrysler reported the fewest safety recalls of any major manufacturer in 2008. We also have continued to advance important new vehicle programs such as the all-new Dodge Ram, the electric-drive vehicles under development by our ENVI organization and the all-new Jeep Grand Cherokee that we will showcase next week at the New York Auto Show. We have continued to improve the fuel economy of our lineup, with 73 percent of our 2009 models offering improved fuel efficiency compared with the previous year’s models, and we are well positioned to meet the more stringent fuel economy requirements coming in 2011.

I want to personally assure you that Chrysler will operate “business as usual” over the next 30 days. While we recognize that we still have substantial hurdles to resolve, Chrysler is committed to working closely with Fiat, the Administration, U.S. Treasury and the Task Force over the next 30 days to secure the support of necessary stakeholders. If successful, the government will consider investing up to the additional $6 billion requested by Chrysler to help this partnership succeed.

Thanks again for your continued support as Chrysler continues to move forward on its path to viability.

Bob