On December 27th, Chrysler's official blog posted a copy of a full-page USA Today ad the company paid for thanking America for receiving a TARP bridge loan from the federal government. The post quickly drew hundreds of anti-Chrysler comments basically telling Chrysler to "go to hell" for spending money on an ad rather than, you know, coming up with a strategy to save itself.

For the last month it appeared as though Chrysler was either ignoring the negative comments or they just didn't notice them. That changed today when a link to the post went live on the-always-good-for-a-laugh Digg and here on Jalopnik, bombarding Chrysler's official blog with more traffic than it seemed able to take, causing the entire blog to shut down for an hour.

When the blog came back up, the offending post had mysteriously disappeared — along with the anti-Chrysler comments. The offending USA Today ad however, was still available to hotlink.

So what do we have to say to this? Well, we've decided to create our own one page ad on behalf of the American taxpayers. We'd like to run it in USA Today, except we kind of spent all our money loaning Chrysler the cash needed to keep their owners at Cerberus out of bankruptcy court. So, here it is — our special "Thank You" to Chrysler.

Although, since 19.9% of Chrysler is still owned by German automaker Daimler and Fiat's still Italian-owned, all the two automakers would need to do is find a nice Japanese automaker to buy the rest and hey, it'd be like an automaker Axis power all on its own.

OK, a little bit more seriously, the two automakers claim this partnership/ownership deal will provide Chrysler access to things like "competitive, fuel-efficient vehicle platforms, powertrain and components" — you know, things they claim they already had. Fiat, on the other hand, will receive a distribution network in "key growth markets" (has Fiat seen North American sales numbers?), as well as "substantial cost savings opportunities" (like what exactly?).

Also, Fiat will now be in charge of managing the process of submitting a viability plan to the U.S. Treasury. Apparently Cerberus was having trouble accomplishing that on their own. That explains the crayons on construction paper plan they submitted to Congress the last time Bob "The Builder" Nardelli showed up. Anyway, here's the joint press release from the two now-joined-at-the-hip automakers.

Fiat Group, Chrysler and Cerberus Announce Plans for a Global Strategic Alliance

Fiat S.p.A., Chrysler LLC (Chrysler) and Cerberus Capital Management L.P., the private investment majority owner of Chrysler LLC, announced today they have signed a non-binding term sheet to establish a global strategic alliance.

The alliance, to be a key element of Chrysler’s viability plan, would provide Chrysler with access to competitive, fuel-efficient vehicle platforms, powertrain, and components to be produced at Chrysler manufacturing sites. Fiat would also provide distribution capabilities in key growth markets, as well as substantial cost savings opportunities. In addition, Fiat would provide management services supporting Chrysler’s submission of a viability plan to the U.S. Treasury as required. Fiat has been very successful in executing its own restructuring over the past several years. The alliance would also allow Fiat Group and Chrysler to take advantage of each other's distribution networks and to optimize fully their respective manufacturing footprint and global supplier base.

The proposed alliance would be consistent with the terms and conditions of the U.S. Treasury financing to Chrysler. Per the U.S. Treasury loan agreement, each constituent will be asked to contribute to Chrysler’s restructuring effort including: lenders, employees, the UAW, dealers, suppliers and Chrysler Financial. Such steps would greatly contribute to Chrysler’s long term viability plan. Completion of the alliance is subject to due diligence and regulatory approvals, including the U.S. Treasury.

As a consideration for Fiat Group’s contribution to the alliance of strategic assets, to include: product and platform sharing, including city and compact segment vehicles, to expand Chrysler’s current product portfolio; technology sharing, including fuel efficient and environmentally friendly powertrain technologies; and access to additional markets, including distribution for Chrysler vehicles in markets outside of North America, Fiat would receive an initial 35 percent equity interest in Chrysler. The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.

“This initiative represents a key milestone in the rapidly changing landscape of the automotive sector and confirms Fiat and Chrysler commitment and determination to continue to play a significant role in this global process. The agreement will offer both companies opportunities to gain access to most relevant automotive markets with innovative and environmentally friendly product offering, a field in which Fiat is a recognized world leader while benefitting from additional cost synergies. The deal follows a number of targeted alliances and partnerships signed by the Fiat Group with leading carmakers and automotive suppliers over the last five years aimed at supporting the growth and volume aspirations of the partners involved,” the CEO of Fiat Group, Sergio Marchionne said.

"A Chrysler/Fiat partnership is a great fit as it creates the potential for a powerful, new global competitor, offering Chrysler a number of strategic benefits, including access to products that compliment our current portfolio; a distribution network outside North America; and cost savings in design, engineering, manufacturing, purchasing and sales and marketing," said Bob Nardelli, Chairman and CEO of Chrysler LLC. "This transaction will enable Chrysler to offer a broader competitive line-up of vehicles for our dealers and customers that meet emissions and fuel efficiency standards, while adhering to conditions of the Government Loan. The partnership would also provide a return on investment for the American taxpayer by securing the long-term viability of Chrysler brands in the marketplace, sustaining future product and technology development for our country and building renewed consumer confidence, while preserving American jobs."

"This is great news for the UAW Chrysler team and we look forward to supporting and working with them to ensure Chrysler's long term viability,” said Ron Gettelfinger, President United Auto Workers (UAW).

“We're on board with this important strategic initiative as it will help preserve the long-term viability of our great company, its brands and of course UAW-Chrysler jobs,” said General Holiefield, Vice President, United Auto Workers (UAW).

# # #

About Chrysler LLC
Chrysler LLC, headquartered in Auburn Hills, Mich., produces Chrysler, Jeep®, Dodge and Mopar® brand vehicles and products. Total sales worldwide in 2008 were 2 million vehicles. Outside of North America, 2008 was the second-best sales year in the last decade and the third-best ever for Chrysler International. Chrysler LLC’s product lineup features some of the world's most recognizable vehicles, including the Chrysler 300 and Town & Country, Jeep Wrangler and Grand Cherokee and Dodge Challenger and Ram. In the fall of 2008, Chrysler introduced three advanced electric-drive vehicle prototypes – the Dodge EV, Jeep EV and Chrysler EV. One is targeted to be produced in 2010 for consumers in North American markets, and European markets after 2010.

About Fiat
Founded in 1899, Fiat is an automotive-focused industrial group, serving customers in more than 190 countries around the world. With some 185,000 employees, 114 R&D centers and 178 plants worldwide, the Fiat Group designs, manufactures and sells passenger cars (Fiat, Lancia, Alfa Romeo, Abarth, Maserati and Ferrari), agricultural and construction equipment (CNH Case New Holland), trucks and industrial vehicles (Iveco), and automotive components (FPT Powertrain Technologies, Magneti Marelli and Teksid).

In a statement from Chrysler, the company acknowledges the Carpocalypse and explains all 30 of the company's plants will be idled on Friday, December 19. But rather than giving a specific date for returning the release merely states:

"Chrysler manufacturing operations... will not return to work any sooner than Monday, Jan. 19, 2009." (emphasis added)

While we assume the company will come back at some point, maybe in order to produce its not-so-mysterious future vehicles, it does make the situation sound even more dire than even we could imagine.

In reality, this will probably allow the company to avoid bringing production of cars they have way too many of online until/if demand increases. It will also allow the company to completely scuttle certain lines altogether.

Or they've almost completely run out of money.

The carefully and eerily worded press release below.

Chrysler LLC Adjusts Production as a Result of the Deteriorating U.S. Credit Crunch

Auburn Hills, Mich., Dec 17, 2008 -

Due to the continued lack of consumer credit for the American car buyer and the resulting dramatic impact it has had on overall industry sales in the United States, Chrysler LLC announced that it will make significant adjustments to the production schedules of its manufacturing operations. In doing so, the Company will keep production and dealer inventory aligned with U.S. market demand. In response, the Company confirmed that all Chrysler manufacturing operations will be idled at the end of the shift Friday, Dec. 19, and impacted employees will not return to work any sooner than Monday, Jan. 19, 2009.

Chrysler dealers confirmed to the Company at a recent meeting at its headquarters, that they have many willing buyers for Chrysler, Jeep® and Dodge vehicles but are unable to close the deals, due to lack of financing. The dealers have stated that they have lost an estimated 20 to 25 percent of their volume because of this credit situation.

The Company will continue to monitor the production schedules of its manufacturing operations moving forward.

[Source: Chrysler, Photo: IIHS]

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 expenditures

Without 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]

A message to employees from Bob Nardelli

Dear Employees,

These are truly unimaginable times for our industry. We continue to be in the most difficult economic period any of us can remember. The combination of troubled financial markets, difficult credit, volatile commodity prices, the housing crisis and declining consumer confidence continues to weigh on the economy. Never before have auto industry sales contracted at such a fast rate. Throughout this challenging time for our industry and our company, we have continued to face the realities of our business environment. Working as a team, we have been right-sizing our organization to become as competitive as possible.

As business conditions today continue to decline, and we prepare for economic challenges extending into 2009, additional actions will be needed to re-size our company to remain competitive. Due to the unprecedented conditions in the auto industry, both in our home and international markets, we are targeting a 25 percent reduction in our salaried and supplemental work force. As always, we will strive to do this in a socially responsible way, with respect and gratitude to those who have contributed so much to our company over the years.

Your leadership team will receive the details on new voluntary programs today that will be made available to Chrysler salaried employees beginning in November. These new programs will be available to a broader group than before and will feature enhanced benefits, including both cash and new-vehicle vouchers. Your management will share all the program details with you in the next few days. I hope that every eligible employee takes time to seriously consider these enhanced offerings given the current environment. In addition, it will be necessary to have involuntary separation actions at the end of December, which is why the company is also issuing a WARN act notice today.

We need to work harder and more diligently to control every expense. To that end, we are eliminating in some cases, and cutting back on all discretionary and overhead expenses. Details of this initiative will be communicated through your leadership team. As an additional cost savings measure, we also will be reducing capital expenditures, but I assure you that we are protecting all major product programs.

As we re-size the company to reflect declines in volume, we know we must find new and more efficient ways to conduct our business operations. We recognize that in order to strengthen our competitive capability, and reduce the time and cost to achieve our objectives, we cannot operate as we have in the past. In the near future, we will be making organizational announcements as a result of restructuring actions reflecting the need to find new ways to operate, while still recognizing the importance of focusing on the customer, a relentless commitment to quality and investing in the programs that we need to compete in the marketplace.

I realize the appetite to know what the future holds for Chrysler is tremendous. Media speculation about our fate continues to be rampant. As a matter of company policy, Chrysler does not confirm or disclose the nature of its business meetings, in many cases to comply with legal requirements, as well as protect the integrity of our Company and those with whom we meet. When erroneous reports can be corrected with definitive answers, I support dealing with these issues in a clear and direct manner. I want to assure you that your leadership team is committed to communicating fully and directly to you if, and when, there is something to announce.

The Chrysler team has been through tremendous change over the years through the many ups and downs of this industry. During these tumultuous times, I encourage you to help each other to keep a sharp focus on the important tasks at hand.

Thank you for your continued dedication.

Bob

[via Chrysler

So what's Nardelli got to say about life, liberty and the pursuit of less losses for Cerberus? Here's the full transcript of his exclusive interview with CNBC's David Faber:

CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S DAVID FABER SITS DOWN
WITH ROBERT NARDELLI, CHRYSLER CHAIRMAN & CEO, TODAY ON CNBC'S "WALL
STREET CRISIS: IS YOUR MONEY SAFE?"

WHEN: Today, Thursday, October 16th at 8:40PM ET

WHERE: CNBC's "Wall Street Crisis: Is Your Money Safe?"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview
with Robert Nardelli, Chrysler Chairman & CEO.

All references must be sourced to CNBC

———————————————————————————————-

FABER: THANK YOU MARK. YEAH WE ARE HERE ROBERT NARDELLI. MR. NARDELLI
THANKS FOR JOINING US.

NARDELLI: THANK YOU. IT IS GREAT TO BE HERE.

FABER: ON THIS LOVELY EVENING WITH THE CRICKETS WITH THE BACKGROUND. LET
ME START OFF WITH THE HEADLINES THAT WE'VE BEEN TALKING ABOUT, PEOPLE
HAVE BEEN SEEING, AND WE'VE BEEN TALKING ABOUT FOR MORE THAN A WEEK NOW.
ARE YOU IN TALKS WITH GENERAL MOTORS? IS IT POSSIBLE CHRYSLER WILL GET
PURCHASED BY GM?

NARDELLI: AS YOU KNOW, OBVIOUSLY, WE DON'T COMMENT ON THOSE RUMORS OR
SPECULATION, DAVID, BUT I THINK IF YOU LOOK AROUND THE GLOBE, TODAY THEY
ANNOUNCED IN CHINA A CONSOLIDATION. OBVIOUSLY, THERE'S GOING TO BE
SPECULATIONS.WE'VE BEEN VERY OPEN ABOUT LOOKING FOR PARTNERS AND
CREATING ALLIANCES, VERY IMPORTANT FOR US. WE ANNOUNCED THE ONE WITH
NISSAN THAT WOULD GET US INTO A "B" PLATFORM, A SMALLER-SIZED VEHICLE.
IS IT SOMETHING WE CAN'T DO? SURELY NOT. WE HAVE GREAT ENGINEERS, WE'VE
GOT GREAT TECHNOLOGY TO BE ABLE TO DO IT, BUT RIGHT NOW IT'S A RACE.
IT'S A RACE TO MAKE SURE WE CAN RESPOND TO AN UNPRECEDENTED CHANGE IN
THE INDUSTRY AND CONSUMER DEMAND BY DOWNSIZING. SO BY BEING ABLE TO FORM
THESE ALLIANCES OR CREATE THESE PARTNERSHIPS, WE'RE TRYING TO FILL OUR
PORTFOLIO TO SUPPORT OUR DEALERS TO BE MORE RESPONSIVE TO OUR CUSTOMERS.

FABER: THERE ARE SOME WHO SAY THAT THERE ARE A LOT OF BENEFITS FROM
CONSOLIDATION, FROM A GM AND CHRYSLER, THE SYNERGIES WOULD BE
CONSIDERABLY VERY LARGE. DO YOU AGREE?

NARDELLI: WELL, I THINK IF YOU LOOK AT THE U.S. INDUSTRY, WE STARTED THE
YEAR AT ABOUT 16.6 MILLION UNITS. WE FINISHED LAST MONTH AT 12.8. THE
PIN NUMBERS TODAY ARE AROUND 12 MILLION UNITS. I THINK IT JUST,
CERTAINLY, CREATES AN ENVIRONMENT FOR CONSOLIDATION, WHERE YOU CAN GET
SYNERGIES OF PRODUCTIVITY THAT WILL ALLOW YOU TO BE MORE COMPETITIVE,
NOT ONLY HERE IN THE U.S. MARKET, BUT ON A GLOBAL BASIS.

FABER: TO THE EXTENT — AND I REALIZE YOU'RE NOT GOING TO COMMENT ON THE
TALKS, PER SE, TO THE EXTENT THERE ARE ANY, BUT WHEN THOSE KINDS OF
TALKS OCCUR,THEY CAN ALSO BE DISTRACTING. FOR MANAGEMENT, AND
POTENTIALLY FOR EMPLOYEES. ASSUMING THERE ARE TALKS GOING ON, IS IT
SOMETHING THAT YOU WOULD APPROACH AND THEN WANT TO TRY TO GET AN ANSWER
TO IN A FAIRLY RAPID FASHION?

NARDELLI: LET ME JUST SAY, I COULDN'T BE PROUDER OF OUR ORGANIZATION.
THEY HAVE GONE THROUGH A TREMENDOUS LEVEL OF ANXIETY. REMEMBER, THEY
FORMED A MERGER OF EQUALS, IF YOU WILL, A WHILE BACK. AND THEN ALL
OPTIONS WERE PUT ON THE TABLE IN SOME TIME, FEBRUARY, MARCH OF LAST
YEAR, AND THEN WE CONSUMMATED THE DEAL, IF YOU WILL, WITH CERBERUS.
AGAIN, I COULDN'T BE HAPPIER WITH CERBERUS AS OUR OWNERS AND STEVE
FEINBERG HAS BEEN ABSOLUTELY WONDERFUL TO WORK WITH, THE ENTIRE
ORGANIZATION. SO OUR PEOPLE HAVE GONE THROUGH TREMENDOUS ANXIETY.
THEY'VE SEEN THE PEAKS, THEY'VE SEEN THE VALLEYS. NOT ONLY RECENTLY, BUT
THE HISTORY OF CHRYSLER, DAVID, AS YOU KNOW, HAS BEEN ONE OF A LITTLE
BIT OF A ROLLER COASTER RIDE, WHERE WE'VE ALWAYS MANAGED TO COME OUT
WITH SOME BOLD, INTIMIDATING, COMMANDING DESIGNS. NEW TECHNOLOGIES,
INNOVATIVE SOLUTIONS TO WHAT CUSTOMERS ARE LOOKING FOR. SO I THINK OUR
PEOPLE ARE VERY RESILIENT. AND WE JUST KEEP REASSURING THEM THAT OUR
RESPONSIBILITY IS TO RETURN CHRYSLER TO PROFITABILITY. WE FOCUS ON THAT
EVERY DAY. WE DO THAT BY MAKING SURE THAT WE'VE GOT GREAT PRODUCT
CADENCE. WE MAKE SURE THAT WE'RE INVESTING HEAVILY IN QUALITY. THAT OUR
QUALITY TODAY IS BETTER THAN YESTERDAY. NOT AS GOOD AS IT'S GOING TO BE
TOMORROW, SO THAT WE CAN REALLY CHANGE THE IMAGE, THE REPUTATION, THE
RELIABILITY, THE DURABILITY OF OUR VEHICLE, THAT THEN SUPPORTS OUR
DEALER NETWORK. A STRONG DEALER NETWORK, A LOYAL DEALER NETWORK, AND
THEN TRY TO RESPOND TO CONSUMER DEMAND.

FABER: LET'S TALK ABOUT SOME OF THE OTHER THINGS GOING ON RIGHT NOW. THE
PRICE OF OIL HAS DROPPED PRECIPITOUSLY. ONE WOULD IMAGINE THAT MIGHT BE
GOOD NEWS FOR YOUR INDUSTRY. ONE MIGHT IMAGINE THAT, BUT I CAN ALSO
IMAGINE IN THIS ENVIRONMENT, IT MIGHT NOT BE THE CASE.

NARDELLI: I THINK IN A NORMAL ENVIRONMENT, WE'D BE DOING A DANCE RIGHT
NOW AT UNDER $70, YOU KNOW, AROUND $3 PER GALLON. OBVIOUSLY, WHEN OIL
SPIKED, GASOLINE PRICES WENT UP TO $4. WE THOUGHT THAT WAS GOING TO BE
OUR BIGGEST CHALLENGE IN 2008.IF YOU THINK ABOUT AN ECONOMY THAT'S IN
TURMOIL, IF YOU THINK ABOUT AN INDUSTRY THAT'S SPIRALING DOWNWARD, $4 A
GALLON GAS HAS REALLY BEEN DWARFED BY THIS WHOLE ISSUE NOW OF CREDIT
AVAILABILITY FOR OUR CONSUMERS, CONSUMER CONFIDENCE, CONSUMERS' ABILITY
TO ACTUALLY GET INTO A VEHICLE. YOU'VE SEEN SOME FINANCING ARMs TODAY
ANNOUNCE, UNLESS YOU HAVE A FICA SCORE OF ABOUT 700, YOU WON'T QUALIFY.
A LOT OF NORMAL CUSTOMERS OUT THERE TODAY, DAVID, ARE 650, 670. AND SO
THOSE THAT HAVE ENOUGH INITIATIVE, ENOUGH CONFIDENCE TO BUY A VEHICLE
MAY FIND THEMSELVES NOT QUALIFYING FOR A VEHICLE.

FABER: SO YOU'RE SAYING THAT DESPITE THIS INCREDIBLE DROP IN OIL, WHICH
ONE WOULD IMAGINE WOULD BE GOOD NEWS FOR YOUR POTENTIAL BUYER, THE
CREDIT PROBLEM IS DWARFING THAT?

NARDELLI: I THINK, NUMBER ONE, IT'S PARAMOUNT IN THE CONSUMER MIND RIGHT
NOW. I THINK IT'S THE BIGGEST CHALLENGE THAT WE'RE FACING RELATIVE TO
OUR DEALER NETWORK, TO MAKE SURE THAT WE CAN CONTINUE TO FINANCE THEM ON
THE WHOLESALE BASIS, THAT THEY STILL HAVE GOOD ACCESS TO RETAIL
FINANCING, AND SO WE'RE WORKING VERY HARD RELATIVE TO INCENTIVES TO MAKE
SURE THAT OUR CONSUMERS CAN GET INTO OUR VEHICLES. WE TRIED THAT EARLIER
THIS YEAR WITH REFUELING AMERICA.SO WE HAVE A LASER FOCUS ON OUR DEALERS
AND OUR CONSUMERS, OUR CUSTOMERS TO TRY TO COME UP WITH SOLUTIONS,
CREATIVE SOLUTIONS, KIND OF OUT-OF-THE-BOX SOLUTIONS. BECAUSE AS A
PRIVATE EQUITY COMPANY, WE HAVE THE ABILITY TO DO THINGS IN SOMEWHAT OF
AN UNTRADITIONAL MANNER.

FABER: HOLD IT THERE. WE'RE GOING TO BE RIGHT THERE. I WANT TO TAKE A
BREAK AND WE'LL CONTINUE TO TALK WITH BOB NARDELLI, CHAIRMAN AND CEO OF
CHRYSLER

FABER: WELCOME BACK TO CNBC, I'M DAVID FABER HERE IN KIAWAH ISLAND,
SOUTH CAROLINA, WHERE THE BUSINESS COUNCIL IS TAKING PLACE. I'VE BEEN
SPEAKING TO BOB NARDELLI, THE CHAIRMAN AND CEO OF CHRYSLER. WE'VE BEEN
TALKING ABOUT THE IMPACT THE CREDIT CRISIS HAS BEEN HAVING ON YOUR
BUYERS, WHO ARE UNABLE TO GET CREDIT TO BUY AUTOMOBILES. YOU MENTIONED
16.6 MILLION AUTO SALES. WHERE ARE WE HEADED? SOME SEE US HEADED AS LOW
AS 13 MILLION. IS THAT REALLY A POSSIBILITY?

NARDELLI: I THINK THAT'S A VERY REAL POSSIBILITY. DAVID, WE STARTED THE
YEAR AT ABOUT 16.6. LAST NOVEMBER, TRYING TO PUT TOGETHER A VERY
AGGRESSIVE, CONSERVATIVE PLAN FOR CHRYSLER, WE KIND OF PEGGED IT AT
15.5. SO WE THOUGHT WE WERE IN PRETTY GOOD SHAPE THROUGH THE FIRST
QUARTER. THEN WE SAW THIS UNPRECEDENTED AND PRECIPITOUS SPIRALING
DOWNWARD. LAST MONTH WE ENDED WITH SEASONALLY ADJUSTED RATE OF ABOUT
12.8. AGAIN, THERE ARE FORECASTS OUT THERE THAT THE YEAR COULD END AT 13
MILLION. RIGHT NOW THE PIN NUMBERS HAVE US JUST SLIGHTLY ABOVE 12
MILLION. SO JUST IMAGINE THE VOLUME CONTRACTION, JUST IN THE U.S.
MARKET.

FABER: THAT'S SHOCKING. THAT'S OVER 4.5 MILLION CARS.

NARDELLI: IT IS. SO JUST TO PUT THAT INTO CONTEXT, THAT'S AS BIG AS ONE
OF THREE MANUFACTURERS IN DETROIT IS TODAY. SO WE'VE HAD TO,
UNFORTUNATELY, TAKE OUT ABOUT 1.1 MILLION EQUIVALENT UNITS OF CAPACITY.
WE'VE HAD TO AFFECT WELL OVER 25,000 FAMILIES AS A RESULT OF HAVING TO
RESIZE TO MAKE SURE THAT WE CAN BE COMPETITIVE THROUGH THIS TROUGH AND
COME OUT THE OTHER BIGGER, STRONGER, AND MORE FORMIDABLE. ONE OF THE
MOST GUT WRENCHING PARTS OF THIS JOB RIGHT NOW IS TO AFFECT PEOPLES
LIVES. YOU KNOW, PEOPLE WHO ASPIRE TO HOMES AND COLLEGE EDUCATIONS AND
SO FORTH. SO IT'S REALLY ONE OF THE MOST CHALLENGES PARTS THAT I'VE HAD
TO GET MY ARMS AROUND IN THE LAST YEAR SINCE I'VE BEEN WITH —

FABER: MANY CONSUMERS HAVE WATCHED THE STOCK MARKET DIVE OVER THESE LAST
THREE WEEKS, OCTOBER HAS BEEN WORSE THAN SEPTEMBER. I'VE BEEN SPEAKING
TO PEOPLE VERY CLOSE TO CONSUMER-RUN COMPANIES AND THEY SAY THEY'VE SEEN
A PRECIPITOUS DECLINE SINCE THE END OF SEPTEMBER. ARE YOU SEEING SIMILAR
KINDS OF THINGS?

NARDELLI: I THINK CERTAINLY IN THE FIRST COUPLE OF WEEKS OF OCTOBER.
WHAT I PROVED, DAVID, NO ONE IS IMMUNE FROM THIS ECONOMIC CRISIS THAT
WE'RE IN RIGHT NOW. I SAW YOU AND JOHN THIS MORNING, YOU KNOW, ON YOUR
SEGMENT, AND I THINK HE FRAMED IT VERY APPROPRIATELY. I THINK YOU ASKED
HIM IF WE WERE HEADED FOR A RECESSION. HE SAID, I THINK WE'RE IN ONE.
AND SO I THINK WE'RE SEEING, AGAIN, AN UNBELIEVABLE CONTRACTION. AND
OBVIOUSLY THE SPECULATION AND THE RUMORS AROUND THAT IS KIND OF DUE
COURSE. IT'S NORMAL ANY TIME YOU HAVE THIS KIND OF ECONOMIC PRESSURE,
YOU'RE GOING TO SEE CONSOLIDATIONS, YOU'RE GOING TO SEE PARTNERSHIPS,
ALLIANCES TO TRY AND OPTIMIZE AND GET PRODUCTIVITY AND SYNERGIES OF
TECHNOLOGY.

FABER: BUT YOU DON'T KNOW WHERE YOU'VE GOT TO OPTIMIZE YOUR COSTS ARE
WHEN YOUR IN DEMAND IS VARYING SO MUCH. IT MUST BE VERY DIFFICULT.

NARDELLI: IT'S VERY CHALLENGING, PARTICULARLY IN THIS INDUSTRY BECAUSE,
YOU KNOW, OBVIOUSLY IT'S NOT A MATTER OF JUST CANCELING AN ORDER. YOU
KNOW, TO STOCK A SHELF AS IN RETAIL. WE'VE MADE HUGE CAPITAL INVESTMENTS
IN EXCESS OF BILLIONS OF DOLLARS FOR A LOT OF THESE PLATFORMS. AND SO
WHEN YOU HAVE TO DOWNSIZE, OBVIOUSLY YOUR AMORTIZATION ON THE PHYSICAL
CAPITAL IN OUR FACILITIES, WORKING WITH THE SUPPLIER NETWORK IS
EXTREMELY CHALLENGING, DAVID.YOU KNOW, WHEN WE DID THE DUE DILIGENCE ON
CHRYSLER, WHAT WE SAW THERE'S ABOUT 1 MILLION PEOPLE DEPENDING ON OUR
SUCCESS.

FABER: IN TERMS OF ALL OF THE SUPPLIERS.

NARDELLI: YOU LOOK AT NOT ONLY OUR DIRECT EMPLOYEES. YOU LOOK AT THE
DEALER NETWORK, 3,600 DEALERS AND THEIR FAMILIES, THE SUPPLIERS, THE
LOGISTICS, THE TRANSPORTATION, IT'S A HUGE RESPONSIBILITY. AND I HOPE
THAT THE GENERAL PUBLIC, I HOPE THAT OUR LEADERS IN WASHINGTON
UNDERSTAND THE IMPLICATIONS OF THE PRESSURE THAT THE INDUSTRY IS UNDER
RIGHT NOW. AND CERTAINLY IT'S GONE FROM HOUSING TO BANKING AND I THINK,
UNFORTUNATELY, TRANSPORTATION IS FEELING THE BLUNT OF BOTH OF THOSE
SECTORS.

FABER: I WANT TO END ON THAT. AND LET ME QUICKLY ASK YOU, IN 1979,
CHRYSLER GOT BAILED OUT BY THE FEDERAL GOVERNMENT. $1.5 BILLION, A VERY
SMALL SUM IN CURRENT TERMS. IS IT POSSIBLE YOU'RE GOING TO NEED THE HELP
OF THE FEDERAL GOVERNMENT AGAIN?

NARDELLI: WELL, I THINK THAT REMAINS TO BE SEEN. WE'RE DOING EVERYTHING
WE KNOW HOW TO DO. WE'RE LOOKING AT EVERY LINE ITEM WHILE AT THE SAME
TIME TRYING TO MAKE SURE THAT WE CONTINUE A VERY STRONG PRODUCT CADENCE.
WE'RE WORKING VERY HARD TO MAKE SURE WE'RE COMPLIANT WITH THE CAFE
STANDARDS THAT HAVE PUT A TREMENDOUS FINANCIAL BURDEN ON THE AUTO
INDUSTRY. WE FULLY SUPPORT, DAVID, ENERGY INDEPENDENCE. WE SUPPORT THE
NEED FOR ENVIRONMENTAL IMPROVEMENTS, WE'RE DRIVING HARD ON INNOVATION
AND TECHNOLOGY TO MEET BOTH OF THOSE THINGS. WE HAVE TO BE VERY CAREFUL,
THOUGH, HOWEVER, AS WE TRY TO GAIN INDEPENDENCE ON OIL. WE'VE GOT TO
MAKE SURE THAT WE DON'T BECOME DEPENDENT ON BATTERIES. OUR ENVY PROGRAM
WITH ELECTRIC VEHICLES, WE HAVE TO MAKE SURE WE'RE SUPPORTING
FINANCIALLY, WORKING WITH THE ENTREPRENEURS TO CREATE THE BATTERY
TECHNOLOGIES HERE IN THE U.S. THAT ALLOWS US TO BE SELF-SUSTAINING.

FABER: WE HAVE TO END IT THERE. OKAY. BOB, THANK YOU VERY MUCH.

NARDELLI: THANK YOU.

GMAC Leaders and NAO Team:

In light of the disruption in the credit markets, GMAC NAO is announcing a temporary, more conservative purchase policy for retail auto contracts in the United States. In the short term, we will limit auto contracts to those consumers who have a minimum 700 credit bureau score, with an advance rate equal to or less than dealer invoice. This means that consumers will be required to make a down payment. In addition, we will restrict approval of contract terms beyond 60 months, except for those customers qualifying for GM-supported 72-month incentives currently advertised.

These are extraordinary times, and we must take these prudent steps to focus our resources on high quality retail contracts and critical areas such as dealer wholesale financing, until the credit markets are stabilized. To assist dealers, GM has enhanced its retail incentive programs in October to utilize more cash incentives. GM and GMAC will continue to work collaboratively through these challenging financial market conditions.

Barbara Stokel

Executive Vice President, North American Operations

Jalopnik Snap Judgment: Anyone complaining about Chrysler's lack of upcoming models isn't paying attention to the news. The company appears to be actively seeking tie-ups, particularly with Nissan, that will provide it with fresh new vehicles without having to actually engineer and build them. It's as if Chrysler is moving toward a future as a vehicle marketing company rather than an actual auto manufacturer. In the meantime, talk about six degrees of separation: This news means that through Nissan, via its French linkage, Chrysler will be once again be selling rebadged Renaults in the states. All you Dodge Monaco/Eagle Premier fan boys rejoice: Your ship has come in. In fact, we're now only one step away from reverse-engineering the entire US auto industry back to about 1986, so expect the new 2010 AMC lineup to be announced early next year. [Automotive News, (Sub. Req.)]

Sales: D
Under Nardelli and Cerberus, Chrysler has only topped DaimlerChrysler year-over-year sales numbers in one month: December, 2007. So why not a solid "F?" Because product that the new Chrysler management team had any control over the design of is only now coming to market. What they've done with their inheritance has not been impressive, but what happens in the next 12 months is going to be a more accurate assessment of Chrysler's new sales strength.

Product: B
Before you scoff, read the paragraph above. Chrysler's new management team had little control over product that's only now hitting showroom floors due to the industry's notoriously long lead times. As the Detroit News mentions, Nardelli spearheaded an effort to make as many improvements as possible, including nearly 500 line-item changes to its cars and trucks. So, points for effort, but the next 24 months are going to be far more critical from a product perspective.

Finances: C
Chrysler can't seem to sell much of anything, yet the company reported a $1.1 billion profit for the first half of the year — before taxes, amortization and other nastiness (it was parent company Chrysler Holding LLC that lost $515 million). As the Detroit News points out, the figure doesn't mean the automaker is profitable, but it does indicate their cash flow is healthy. Still, if Chrysler can't create some high-demand new product, the equation will likely change — and fast.

Press Management: B
For all the bad news at Chrysler in the past 12 months, the spinmeisters in Auburn Hills have done a remarkably good job at controlling leaks, managing negative reports, and quashing rumors. Granted, some press complicity is at work — many outlets were willing to give the new organization some time to get its feet wet — but Chrysler has responded to speculation quickly, then let it die. For example, the rumor last June that half of Chrysler had been sold. Chrysler's response? "No, it hasn't." Now piss off.

Opacity: A
The beauty of being owned by a private equity firm is that you don't have all those pesky disclosure obligations. Chrysler tells us what Chrysler wants to tell us, barring the occasional financial leak or creative newspaper math.

Employee Morale: D
It isn't a fun time to be working at Chrysler. Far from infusing a startup culture at Chrysler, layoffs and continued bad news have many employees concerned. The Detroit News quotes Mark Mitchell, a skilled trades worker at Chrysler's Sterling Heights Assembly plant: "We are not confident in Nardelli at all because of his lack of experience in the automotive industry. A lot of people here are worried about losing their jobs." Of course, if we built Sebrings and Avengers, we'd probably be worried too.

Overall? We give Nardelli and Cerberus a solid C for their efforts. It's been a rough year, but things are tough all over, and Chrysler has made some pretty ballsy moves. We're interested to see where Chrysler is in another 12 months — or whether it exists at all.

[Source: Detroit News; Photo: Bill Pugliano/Getty Images]

Jalopnik Snap Judgment: Though Chrysler's last-minute leasing bubble looked good on paper, the net effect will be to front-load shoppers, not unlike the GM "employee pricing for everyone deals" from a few years back. Combined with news of the lack of product research being conducted by potential buyers, the bad news for Chrysler is that everyone who may have been interested in driving a Chrysler probably picked one up at the end of July. August sales numbers will begin to tell the story, as we'll see the combined effects of customer defections and the absence of leasing availability. Is this yet another warning sign for Cerberus, who many think is in over its head, or just another unusual component in a broader calculated strategy for returning Chrysler to health? [Automotive News, Sub. Req.; Image Credit: Andrzej Wolfarth via TOCMP]

We're going to assume that, since this came out of a Mopar accessory catalog, the photo depicts seat warmers. But with Chrysler's interior track record, we're not ready to declare anything for certain.

Jalopnik Snap Judgment: Two things to think about: First, Chryserberus is obviously listening to consumer complaints about its interiors. Second, if Compass and Patriot are getting a refresh, ecxpect Caliber to get one as well (if it survives), possibly vaulting the three (or maybe two) from the ranks of also-rans and onto the shopping lists of millions of new small-car customers.

[via Allpar]

Jalopnik Snap Judgment: With America's newfound thirst for small cars, combined with its memories of the godawful Fiats foisted upon its fair citizens in the 1970s and '80s nearly forgotten, the time may be ripe for a Fiat return. If Chrysler can make a few bucks by utilizing idled plants, and C-J-D dealerships can add a new, albeit low-volume, brand to their showrooms to replace the loss of lease business, this could be a win-win situation. Unless you encounter an Audi Q7 while driving your new Fiat 500 home, anyway. [Automotive News, (Sub. Req.)]

The plant was down to one shift already; after the closure, Chrysler will source the Grand Caravan and Town & Country from its Windsor, Ontario minivan plant. Additionally, on Sept. 2, the St. Louis North truck plant will be pared down to one shift, resulting in about 900 layoffs. Chrysler had spent approximately $800 million in plant improvements to the two facilites over the past two years, so look for Cerberus to increase the price of a Town & Country Limited from $36,755 to $288,995 in an effort to recoup costs. Union leaders speculate that some of Chrysler's decision was based on political circumstances, as both St. Louis facilities voted down last fall's master contract between Chrysler and the UAW, ratifying it only after significant negotiations. Health care costs may also have played a part: According to Glenn Kage Jr., financial secretary at UAW Local 136, Chrysler can make minivans in Windsor, Ontario, for $1,000 per vehicle less than St. Louis South because of the savings to the company of Canada's national health care system.
[Automotive News (Sub. Req.)]

"Chrysler's product pipeline severely lags the industry on a number of key metrics, which is an ominous sign for its market share. We believe that this is an active decision by new owners to rationalize the product portfolio in advance of a breakup/sale."

The argument that Chrysler is entering a product drought in advance of a sale also doesn't sit well with some industry watchers. Although the company doesn't have any major product reveals scheduled for the next year, they have one of the youngest vehicle lineups currently on the market. Others claim that Chrysler is reducing product in a long-term effort to become more competitive with a smaller fleet, and at the same time force weaker dealers out of business by depriving them of products during the current industry downturn. Such a move would allow Chrysler to pare down its dealer body without expensive — and potentially litigious — buyouts and consolidations.

Whatever happens, we do tend to agree with at least one Cerberus statement: "You can't judge an investment like this after just one year." Only question — does Cerberus believe that? [Freep, Photo Credit: blog.vehiclevoice.com]

The bankruptcy rumors seem to have sprung from reports this week that Chrysler drew down on a line of credit from Daimler. However, under Cerberus' purchase terms, Chrysler had to exercise the credit line before Aug. 3, so there's a "use it or lose it" component to the whole financial story too. Chrysler spokespeople state that the borrowing of $1.5 billion from Daimler and $500 million from Cerberus is not an indication that the company is having cash flow problems, and that Chrysler has $9 billion in cash. Sure sounds good, but all the "categorical denials" and "without merits" pouring out of Auburn Hills don't do much to soothe the nerves.
[BusinessWeek]

Attempting to close on a high note, Nardelli said "We have great vehicles to sell. And keep talking up our products to your family, friends and neighbors." Unfortunately, most of Chrysler employees' family, friends and neighbors are grappling with their own layoffs and foreclosures, so putting a new Sebring in the garage isn't a top priority.
[Freep, Photo Credit: Daylife.com]

Not surprisingly, Nardelli said that Chrysler might have to "go back and resize" production plans. He also reiterated his expectation that Chrysler would remain a private company, explaining that there were clear advantages to running Chrysler under private equity ownership rather than as a public company. For example, not having to tell reporters a damn thing except, "we are guarded but optimistic. We are very encouraged in what we have accomplished." Which would be what, exactly?
[Automotive News (Sub. Req.), Photo Credit: Bill Pugliano/Getty Images]

Chrysler's Toledo Supplier Park was named North America's most productive assembly plant, slapping Jeep Wranglers together using just 13.57 labor-hours. But who's actually doing the work? The Toledo Supplier Park uses Kuka Group (Augsburg, Germany) to manage the body shop, Magna Steyr (Graz, Austria) to manage the paint shop and Hyundai Mobis (Seoul, South Korea) for chassis assemblies. Somewhere, Lee Greenwood is weeping softly.
[Automotive News (sub. req.)]