The Detroit News reports today on the marriage of Chrysler and Cerberus Capital Management, which took place one year ago this week. Robert Nardelli, former head of Home Depot, beat out Tom LaSorda and Wolfgang Bernhard for the top job at the new Chrysler, joining an already troubled automaker just at the edge of what would become the country's worst auto sales period in 20 years. What the hell was he thinking? More importantly, what's he thinking now? A Chryslerberus freshman report card after the jump.
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.
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.
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.
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]