Chrysler's Press: On Sales, Incentives, Cash and Alliances
January 28, 2009
LINTHICUM HEIGHTS, Md. -- Chrysler President Jim Press told reporters here that it has other possible partners it can tap in case the Fiat alliance
doesn't work out, that the automaker's new incentives are helping its market share this month and that it needs the additional $3 billion in federal loans to survive the first quarter.
Press held a roundtable with reporters as he tours the country visiting dealers, urging them to push out the old 2008 inventory and order more 2009 models so Chrysler can keep its factories running and badly needed cash coming in.
Fiat Alternatives
Press said Chrysler is in talks with other possible partners in case the U.S. Treasury Department rejects its proposed alliance with Italy's Fiat, the Detroit News reported. Indeed, there has been some debate about whether U.S. taxpayers should fund a U.S. company that is giving a 35 percent equity stake to a foreign automaker -- a stake that may well go higher -- with no cash changing hands.
"If it doesn't work out with Fiat, we still have had other conversations with other potential partners and alliances and those obviously can continue, so we have other alternatives," Press said, according to the paper. "It's a little bit like dating: nobody knows who we're dating. We don't need the paparazzi to follow us around and put pressure on the dates."
Nevertheless, Press defended the Chrysler-Fiat alliance saying Fiat is providing "billions and billions and billions of dollars' worth of hardware" in the form of small car and fuel-efficient platforms. Other Chrysler executives have noted the deal would save American jobs by allowing Fiat to use Chrysler manufacturing capacity in the U.S.
Desperately Seeking Cash
With most of its factories shut down for much of the first quarter, Chrysler is generating little cash. An automaker can only book inventory when a vehicle leaves an assembly plant and heads to a dealer who has purchased it.
That's why Chrysler needs the additional $3 billion it is seeking in government loans, Press said. Chrysler already has received $4 billion.
"I can't tell you the lights will go out on April 1," Press reported told the media here. "But unless something changes, that's the time when we need the funds."
More Slow January Sales
Press predicted U.S. vehicle sales will come in at an annual rate of about 10 million vehicles this month; automakers report January sales on Tuesday. Press' forecast is in line with projections by other automakers and analysts; it is about on par with December's weak pace.
Still, the ever upbeat Press told reporters Chrysler is "starting to get some traction" on its products, thanks to its recent incentive program, which includes zero percent loans and cash rebates of up to $6,000 per vehicle. The incentives were made possible by a $1.5-billion government loan to Chrysler's financing arm, Chrysler Financial.
Chrysler sales fell 53 percent in December and 30 percent for all of 2008, nearly double the drop for the total industry.
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