Chrysler's Nardelli Says Company Needs Alliances and Bail Out
PALM DESERT, Calif., Nov 13, 2008; Kevin Krolicki writing for Reuters reported that Chrysler LLC needs federal funding and an alliance with other automakers in the United States or abroad to ride out a crisis caused by collapsing demand that is threatening its survival, Chief Executive Bob Nardelli said on Thursday.
Nardelli said the amount Chrysler would seek from its second U.S. government bailout in 30 years had not yet been determined and would hinge on an assessment of the automaker's liquidity needs and its business plan.
Nardelli stressed that Chrysler and its larger Detroit-based competitors could look to cut costs by sharing production and sourcing arrangements as they receive federal funding that would include the government taking equity stakes in the companies.
Without such unprecedented operational tie-ups with General Motors Corp and Ford Motor Co, Chrysler would have to seek an alliance with an overseas automaker like the one between Renault SA and Nissan Motor Co. "We have no alternative," he said.
"I think it's going to take creative, bold new thinking," said Nardelli, speaking to the Ernst & Young Strategic Growth Forum. "We can't just get the money, and it's a road to nowhere."
The remarks were the first by the Chrysler CEO since GM said last week that it had dropped a bid to acquire Chrysler, saying it needed to focus on shoring up its own finances.
Chrysler owner Cerberus Capital Management has also had talks with Renault-Nissan and South Korea's Hyundai Motor Co to try to broker a sale for Chrysler, sources with knowledge of the talks have said.
Nardelli's comments represent the most detailed plea yet by a senior executive at any of the U.S. automakers for a federal bailout. They have sought $25 billion or more in emergency funding from Congress, which would represent the first for the industry since the 1979 rescue package for Chrysler.
Nardelli said a condition of any federal bailout would be for the U.S. government to take equity stakes in the automakers, just as it has in banks.
Editing for reuters by Toni Reinhold