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Chrysler Sold to Fiat. Immediate Organizational Changes Are Announced

Sergio Marchionne is the new CEO. EVP Steve Landry Retires.

by on Jun.10, 2009

Sergio Marchionne

Chrysler Group needs to sell off its bloated inventory and get factories producing again.

Sergio Marchionne, Chief Executive Officer of the New Chrysler Group, put in place a new organization at the same time the sale of Chrysler to Fiat was completed this morning.

The U.S. Supreme Court late yesterday lifted a stay, allowing the sale to proceed. Under the terms approved by the U.S. Bankruptcy Court in New York and antitrust regulators, the company formerly known as Chrysler LLC formally sold substantially all of its assets, without most of its debts and liabilities, to a new company that will operate as Chrysler Group LLC.

In addition to Mr. Marchionne, currently the Chief Executive Officer of Fiat S.p.A. serving as CEO, Chrysler Group LLC will be managed by a nine-member Board of Directors, consisting of three directors to be appointed by Fiat, four directors to be appointed by the U.S. Government, one director to be appointed by the Canadian Government and one director to be appointed by the United Auto Workers’ Retiree Medical Benefits Trust. The Board is expected to name C. Robert Kidder as Chairman. The process of determining additional board members is continuing.

Chrysler Group LLC said in a statement that it is restructuring to concentrate on the Chrysler, Jeep, Dodge vehicle lines and the Mopar brand of aftermarket parts.

A large, potentially fatal, issue remains with Chrysler’s currently depressed sales levels, and as a result how long it takes to sell off the current inventory. All Chrysler plants have been idled since its bankruptcy filing and it is uncertain when they will resume production. Its suppliers are facing their own insolvencies.

The sales challenge confronting Chrysler as it emerges from bankruptcy is gargantuan. Before the Chrysler bankruptcy filing in March, the company had an average of $5,566 of incentives in effect — roughly 20% to 25% of the wholesale cost of a vehicle — and sales declined almost 50% anyway.

“I personally feel privileged to have the opportunity to lead the New Chrysler and to work with senior management to build this company and our great brands into all we know they can and should be,” said Sergio Marchionne, who today was named Chief Executive Officer of Chrysler Group LLC. “That effort starts with leadership.”

To assist the new company in the transition, Jim Press is appointed Deputy CEO and Special Advisor, reporting to Mr. Marchionne. The company said Press will be instrumental in the restructuring of the Chrysler Group. Press served most recently as Chrysler LLC Vice Chairman & President.

Steven Landry, Executive Vice President, North American Sales & Marketing, Global Service & Parts, announced his intention to retire. Mr. Landry offered to assist the new company in the transition. (more…)

Chrysler Sales Dive 48% in April

"We know where the bottom is," said Jim Press.

by on May.01, 2009

Jim Press with Challenger

Not very many people are buying vehicles.

Bankrupt Chrysler LLC experienced the kind of sales performance in April that caused its financial difficulties in the first place, as sales dropped to 43,138 vehicles, or -48%, compared with 83,348 a year ago.

Year-to-date sales dropped to 323,890 vehicles, compared with 601,622 in 2008, or -46%. Chrysler Crossfire, PT Cruiser and Sebring; Jeep Compass, Commander and Patriot; Dodge Avenger, Caliber, Durango and Journey — all had sales declines that averaged -70%.

As a result of the ongoing sales slump, Chrysler will extend through May 4 the Employee Pricing Plus Plus (sic) program, which offers the employee price to all customers purchasing or leasing new 2009 Chrysler, Jeep or Dodge vehicles. Customers may also qualify for 0% financing for up to 48 months through Chase bank.  In addition to the employee price, customers are eligible for cash discounts of up to $3,500 on 2009 model year vehicles. 

The Company finished the month with 336,913 vehicles in inventory, representing a 114 day supply.  Inventory is down 20% compared with April 2008, when it totaled 422,353 units. All of Chrysler’s North American plants will be closed until it emerges from bankruptcy, the company said yesterday.

As always sales executives attempted to stay positive in the face of a clear disaster.

“The industry appears to have stabilized, as it’s been fairly level for the past four months,” said Jim Press, Vice Chairman and President, Chrysler LLC. “We know where the bottom is and, as the economy struggles to recover, vehicle sales should follow.” (more…)