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LaSorda Tells CNBC: Chrysler Moving Ahead Despite Sale Talks

CNBC.com
Wednesday, 18 Apr 2007 | 3:37 PM ET

Chrysler Group Chief Executive Tom LaSorda told CNBC that he is moving ahead with new products despite the possible sale of the auto maker.

“When you’re running a company like this, you have to look to the future and the future’s about product” LaSorda said in an interview with CNBC's Phil LeBeau. “Regardless of what happens, we still have to make the future decisions for the benefit of the company, and that’s about product profitability.”

LaSorda's comments came after Chrysler announced plans to build two new plants in Michigan: a $730-million engine plant in Trenton and a $700-million axle plant in Marysville.

LaSorda said those investments, which are aimed at shaping a more fuel-efficient vehicle line-up for the U.S. unit of DaimlerChrysler , are necessary for Chrysler's turnaround, regardless of the sale process.

“I can’t sit back and wait," he said. "We have our governance, we take it to the board of management and we get those decisions approved. We have to move ahead, if you wait in this business, you could lose a major product program.”

LaSorda also said talks regarding a sale of the automaker were continuing and that "all options are still on the table."

Chrysler's Future
Staying focused on running Chrysler at the same time the carmaker is being shopped by DaimlerChrysler, with Tom Lasorda, Chrysler CEO and Phil Lebeau, CNBC auto industry reporter

Representatives of DaimlerChrysler have been meeting with several potential buyers for Chrysler after putting the U.S. automaker up for sale in February. At the same time, union workers continue to push for the company to remain part of its German parent.

LaSorda said the sale process represented a major uncertainty for the automaker's dealers and employees. "They just want to know when there will be closure," he said. "And I can't say much about that."

LaSorda, who has been directing Chrysler's sales and efforts since the departure of the company's sales chief late last year, said he expected to announce a new arrangement soon.

Time Is Not Right For Nissan

Earlier Wednesday, Carlos Ghosn, chief executive of Japan's Nissan Motor and French partner Renault, said at a separate forum that he is not vying for Chrysler Group because the time is not right.

Speaking to reporters after an appearance at the Council on Foreign Relations, Ghosn said his priorities are to focus on his businesses, not mount a bid for the automaker.

"It has to happen at the right moment," Ghosn said. He has been interested in entering the U.S. market but has said there was no urgency after talks between his overseas alliance and General Motorsfailed to produce a partnership last fall.

Billionaire investor Kirk Kerkorian, who was behind the proposed alliance between GM and Nissan/Renault, has offered $4.5 billion for Chrysler. Other bidders include private equity firms Cerberus Capital Management, Blackstone Group, and Canadian auto parts maker Magna International.

But Ghosn, credited with rescuing Nissan from near-bankruptcy in 1999, is under pressure after disclosures that Nissan may miss its sales target of 4.2 million vehicles next fiscal year. The goal is a centerpiece of his current business plan.

Ghosn would not comment on the sales reports, saying the company would discuss financial results on April 26. But he cited the company's profit warning two months ago as a key reason to focus internally and remain out of the Chrysler fray.

Although he is staying on the sidelines for the moment, Ghosn said he is not ruling out future investments, saying there is value in domestic auto parts and auto manufacturers, if they are managed properly.

Remaining A Part of DaimlerChrysler

Separately, United Auto Workers President Ron Gettelfinger said he still thought it was an option for Chrysler to remain a part of DaimlerChrysler.

Gettelfinger made the comments to reporters at an event to announce Chrysler's plans to invest $1.78 billion over the next several years in new plants and production upgrades in Michigan.

Some observers have questioned the timing of Wednesday's plant announcements given the ongoing sale process at Chrysler.

"We believe that should Chrysler end up being sold to private equity, the likelihood of the Marysville plant actually being built would be reduced significantly," Lehman Brothers analyst Brian Johnson said in a note for clients on Wednesday. "In our view, any potential new owner of Chrysler would likely try and cancel this program."

The axle and engine investments were the first actions taken by Chrysler under a plan it announced in February that it would spend some $3 billion to build and retool plants in order to make more fuel-efficient engines.

Chrysler lost nearly $1.5 billion in 2006 as inventories mounted and consumers shifted away from the light trucks and sport utility vehicles that accounted for nearly 70% of its total sales. The automaker is moving ahead with plans to cut 13,000 jobs as it seeks to return to profitability by 2008.

Chrysler said that it aimed to have the Trenton, Michigan engine plant in operation by 2009 as it reduces the number of V-6 engines it puts in vehicles from four currently to just one.

Chrysler is bringing its first hybrid -- the Dodge Durango -- to the U.S. market in 2008, and LaSorda indicated that the same hybrid system that will be used in that vehicle could be used elsewhere in its line-up. "Stay tuned," he said.

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