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How Quickly can Nardelli Fix Chrysler?

Monday, 13 Aug 2007 | 2:05 PM ET
Bob Nardelli
AP
Bob Nardelli

One week after Cerberus Capital announced former Home Depot CEO Bob Nardelli will take over Chrysler, the reality of the job he faces in fixing the automaker is clear. It is gonna take a while.

As impressive as Nardelli's credentials are in running Home Depot and, before that, GE Power Systems (GE is the parent company of CNBC), Chrysler is a different story. Sure he, and Cerberus, will zero in, right off the mat, and go to work on the one thing they can control: costs. Chrysler is already cutting 13,000 jobs and the upcoming UAW contract will also help lower expenses.

But beyond that, the real challenge for Nardelli will be putting Chrysler in a position where it can grow revenue. That will be trickier.

On the sales front, the new Chrysler and Dodge Minivans should help sales. Through July, the Caravan and Town & Country are down 18% and 20% respectively. A new model will boost minivan sales.

After that, attention will turn to the re-design of the Dodge Ram Pick-up. Year to date, the Ram basically is flat -- not bad given the increasingly competitive truck market. But the next year will be tough as Toyota continues to push the Tundra with heavy incentives that will force Dodge (and the other automakers) to match.

But the most intriguing question will be how quickly Nardelli can get Chrysler's designers and product people to goose the pipeline. It will take them, and Nardelii, some time to get on the same page. Even after that happens, getting the new models they need developed and built will take time.

Bottom line: be patient waiting for Chrysler to come back. It will take a while. Cerberus and Nardelli will be aggressive, but when you have a long lead business that needs fixing, the solutions won't happen overnight.

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  • Phil LeBeau is a CNBC auto and airline industry reporter based in the Chicago bureau and editor of the Behind the Wheel section on CNBC.com.

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