Behind the Wheel with Phil Lebeau

LaSorda's Turnaround: Now Comes The Test

Talk about a sign of the times. Monday, DaimlerChrysler essentially pays money to unload the Chrysler division. Tuesday, Chrysler posts a first quarter loss of $1.98 Billion.

Good thing Chrysler CEO Tom LaSorda has such an upbeat outlook on things, otherwise he'd really be depressed at how far his company has fallen.

This makes his turnaround plan (cutting 13,000 jobs, targeting a return to profitability by the end of '08) even more critical to his having a chance to stay on the job. While his new bosses at Cerberus have given LaSorda a full vote of confidence, you have to wonder how much latitude they will give him.

Cerberus has three succesful former auto execs (including former Chrysler COO Wolfgang Bernhard) on the team that advised on and oversaw the Chrysler sale. They may look at Chrysler and say, "hey, let's get even more aggressive" or the could say, "we're missing the boat by not doing more in this area". The point is this: they will want to see Chrysler start to make headway.

My gut says that. Cerberus won't push Chrysler hard for further changes until the sale is complete (3rd quarter) and the UAW contract talks wrap up (early september).

So far CEO Tom LaSorda and his executives, the next 4 months will be critical. Much of their turnaround is already in action, so there's not much they can do the speed that up. But a mild bounce in sales could help restore some confidence in the struggling automaker.

All of this means this fall in Auburn Hills could be an interesting on when Cerberus finally takes control.

Questions?  Comments?