Chrysler Corp., owned by private equity firm Cerberus Capital, has said what many auto industry watchers have suspected for a while. It's "operationally bankrupt," according to Chrysler boss Robert Nardelli (who left Home Depot this year after compensation padding during HD's poor performance). Nardelli walked into a nightmare, which was fitting since he left one company in his messy wake and joined another that was already in progress. How fitting.Anyway, Chrysler, who is selling assets and trying to reorganize into something recognizable as an auto manufacturer, is apparently running out of cash. When Nardelli was asked point-blank if Chrysler was bankrupt, he answered slyly with "Technically, no. Operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with." Thank goodness for Cerberus, eh?
Chrysler is trying to raise capital by selling land, older factories and other tangible assets (probably at a loss to book value), but with Cerberus now being exposed to the effects of the subprime mortage industry's implosion with its ownership of GMAC (bought from General Motors for $12 billion), it can't just prop up Chrysler without seeing the company shed itself of useless assets as quickly as possible. Would you buy a Chrysler vehicle with all this uncertainty? If customers start using that in their decision-making process, the world of hurt could get even worse.
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Reader Comments (Page 1 of 1)
12-21-2007 @ 6:46PM
Mark Fender said...
Congratulations Bob. It only took you months to do to Chrysler what it took you years to do at Home Depot.
12-22-2007 @ 6:43PM
Chryguy said...
Nardelli will ruin Chrysler, just like he's done with Home Depot. He doesn't know the first thing about car manufacturing.
12-23-2007 @ 1:35PM
TampaMikey said...
Let me see....my 1992 Toyota Camry is still running solid with 170k miles and my piece of junk 1999 Grand Caravan (who I got rid off and bought 2006 Toyota Siena) was falling apart after 40k miles... Cars made by Chrysler and other american companies are garbage compare to foregin cars. Toyota and Honda for a example takes pride in their automobiles. American auto makers just wants profits and nothing else.