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Amid Tough Times, Chrysler CEO Optimistic

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Amid Tough Times, Chrysler CEO Optimistic

Business

Amid Tough Times, Chrysler CEO Optimistic

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MICHELE NORRIS, host:

You would expect a big U.S. automaker at the North American International Auto Show to tout its prospects, but this year in Detroit the task is more elemental for Robert Nardelli. He's the CEO of Chrysler. Nardelli has to convince a skeptical audience of journalists at the show's press preview that Chrysler is actually trying to stay in business, that it's not just being readied for sale. Nardelli talked this morning with our co-host, Robert Siegel.

(Soundbite of the Cobo Center in Detroit)

ROBERT SIEGEL, host:

By 8 a.m., the exhibition floor here at the Cobo Center was already buzzing with television reporters doing stand-ups and auto company flaks squiring star executives to their interviews. So for some quiet, Mr. Nardelli and I sat inside a Chrysler concept car, more concept than car at this stage.

Mr. ROBERT NARDELLI (Chief Executive Officer, Chrysler): And we're sitting in the Chrysler 200 which we revealed yesterday and, I think, caught most of the industry by surprise.

SIEGEL: This car looks like it could be, you know, car of the year in 2015 or something like that.

Mr. NARDELLI: We're hoping for car of the year this year relative to concept cars, but I would say this is much closer to pre-production than concept.

SIEGEL: Is Chrysler still going to be around for this car to make it from concept to pre-production?

Mr. NARDELLI: The short answer is yes. If you look at Chrysler, we were never that big relative to certainly the other two in Detroit, but the fact is we've loss less share over the past decade. Where we are is we're facing the same adversity that all auto manufacturers are facing relative to a downward spiraling economy, a financial crisis that's really impacting our consumer's ability to buy our vehicle.

SIEGEL: Right now the factories are idle.

Mr. NARDELLI: But still employed.

SIEGEL: When are they going to open up? When will the money actually go not to just to employ people, but to employ people who are making cars and trucks?

Mr. NARDELLI: Well, as you know, the money right now that we have gotten from the government is part of our general operating funds. Throughout this period, we continue to pay our suppliers. We continue to fund our dealers providing them the incentive money to move cars at retail. So this has been a very important bridge. The way the model works - if you're not producing, you're not generating revenue, you're not generating cash so you have to fill this trough.

SIEGEL: So the federal $4 billion is doing what - in for a healthier company, reserves might actually accomplish, what you're savings might do to you...

Mr. NARDELLI: Or in a normal economy where there was access to financial credit for consumers. Our dealers are telling us that consumers are being turned away, that we could about 20 to 25 percent more volume if they had access to the credit market.

SIEGEL: I just want to hear, though, about Chrysler's future right now. One version of what's happened to this company is that if it's not for sale right now, it's only because all the buyers have said no. It's only because GM and Nissan didn't see something worth buying. True?

Mr. NARDELLI: No, I wouldn't say - I would say that's not true. As you know, we have forged some alliances already. We're producing all of Volkswagen's minivans. Nissan has asked us to be the single-source producer for their trucks by 2011. We are already producing trucks for Mitsubishi. We have a number of component arrangements. So I would say that, you know, the general perception out there that we have been rejected is not true. To go through a massive merger with one of the other manufacturers, maybe the timing just wasn't right.

SIEGEL: But in a way that should be simplest for Chrysler given the private ownership of Chrysler. This should be the easiest deal to consummate.

Mr. NARDELLI: Well, I would say that our owners are very open. They have publicly said that if it means a reapportionment of the equity, they're more than willing to do that as part of our restructuring plan. And we have to go back and submit that plan preliminary on February 17th and then we have a final review on March 31.

SIEGEL: I just want you to explain that February 17th when you come back to the federal government, it's not that $4 billion will do the trick. The assumption is that the $4 billion in loan from Washington permit Chrysler to get to the point to borrow another $3 billion.

Mr. NARDELLI: We originally asked for seven at the first Congressional hearing. The $4 billion was the first traunch, if you will, of that seven billion and it was tied to come back and again demonstrate the viability of Chrysler.

SIEGEL: And to survive Chrysler still needs that other $3 billion?

Mr. NARDELLI: Yes, sir.

SIEGEL: Robert Nardelli, thank you very much for talking with us.

Mr. NARDELLI: Thank you very much.

SIEGEL: Robert Nardelli is the CEO of Chrysler. Tomorrow, we'll hear from his counterpart at General Motors, Rick Wagner.

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