Reborn Chrysler says it will be leaner, more competitive

AUBURN HILLS, Michigan (AFP) - The new Chrysler has emerged from bankruptcy protection as a leaner, hipper and more competitive automaker, top executives said Wednesday as they presented a five-year plan aimed at achieving long-term profitability.

"The problems that led to the bankruptcy of the previous Chrysler can be solved," board chairman Robert Kidder told journalists and analysts gathered in Chrysler's design dome at its Auburn Hills, Michigan headquarters.

Kidder said new chief executive officer Sergio Marchionne and the team he has brought from Fiat -- which obtained a 20-percent stake and controlling interest in Chrysler in exchange for sharing its technology -- has been working "tirelessly" to transform the US automaker.

"Chrysler Corp. begins with a better balance sheet, a lean organization, access to important Fiat technology and a strong leadership," Kidder said.

"After five months and several board meetings later the board's confidence that Chrysler will reemerge as a strong competitor in the auto market is considerably stronger."

The automaker's top priority is to invest in creating "compelling brand and product offerings," Kidder said, adding that it will leverage its alliance with Fiat to develop global economies of scale.

"Efforts to shave manufacturing, material and administrative costs will continue," he said, adding that Chrysler will also ensure that it matches production to actual demand which is "a significant departure from past practice."

The "highly dedicated and motivated" leadership team intends to "make this a great public company once again and repay the loans of the US and Canadian governments with all speed," Kidder said.

Marchionne saved most of his remarks for the presentation of Chrysler's five year plan near the end of the six-hour presentation.

He refuted recent reports that Chrysler is burning through the four-billion-dollar cash endowment it received upon exiting bankruptcy protection in June.

"The new Chrysler is being extremely parsimonious ie. cheap," Marchionne said, adding that Chrysler has substantially reduced its fixed costs and increased its cash position to roughly 5.7 billion dollars at the end of September.

The maverick executive - who also heads Fiat - said earlier this month that he can make Chrysler profitable within two years and plans to orchestrate a public stock offering "sometime after 2010."

Many here are hoping the charismatic Marchionne -- Chrysler's fourth chief executive officer in less than three years -- will be the one to finally transform the third largest US carmaker into a truly viable company.

Chrysler's biggest challenge will be surviving the next two to three years until the Fiat products arrive, said David Cole, chairman of the Center for Automotive Research.

"The next couple years will be tricky," Cole said in an interview ahead of the meeting.

Chrysler's current product offerings are weak and there isn't much in the pipeline after the internal and external turbulence of recent years.

Chrysler underwent a painful divorce from Germany's Daimler in 2007 and its new owners -- private equity group Cerberus -- took the helm as auto sales were beginning to tumble.

The company shuttered plants and shed tens of thousands of workers, but the painful restructuring was insufficient to keep the company afloat during one of the worst economic downturns in decades.

After a swift government-backed bankruptcy filing, Chrysler emerged as a new company under Marchionne's direction in June.

Its US sales -- which were down 30 percent in October even as its rivals posted gains -- remain down 39 percent for the year to date. And with US auto sales expected to remain at historically low levels for at least another year, competition will be fierce.

But the Fiat-Chrysler alliance could prove to be the savior of both companies should it survive the next few years, Cole said.

"Neither Chrysler or Fiat were survivable: they didn't have global presence and they didn't have global scale," Cole said.

"They have to take advantage of coming together and that's going to take a while to do."

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