Chrysler CEO: Brands will not be broken up

/ Source: news services

Chrysler Group Chief Executive Tom LaSorda said on Tuesday that the automaker’s three brands, Jeep, Chrysler and Dodge, will not be broken up after its sale to Cerberus Capital Management.

“These brands will not be broken up under any circumstances,” LaSorda told reporters, a day after German parent DaimlerChrysler AG announced the sale of most of its stake in Chrysler to Cerberus Capital Management.

The CEO also said Cerberus has endorsed the current product plan and investment in plants. “The product plan is set,” LaSorda said.

Sorda’s comments one day after German-based DaimlerChrysler said it will sell almost all of money-losing Chrysler to a private equity firm for $7.4 billion, backing out of a troubled 1998 takeover aimed at creating a global automotive powerhouse.

Eighty percent of Chrysler Group, burdened by high pension and health costs and declining market share in the United States, will be sold to Cerberus Capital Management LP. Cerberus is taking a huge risk by agreeing to take on billions of dollars in pension and retiree health care costs at Chrysler.

Cerberus Chairman John Snow, a former U.S. treasury secretary, told a news conference in Germany Monday that the New York-based private equity firm believes in Chrysler and wants to see the company recover.

United Auto Workers President Ron Gettelfinger said the deal is in the “best interest” of its membership.

Canadian Auto Workers President Buzz Hargrove said he has “enormous concerns” about the plan, stressing that many private equity groups have a long-standing history of slashing jobs in order to boost profits for investors.

Management from Cerberus and Chrysler were set to meet U.S. and Canadian union leaders Tuesday in a meeting to convince them that their deal will be good for Chrysler’s 80,000 workers.

Separately, DaimlerChrysler AG said Tuesday its overall first-quarter profit rose even as its American unit saw its losses widen on a restructuring plan.

The German-American automaker earned 1.97 billion euros ($2.67 billion) in the January-March period, compared with 718 million euros a year earlier.

Sales fell to 35.4 billion euros ($47.96 billion) from 37.4 billion euros a year earlier.

Its Chrysler Group, which is being sold to private equity firm Cerberus Capital Management, lost $1.98 billion in the quarter, compared with a profit of $857 million a year earlier.

The loss was the result of a $1.2 billion in restructuring charges.