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CEO Nardelli sees Chrysler staying independent

Chrysler LLC Chief Executive Robert Nardelli said Tuesday that he expects the automaker will be an independent company three years from now.
/ Source: The Associated Press

Chrysler LLC Chief Executive Robert Nardelli said Tuesday that he expects the automaker will be an independent company three years from now, and that Chrysler's private-equity owners were not second guessing their acquisition.

Nardelli, speaking at a conference in New York City, said there are benefits to running Chrysler under private ownership rather than a public company. He said it streamlines the decision-making process and sidesteps some of the second guessing that comes from equity investors and analysts.

Chrysler became a private company last August after Cerberus Capital Management LP bought an 80.1 percent stake from Chrysler's former partner, German automaker Daimler AG, in a $7.4 billion deal.

Cerberus said last week that it has not sold any of its stake in Chrysler after a published report said the firm had sold more than half its equity to investors including major banks and hedge funds in order to reduce its risk.

Asked what the endgame was for Chrysler, Nardelli said that remains up to the owners — and shrugged off speculation he would have a role in such a decision.

"Strategic alternatives down the road is Cerberus' deal," he said at The Wall Street Journal's "Deals and Deal Makers" conference. "That keeps me focused on running the company."

With truck and sport utility vehicle sales tumbling and its U.S.-based competitors either closing factories or cutting production, industry analysts have said Chrysler may be the next automaker to announce further cuts.

Chrysler has said that moves announced late last year are sufficient for now to deal with the declining U.S. auto market, and Nardelli didn't talk about further cuts in his speech. But he told The Wall Street Journal in an interview on the sidelines of the conference that Chrysler "may have to go back and resize" production again in light of declining truck sales.

High gas prices, the weak economy and low consumer confidence have taken their toll on larger vehicle sales industrywide.

Chrysler's sales were down 25 percent in May, a month in which the whole market dropped 11 percent when compared with May of last year. Through the first five months of the year, Chrysler's sales were off 19 percent, with huge drops in larger vehicles that make up most of its lineup.

In November, Chrysler announced it would cut 8,500 to 10,000 hourly jobs and 2,100 salaried jobs through the end of 2008, or about 15 percent of its work force. In the past year, the company has cut shifts at seven vehicle assembly factories in Detroit, Sterling Heights and Warren, Mich.; Belvidere, Ill.; Toledo, Ohio; Brampton, Ontario; and St. Louis.

On Tuesday, Nardelli said the company remains in good shape and that its liquidity position was strong at the end of April. The former chief executive of Home Depot Inc. said Chrysler ended last year with about $9 billion in cash.

Nardelli also said the Auburn Hills, Mich.-based automaker is rushing to build a more international profile, most of which was lost with its separation from Daimler.

"We are scrambling, moving as aggressive as we can," he said about striking international pacts in areas like China, Russia, India, Brazil and Canada. "We understand the speed at which we have to act."