Chrysler secures $2 billion loan, Daimler pays $1.5 billion of it

Posted: Jun 25, 2008
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Chrysler today got itself a $2 billion loan that was partially funded by its former owner Daimler AG. Daimler still holds a 19.9 percent stake in Chrysler and offered $1.5 billion of the $2 billion loan while Cerberus coughed up the rest.

While Cerberus and Chrysler say that the loan is simply for contractual reasons, analysts say that Chrysler needs the cash to revamp its product lineup from pickups and SUVs and move toward more compact and fuel-efficient cars.

Chrysler’s CEO Bob Nardelli said earlier this month that Chrysler finished ahead of Cerberus’ expectations with $9 billion in cash.

Global Insight analyst Aaron Bragman says that the loan shows how much Chrysler needs the cash. Bragman said that he wonders if Chrysler is as financially strong as it claims. “We keep hearing that all targets are being met,” he said. “Either that’s not the complete truth, or their targets are rather low.”

 

Source: Detroit News


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  • DadzBoyz

    Or their targets are behind the scenes product development targets that we don't see and not the more common and expected sales targets that everyone automatically looks to. This company is in a ground up rebuild mode. Their targets are likley more along the lines of dealer network targets, product development targets, cost cutting targets, global expansion targets, SG&A reduction targets, etc. It wouldn't suprise me in the slightest if they have been meeting these targets. In this way, I think that Chrysler is in a better position for long term success than GM or Ford because they are doing such a complete corporate overhall. GM and Ford's plans are the same old reduce headcount and change product. Lowering costs is a lesser part of their plan. These companies seem to do this about evey 12-18 years. The problem there is that they are still the same company with the same people and much of the same politics and general corporate structure. Chrysler, on the other hand has a new executive staff, and is totally changing the way the company is structured and works. We don't see it yet, but I'd be willing to bet we will in the next two years. You have to give Jim Press some credit. He must have seen something worthwhile happening there. He is too good at what he does to jump on a sinking ship. If you think about their “goals” they appear to have the right people running the company. Nardelli is a cost cutter, Press is a dealer and car guy, and LaSorda is a manufacturing and union guy. They all have the strengths needed to make this turnaround work. Look at GM. They have Lutz (who is a great man in his job) who is a car guy and you have Wagoner who is a bean counter. Where are the dealer, union, and manufacturing pieces to this puzzle? Oh yeah. They're covered buy the old guard. Ford made a CEO change, which appears to have been a good move, but Mullally is just one man. He still has to dedicate time contending with the Ford family which can be a bear of a task. He does seem to be doing a decent job so far though.

  • justmatt

    I agree that Chrysler is having a swift turn around, but Chrysler desparately needs to hit the mark everytime. No more misses. The Sebring and Avenger are a miss in a segment that is improving for GM and Ford. Chrysler needs every product launch to be a big hit, No more Journeys, or Hemi hybrids. GM and Ford do at least have extensive global operations to lean on in tough times. Chrysler needs to build up its North American operations before it can even think about using European or Asian sales for a crutch. The big 3 were all caught off guard, but don't under-estimate Chrysler's part of this Challenge. There is surely more to come.

  • DadzBoyz

    Or their targets are behind the scenes product development targets that we don't see and not the more common and expected sales targets that everyone automatically looks to. This company is in a ground up rebuild mode. Their targets are likley more along the lines of dealer network targets, product development targets, cost cutting targets, global expansion targets, SG&A reduction targets, etc. It wouldn't suprise me in the slightest if they have been meeting these targets. In this way, I think that Chrysler is in a better position for long term success than GM or Ford because they are doing such a complete corporate overhall. GM and Ford's plans are the same old reduce headcount and change product. Lowering costs is a lesser part of their plan. These companies seem to do this about evey 12-18 years. The problem there is that they are still the same company with the same people and much of the same politics and general corporate structure. Chrysler, on the other hand has a new executive staff, and is totally changing the way the company is structured and works. We don't see it yet, but I'd be willing to bet we will in the next two years. You have to give Jim Press some credit. He must have seen something worthwhile happening there. He is too good at what he does to jump on a sinking ship. If you think about their “goals” they appear to have the right people running the company. Nardelli is a cost cutter, Press is a dealer and car guy, and LaSorda is a manufacturing and union guy. They all have the strengths needed to make this turnaround work. Look at GM. They have Lutz (who is a great man in his job) who is a car guy and you have Wagoner who is a bean counter. Where are the dealer, union, and manufacturing pieces to this puzzle? Oh yeah. They're covered buy the old guard. Ford made a CEO change, which appears to have been a good move, but Mullally is just one man. He still has to dedicate time contending with the Ford family which can be a bear of a task. He does seem to be doing a decent job so far though.

  • justmatt

    I agree that Chrysler is having a swift turn around, but Chrysler desparately needs to hit the mark everytime. No more misses. The Sebring and Avenger are a miss in a segment that is improving for GM and Ford. Chrysler needs every product launch to be a big hit, No more Journeys, or Hemi hybrids. GM and Ford do at least have extensive global operations to lean on in tough times. Chrysler needs to build up its North American operations before it can even think about using European or Asian sales for a crutch. The big 3 were all caught off guard, but don't under-estimate Chrysler's part of this Challenge. There is surely more to come.