The addition of high-powered Jim Press toLLC’s leadership team clarifies the intentions of the auto maker’s new owners, Cerberus Capital Management LP, according to key stakeholders in the operation and industry observers.
“Cerberus didn’t take overto be wallflowers, obviously,” says Dennis DesRosiers, president of Toronto-based DesRosiers Automotive Consultants Inc. “They are intent on making change. And if you want to make change, you spend money to get the best.”
Chrysler does not disclose how it will compensate Press, who leavesMotor Corp.’s inner circle to become vice-chairman and president responsible for North American and international sales, global marketing, product strategy, service and parts.
Speculation suggests it took a handsome offer to end a 37-year career that culminated this year in Press’ appointment toMotor Corp.’s board of directors.
As president of Toyota Motor North America, the 60-year-old Press was the first non-Japanese director ever named to Toyota’s board.
“You figure he is going to be paid a lot of money at Chrysler,” says Carl F. Galeana of the Galeana Automotive Group, which owns Chrysler, Dodge and Jeep dealerships in Michigan, Florida and North Carolina.
The move portends better cooperation between Chrysler and its dealers, who number nearly 3,700. In the last 12 months, the two camps have had a stormy relationship marked by a 2006 inventory glut that turned the auto maker’s profit picture upside-down.
Auto analyst John Casesa, managing partner of New York-based Casesa Shapiro Group, calls Chrysler’s action an “amazing hire.”
“Jim is a very strong marketing and sales exec, and Chrysler really needs help there,” Casesa tells Ward’s.
Is Press a good fit for this role?
“Absolutely,” DesRosier says. “Look what Toyota has done in the United States.”
Press’ leadership has contributed to Toyota’s uninterrupted climb in sales and market share, now in its eighth consecutive year, according to Ward’s data.
On 2.4 million U.S. sales, Toyota enjoyed a 15.4% share of the market in 2006. In 1999, Toyota recorded 1.48 million sales for an 8.7% share.
Last year also marked the first time Toyota surpassed Chrysler in sales and share.
Press shares the vice chairman and president titles with Tom LaSorda, who retains responsibility for manufacturing, procurement and supply, employee relations and business development and alliances.
Press also joins LaSorda and new Chrysler CEO Robert Nardelli on Chrysler’s board of directors, as well as the board of managers of Cerberus Operations and Advisory Co. LLC, which oversees the private equity firm’s interest in Chrysler.
It is the second time since Cerberus acquired a controlling interest in Chrysler that LaSorda has had duties taken away. Despite early indications the private-equity company was satisfied with Chrysler’s management team as it existed under previous owner DaimlerChrysler AG, Cerberus brought in Nardelli – former CEO of The Home Depot Inc. and one-time top executive at General Electric – as CEO of “The New Chrysler.”
LaSorda, publicly unfazed by Nardelli’s sudden arrival last month, says in a statement he looks forward to “partnering with (Press) and Bob as part of the Office of the Chairman.”
Adds Nardelli: “Our top team has a world-class ‘supply’ leader in Tom and an equally world-class ‘demand’ leader in Jim.”
Galeana concurs, suggesting the change makes Chrysler stronger – in a hurry.
“Chrysler arguably has the best manufacturing guy in the world in Tom LaSorda, and it now arguably has the best sales guy in the world, Jim Press,” the dealer tells Ward’s. “It goes to show how fast Cerberus is working to make Chrysler a solid company.”
Gone, it seems, are fears that Cerberus would break up Chrysler into saleable pieces to get a quick return on its $7.4 billion investment.
“They appear not to be doing that,” DesRosiers says. “They appear to be building a substantial organization. Cerberus wants to turn this into a very good and viable company. And you’re going to do that through two things: product and putting the people in place to make sure the product happens.”
Says Douglas Durnin, President-A.K. Durnin Chrysler Jeep in Baton Rouge, LA: “A lot of the questions about Chrysler’s direction have been answered. There are still some unknowns but the news is good.”
The key remaining question is how Cerberus plans to get the best return.
“At the end of the day, they’re private equity,” DesRosiers says. “Do they want to stay in forever?”
Ron Gettelfinger, president of the United Auto Workers union, tells reporters at a Detroit Economic Club luncheon that getting Press was a “coup” for Chrysler.
“I want to welcome him to the Chrysler family as well as the UAW family,” Gettelfinger says, adding Press could bring some insight into “a number of quality and productivity issues” affecting the UAW and the auto maker.
Meanwhile, Gettelfinger’s counterpart with the Canadian Auto Workers union is cautious in his assessment of Press. Buzz Hargrove says he doesn’t know Press and is “not ready to concede that’s he’s done that much for Toyota.”
“The things that built Toyota are unfair trade practices and the manipulation of the yen,” Hargrove tells Ward’s. “If he can do that for Chrysler, I’ll be quite happy.”
– with Cliff Banks, Steve Finlay and David E. Zoia