Chrysler Nears Profitability; Prepared for Downturn

Amid restructuring operations and down-sizing its dealer pool, Chrysler LLC will return to profitability “within the not too distant future,” CEO Robert Nardelli tells journalists following his keynote speech kicking off the recent New York International Auto Show.

“We are, in our 2008 plan, continuing to move in the direction of returning to profitability,” he says, adding the Auburn Hills, MI, auto maker is “on plan for the first two months. That plan continues to drive the company to profitability. We are very pleased with the progress we've made.”

Nardelli declines to say the U.S. economy has fallen into recession, but he boasts Chrysler pegged a 2008 sales downturn to 15.5 million vehicles while the rest of the industry remained more optimistic.

“We face realities in the economy and in the auto industry,” he says, crediting Vice Chairman Tom LaSorda for the ability “to resize” Chrysler's manufacturing footprint.

“We went through some agonizing and tough decisions,” says Nardelli.

The Chrysler Pacifica, Crossfire and PT Cruiser convertible, as well as the Dodge Magnum, all have been discontinued, and plans call for the dealer network of 3,600 retail outlets to be trimmed.

“We think we've incorporated a thinking of conservatism for 2008,” Nardelli says. “We did not build in a second-half recovery. If it happens, we couldn't be happier to change the volume up.”

Should sales fall below 15 million units, as was forecast recently by J.D. Power & Associates, Chrysler will “adjust accordingly,” he says.

If Chrysler needs to make further adjustments in manufacturing capacity, “I would submit to you we might have to adjust less than some of the other manufacturers,” Nardelli says, adding too much was made of Chrysler's recent announcement manufacturing operations will cease for two weeks in July.

“It was no more than a traditional auto manufacturer's shutdown,” he says.

By 2012, Chrysler plans to increase international sales to more than 400,000 units, Nardelli says.

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