Bob Nardelli:

White House Ousts GM's Wagoner – Questions Viability

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President Barack Obama delivered an address to the nation this morning at 11AM where he summarized the results of review of General Motors and Chrysler by The Presidential Task Force on the Auto Industry. The conclusion of the report was that neither of the plans presented to the Task Force by GM and Chrysler are viable.
Wagoner Gone – Replaced by Henderson: Immediately, General Motors’ Chairman Rick Wagoner was let go to be replaced by Fritz Henderson – a very capable and experienced senior executive. Clearly, the Task Force determined that the GM plan did not go far enough. GM now has another sixty days to rework the plan and come back with a viable approach. If they do not, the government can move the Corp into bankruptcy to get its house in order.
Our question is “What will GM’s brand and vehicle line profile look like on June 1?”
Chrysler and Fiat Agree to the Framework of a Tie-Up: Minutes after Obama’s speech, Chrysler announced the it had reached developed a framework for a tie-up with Fiat with the blessing of the Treasury Department. Fiat receives a third share of Chrysler for technology sharing allowing Chrysler to launch competitive new products based on Fiat powertrains and platforms. This is needed to keep Chrysler competitive. Chrysler CEO Bob Nardelli keeps his job because he has been at the helm for a relatively short time (since August 2007) compared with Wagoner’s eight years at the helm.
Government to Guarantee Warranties (Warrantees): Obama stated that beginning today the warranties offered by GM and Chrysler are stronger than they have ever been because they would be guaranteed by the government. Also, adopting a spelling not seen for decades, the government refers to these plans as “warrantees”. This support by the government is to create confidence in purchasing a new General Motors or Chrysler vehicle today.
Other Actions – Tax Credits, Scrappage Plans, Etc: Obama also mentioned the sales tax credit for purchasing a new vehicle that has been approved by Congress. Pending are plans for incentives to scrap older, gross polluters.
Further Question: Ford: Ford Motor Company has not taken part in government loan guarantees having planned financially for tough years back in 2006. While Ford is struggling like GM and Chrysler it does not seem to be hurt as much in the market as they are. Market share is not down as much.
How will Ford be impacted by the statements of the President, The Presidential Task Force on the Auto Industry, and the restructuring forced on GM and Chrysler by the government? Will Ford thrive or continue to struggle?
Another Question: Financial Company CEOs: Rick Wagoner fell on the sword for General Motors performance during his tenure but you can argue that the performance of the financial community has been much worse and much more damaging to the economy. Where can we see the heads of the banks, investment banks, and insurance company CEOs rolling down Main Street?


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The New Chrysler II: Lots of Noise, Questions, and Endless Speculation

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The furor surrounding Cerberus’ decision to make Bob Nardelli, formerly of Home Depot and GE, the CEO and chairman of the New Chrysler II, putting Tom LaSorda in the Number 2 position instead of Number 1, is the juiciest gossip train to hit the circuit since Mulally’s appointment at Ford. There has been much more noise than news this week, and here’s our contribution to the fray.

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Employees at Announcement Wanted to be in Air Conditioning or Home by the Pool
Watching both the press conference announcing Bob Nardelli’s appointment as CEO and chairman of the newly formed Chrysler LLC as well as the employee pep rally afterward, and both groups seem wary instead of enthusiastic or supportive. The backlash in the press finds little support for Nardelli. The employees, while impressed with acrobatics and fireworks, generally looked as though they’d have preferred to be in their offices that hot, muggy afternoon. Most left as soon as they sensed the formal program was over. Nardelli says he’s here to bring laser-focus and energy to the turnaround plan already laid out and in progress. His presence in front of employees didn’t bring energy, and returning to finish the last few days of a family vacation the next day didn’t display laser focus.
Nardelli’s been characterized as a drill sergeant with little people skills, and he’s entering a vibrant company full of strong personalities. Being private gives Chrysler LLC the ability to make decisions based on long-term health instead of short-term profit-and-loss statements. But Cerberus expects a quick turnaround and their investors do expect a return. Nardelli may be playing to a different audience, but the pressure will be no less intense.
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Huh? Bob Nardelli Formerly of Home Depot Heads The NEW CHRYSLER

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When Bob Nardelli left as CEO of Home Depot in January, he got a tidy bonus of $210 Million. Must have made a huge investment in Cerberus Capital Management because they just named Nardelli instead of Wolfgang Bernhard CEO of The New Chrysler Corporation. This is expected to be officially announced at a press conference on Monday morning August 6 in Auburn Hills.
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Mass Retailer Heads Chrysler – “Adjustments” Begin in Management Chairs
The surprise appearance of Nardelli on the scene – a man with supposedly no automotive experience but good experience running one of the biggest retail chains in the USA – leaves us guessing where the various players will eventually alight.
Early reports say that Bernhard declined the CEO position for personal reasons. Tom LaSorda, Chrysler’s CEO until Nardelli’s appointment, is expected to remain on board as Vice Chairman and President… kinda the Chief Operating Officer. Rumors have it that LaSorda is taking calls concerning future opportunities outside Chrysler. It’s tough to become a supporting player after having first chair even under the umbrella of DaimlerChrysler.
Eric Ridenour, a highly respected car guy and until now the Chief Operating Officer working with LaSorda has elected to leave the company to explore other opportunities.
The Zero Dollar Man – No Pay Until Chrysler is Profitable

Back to Nardelli’s $210 million. Reportedly he will not take a salary until The New Chrysler has turned around. But since Chrysler no longer has to report to Wall Street we may never know the actual story here.
Cerberus’ move to have Nardelli is a brave one. The auto industry has numerous examples of industry outsiders who have been chewed up and spit out by the old gang. Cerberus has a legion of former industry execs to call upon. The assumption here is that Cerberus thinks they can find a way either by force of Nardelli’s own style, or with the help of gray-haired former execs, to have Nardelli succeed and excel at the help of The New Chrysler.
Stay tuned, more to come from Monday’s meeting in Auburn Hills.


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