More Cuts Coming at Chrysler?

June 18, 2008
Could there be still more cuts coming at Chrysler? That's the consensus of some who've seen a new memo from the automaker's CEO, Robert Nardelli, which paints a bleak picture of deteriorating conditions in the auto industry.

The situation, said Nardelli, is worse than even the company's pessimistic forecasts had anticipated.

"This is the lowest sales level in 16 years," lamented the former Home Depot boss, "and indicates a significant and continued softening of the U.S. automotive market."

Chrysler was one of the first makers to project that 2008 sales would plunge below the 16 million mark, but while analysts say the latest figures are likely a temporary aberration, preliminary June sales rates are running at barely a 12.5 million level, according to data collective by J.D. Power and Associates.

For the year as a whole, automotive sales are off 8.4 percent from the same period in 2007, but Chrysler has taken a far worse hit, with its three brands - Chrysler, Jeep, and Dodge - posting a decline of 19.3 percent.

At that rate, suggests a report in the Detroit Free Press, it may be difficult for Chrysler to get by even with the 12,000 job cuts Nardelli announced last November. Of course, Chrysler wouldn't be alone. Ford recently revealed it will cut salaried job costs by 15 percent and is readying a new round of blue-collar employee buy-outs. General Motors will be trimming more, as well.

In his memo, Nardelli said, "We thought we were being extremely aggressive in our conservative view." But Nardelli left room open if things continue to weaken, adding, "If we were wrong, and the economy worsens enough, we'll be quick to adjust."

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