NEW YORK – The chief executive of Chrysler LLC said Monday that his company hasn't reached any new deals with other automakers but has spoken with outside parties interested in working with the Dodge and Jeep maker.
In a memo to employees obtained by The Associated Press, Bob Nardelli said Chrysler doesn't comment on speculation or its private meetings, but he said the automaker has spoken with interested outsiders.
The memo comes after news surfaced over the weekend that Cerberus Capital Management LP, Chrysler's privately held majority owner, and General Motors Corp. have held preliminary talks about an acquisition or other combination of the two automakers.
Neither automaker has publicly confirmed the talks, but each said discussions between automakers are routine.
“I can tell you that we have approached and have been approached by third parties who are interested in exploring future possibilities with Chrysler,” Nardelli said in the memo. “As the company evaluates strategic options to maximize core operations and leverage its assets, we engage in a dialogue with these parties.”
Nardelli's memo notes that Chrysler already has announced partnerships with Nissan Motor Co. and Volkswagen AG to jointly make some vehicles. But he said Chrysler hadn't formed any new deals and has no announcements to make.
The talks come at a time when all the U.S. automakers continue to struggle amid slumping sales, tight credit markets, changing consumer preferences and increasing competition from overseas.
Auburn Hills, Mich.-based Chrysler lost at least $510 million in the first quarter and $1.6 billion last year. Its sales are down 25 percent so far this year, the worst drop of any major automaker.
Meanwhile, Detroit-based GM is burning through more than $1 billion in cash per month. Its sales are down 18 percent, and the company has lost $57.5 billion in the past 18 months, largely because of tax accounting changes.
Mark B. Warnsman of Calyon Securities said that while a marriage between GM and Chrysler would solidify GM's top U.S. sales position, he's skeptical about how much the automaker could realistically save through cost reductions.
“The major costs are in the manufacturing, engineering and marketing capacity required to support too many brands,” Warnsman wrote in a note to investors. “We do not see a combined company as being more effective in reducing those structural costs than two stand-alone enterprises.”
Deutsche Bank's Rod Lache estimated that more than $6 billion is savings could be realized through the combination of the two automakers, but he noted that GM would also benefit from Chrysler's demise.
“If it isn't acquired, we believe that Chrysler could be on a path to failure by next year, which would result in significant capacity being taken out of the market (benefiting the surviving players),” Lache said.
GM's shares, along with those of Ford Motor Co., have taken a beating in recent weeks as a result of the ongoing turmoil on Wall Street. Both companies' shares lost about half their value last week, and GM's shares hit a 59-year low Friday.
GM shares jumped $1.62, or 33 percent, to $6.51 Monday as stock markets soared on news of further steps by major governments to support the global banking system. Ford shares gained 40 cents, or 20 percent, to $2.39.
