As a privately-held company, Chrysler LLC hasn’t been required to share its financial information with the public. Shrouded in a veil of secrecy, the automaker has only strongly hinted of its dire financial situation without giving specifics – until now. According to CEO Bob Nardelli, Chrysler has about $6.1 billion in cash reserves, much less than most analysts had predicted.
Nardelli said that Chrysler needs a minimum of $5 billion on hand to operate, so with a $1.1 billion cushion, there’s not much time left before the automaker simply runs out of money. Chrysler’s level of cash dropped about $3 billion in the third quarter of 2008.
Chrysler has been sharply cutting spending – like forcing its dealers to pay for its presence at the Los Angeles Auto Show and Nardelli’s statement last week that he would drop his annual salary to $1. Yet Chrysler is also bound by old contracts that require employee bonuses, as well as overdue bills to suppliers and a $20 billion annual healthcare obligation – not to mention the $6 billion the company requires to pay its 56,000 employees every year.
Nardelli has asked for $7 billion of the proposed $25 billion Detroit bailout to be delivered directly to the Auburn Hills, Michigan, automaker, and this latest look at the automaker’s cash reserves reveals that it can’t wait until the new administration takes office in late January.
11/24, 10:46 AM
posted by:
mayer_ray_nagin
$6B in payroll and $20B for healthcare? Huh? How many retirees does Chrysler have?
Seriously, assuming they are forking ou $1k/month per employee or retiree, they would be paying for about 175,000 people. If 56,000 are current employees, then 120,000 are retirees. That’s sick, but it is in line with the ratios that the GM video put out. No way that is sustainable.
11/24, 10:49 AM
posted by:
Lau
Is this the UAW’s fault? I’m not sure because I don’t know the background info.
11/24, 10:50 AM
posted by:
elviososa
Chapter 11 is the only way to cut cost!
11/24, 11:09 AM
posted by:
Veda
This just makes Ford looks so much better. It’s not surprising if Chrysler dies first. As a tax payer I wouldn’t want my money to go down that drain.
11/24, 11:10 AM
posted by:
Payton Byrd
@elviososa
Chapter 11 is the only way to go out of business.
11/24, 11:26 AM
posted by:
Lariat Luxury Locomotive Liner No.3
Cerberus is a private company with many, many, many other assets they can sell to help Chrysler. Chapter 11 does not mean a company is going of business nor does it guarantee a company will go out business going out of business should they file for Chapter 11; Chapter 9 is a different story. These are the laws we have established as a nation for these situations. Remember, Cerberus and Chrysler are private companies.
11/24, 1:01 PM
posted by:
freeyellow2000
If Chrysler is begging for money…. they should have to release their financial statement, I wouldn’t take Chrysler word for it as they are a private corp and have there is no way we can verfy that fact. Heck they don’t even have to release their profits statement or compensation package of executives
In my eyes…. have they file C11 first and they the gov’t will help
11/24, 2:21 PM
posted by:
pzimet
Jesus christ, these guys are ****ed.
11/24, 2:41 PM
posted by:
elviososa
Payton Byrd….if you filed for bankcrupt, you would still have the money from your wife. Just make sure you and your wife are on the different financial paper. It’s not the end of your life.
11/24, 3:13 PM
posted by:
beemerdude
Lariat Luxury Locomotive Liner No.3:
Would YOU buy a vehicle from a company that is in bankruptcy (Chapter 11 version)??
No one will. So essentially, this has the same affect as going out of business entirely.
Filing Chapter 11 will be a death sentence for the American automotive industry. Just a step toward complete liquidation (Chapter 7).
RE: Chrylser
Interesting how a privately held company (that doesn’t have to show its books) goes to the public when begging for money!!
11/24, 4:29 PM
posted by:
RaineMan
Well… when they were first bought out I said they’d be gone by 2010… what do ya’ know… it’s coming up fast.
11/24, 7:24 PM
posted by:
The Stig
Bob “Golden Parachute” Nardelli was supposed to not be paid anything until Chrysler was profitable.
11/24, 9:36 PM
posted by:
cereal
Try getting out now, Chrysler. My money is not going to you to spend on your little CEOs and un-updated POS.
Shape up. Or … is it already too late?
-eat your cerea.
11/25, 1:16 AM
posted by:
DrFill
Ford is no better
They just got a line of credit when things weren’t this bad
They really only have $17-8 Billion, plus a credit line
They all may not make it to the finish line (Obama)
DrFill