Posted by: Gail Edmondson on March 14, 2007
For the private equity kingpins eager to figure out whether a risky bet on Chyrsler could pay big dividends, what better than to have a former Chrysler top executive as advisor. Cerberus reportedly has taken on former Chrysler Chief Operating Officer Wolfgang Bernhard to give them an insiders’ take on Chrysler’s condition.
Bernhard, 46, earned a reputation as a cost-cutter at DaimlerChrysler and helped former Chrysler CEO Dieter Zetsche turn around Chrysler between 2001 and 2004. Putting Chrysler back in the black earned Bernhard the top job at Mercedes, but he was forced out days before starting his new job after falling out with former-CEO Juergen Schrempp. Ailing Volkswagen snapped up Bernhard, but last November he was again forced out in a management shuffle after Porsche consolidated its control over VW.
So will Cerberus have an edge in assessing Chrysler’s potential? The buzz at Volkswagen these days — only two months after Bernhard’s departure — is that the brash former McKinsey consultant is an excellent cost-cutter, but not a “car guy.” VW managers now say Bernhard blundered on model development and that future models are getting a rework. At the Geneva Auto Show Chrysler managers were whispering the same thing. Bernhard is at least partically to blame for Chrysler’s current model woes, since the latest ones are his making. “Why else would Audi’s management be called in to clean things up at VW,” says one Wolfsburg insider.
Some of that criticism has to be taken with a grain of salt. Being brash, young and talented — as well as an ace cost-cutter — means creating enemies. Cerberus may get a fascinating earful from Bernhard about Chrysler’s cost structure. But they may have a harder time figuring out whether Chrysler will be able to make hit cars consistently — not just one successful model like the 300. That’s the secret to clawing back lost market share and competing against the Japanese. Bernhard never got that far.
Then again, if the exercise is just about breaking up Chrysler and selling the assets to the highest bidder, the numbers are all that matter.