Posted by: David Kiley on September 24, 2008
After unveiling three electric vehicles on Tuesday, Chrysler LLC told its dealers, according to The Wall Street Journal, it has lost $400 million so far in 2008.
A Chrysler spokesman says the report is erroneous.
Let’s take a look at what we know.
Last month, Chrysler had reported to the world that it had posted a $1 billion gross profit for the first half of the year. That’s a bit misleading, though, as there is stuff that doesn’t get attached to a gross profit figure that brings the net profit down. In fact, according to Daimler-benz’s 1q report (Daimler owns 19.9% of Chrysler) Chrysler lost $400 million in that quarter.
CEO Robert Nardelli has told dealers that despite cutting costs, Chrysler was still losing money. Sales at Chrysler fell 24 percent through August. The company still has $11 billion in cash.
Chrysler, run by private equity house Cerberus Capital Management LP, lost $1.6 billion in 2007.
Meantime, Chrysler is angling for a cut of a $25 billion loan package expected to be approved by Congress this week, or next week. To qualify for some portion of the funds, Chrysler will have to apply for it, and prove that the funds will be used for bringing more fuel efficient vehicles to market.
Because Chrysler is privately held, it no longer has to officially divulge profit and loss. When it does report any figures, it is impossible to check the numbers and how they arrive at them.