From Bloomberg: ” Chrysler LLC, the third-largest U.S. automaker, plans to cut an additional 1,000 salaried jobs after its first-half U.S. sales tumbled 22 percent.

The reductions will be completed by Sept. 30 through “retirements, special programs and attrition,'’ spokesman Dave Elshoff said today. The jobs represent 5.4 percent of Chrysler’s salaried workforce. The company is responding to “an expected prolonging of the current market conditions,'’ Elshoff said.”

The latest job cuts affect employees in areas such as accounting, engineering and marketing. Chrysler had 18,529 salaried workers and total employment of 63,627 as of the end of June, Elshoff said. The reductions announced today are 1.6 percent of the total workforce.

Chrysler to Eliminate 1,000 More Jobs by Sept. 30 (Update4) - bloomberg.com

The past couple of weeks have been a roller coaster for the financial markets. Wild swings in Lehman Brothers, Fannie and Freddie, oil prices have caused congressional hearings and legislation to prevent a large-scale financial meltdown.

The issue is not that the US needs a Lehman Brothers or a Freddie Mac, but what will be the systemic risk of a government sponsored entity or investment bank failure to the rest of the market. How big is the “domino effect”?

If you look at the current automakers, sales are down over 30%, stock prices are trading at multiple year lows, and their debt is being careful watched for downgrades. The markets and rating agencies have a pessimistic view of the domestic automakers.

My question is, can the US allow a large automaker to fail or would the government step-in with a bailout plan (ex. Chrysler in the late 70s) if an automaker was unable to honor its credit obligations to bond holders?

The systemic risk is not around is the vehicles produced, but the downward effect it would have on the economy. I read one statistic where one automaker job creates 20 other jobs in the US. Can you have that many people unemployed? Unable to pay off their mortgages in today’s weak housing market?

People like to marginalize size of the domestic Big Three from a global perspective but they do not realize how far their tentacles reach into the rest of the US economy.

Too big to fail or poses no systemic risk?

From Bloomberg: “Chrysler LLC, hobbled by a 22 percent drop in U.S. sales this year, may scrap the most- expensive Dodge Avenger and Chrysler Sebring sedans and add more features to cheaper models to gain car buyers.

The revisions, part of a strategy called “Fight Back,'’ mean less-expensive models would have standard features such as heated seats now offered only in the costlier versions, according to a document sent to parts suppliers.

“This is a classic move to try to jump-start a failing car line,'’ said John Wolkonowicz, an analyst at Global Insight Inc. in Lexington, Massachusetts. “It might sell a few more cars, but because the fundamental car is not that desired to begin with, it’s not going to have that big of an impact.'’

It looks like Press wants to simplify the variations available for a particular model. I know Ford has been working this type of initiative as well.

Chrysler May Scrap Most-Expensive Sebring, Avenger (Update2) - bloomberg.com

Probably very unlikely but always fun to discuss and debate… hte 2010 Plymouth Road Runner Concept.

Will Chrysler bring back Plymouth?
Will Chrysler keep builidng muscle cars variants on the Challenger platform?
Will Chrysler bring the Road Runner back as a Dodge?

Thanks to Autoblog for the heads-up.

2010 Road Runner Concept !!!! - chargerforumz.com

From the article: “Electric car maker Tesla Motors hired Mike Donoughe to oversee both its Roadster sportscar program and its development of a five-passenger sedan.

Donoughe worked 24 years at Chrysler, where he led redesign efforts for the company’s mid-sized vehicles. He also did a three-year stint in Stuttgart, Germany, as director of passenger car development for Mercedes Benz M and R class vehicles.

Ze’ev Drori, chief executive officer of Tesla, said hiring Donoughe will help the company prepare to expand. ”

Shouldn’t it be the other way around where Chrysler hires electric car designers?

Tesla hires 24-year Chrysler veteran - bizjournals.com

Chrysler LLC President Jim Press said on Tuesday the automaker is exceeding all of its financial targets set by private equity owner Cerberus Capital Management despite sharply lower sales this year.

Press told analysts and reporters on a conference call that Chrysler has been successful in maintaining its cash position and that reductions in fixed costs have been “way above” its initial plan.

What do you guys think? Did Cerberus actually forecast over 30% dip in sales for June when they put the game plan together last year?

* Let’s Refuel America extended through July 31; continues to help drive showroom traffic, sales of most fuel-efficient vehicles
* New Dodge Journey becoming a hit in the crossover market
* Dodge Grand Caravan and Chrysler Town & Country minivan sales increase in June
* New fuel-efficient vehicles see increased year-to-date sales

Chrysler LLC Reports June 2008 Sales; Let’s Refuel America $2.99 Gas Guarantee Plus Cash Extended Through July 31 - chrysler.com

BusinessWeek Head Honcho: Bruce, make sure you hit your article quota for week. It’s Friday and you need to one more. Remember to be provocative, bold, and buzz worthy. Don’t worry about learning about the industry or checking your facts.

Bruce: No problem!

From the article: “What was needed was an innovation strategy of growth that quickly generated electric, hybrid, flex-fuel and other models that better fit into a fast-changing market place.”

Did Bruce bother learning about the ENVI division?

“The creation of Envi allows us to focus on the development of a new generation of environmentally responsible Chrysler, Jeep and Dodge vehicles,” said Robert Nardelli, Chrysler’s chairman and CEO, in a company announcement. “Under Lou’s leadership, Envi will develop electric-propulsion vehicles that will provide customers with more fuel-efficient vehicle options.”

Or maybe Bruce didn’t hear about Chrysler’s partnership with General Electric to develop electric powertrain technology:

General Electric Co. has been awarded part of a $30 million contract from the U.S. Department of Energy to help the auto industry develop a cost-effective and reliable plug-in hybrid electric car.

GE Global Research in Niskayuna will work with Chrysler on the project. The two companies together will be given up to $10 million over three years, and each will also contribute an equal amount of money to the project.

Another piece of Bruce’s wisdom: “Supplying these cars from China or anywhere around the world quickly and then investing in new models to capture market share might have saved Chrysler. “

From Bloomberg: “By the end of this year, Nardelli wants to sell a subcompact car in South America that’s designed by Wuhu, China-based Chery Automobile Co. He intends to build minivans for Volkswagen AG this year and pickups for Nissan in 2011. He also plans to sell compact cars built by Nissan in the U.S. in 2010.”

Finally, Bruce concluded with the following tidbit: “My guess is that GM will pick up Jeep and a couple of Chrysler lines—and that will be the end of that. Business model innovation is often the most powerful kind of innovation. It requires imagination and guts. Implementing old, tried and true, strategies in a time of dramatic change rarely work.”

Maybe Bruce has not come across any of the articles on Chrysler’s partnerships and outsourcing. In addition, Jim Press’ work on rationalizing the dealership cannibalization and his efforts on ending badge reengineering. Please someone tell Jim Press his initiatives are old are tired.

Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking.

Hey Bruce, stick to thinking about innovation and design and leave the M&A speculation to Wall Street.

Will General Motors Pick Up Chrysler On The Cheap? - businessweek.com

Earlier in the day, Iacocca walked through Chrysler’s headquarters with a half-dozen top executives.

He said he liked what he saw, especially the next generation of the Chrysler 300 sedan, which Nardelli confirmed would be released, along with the Dodge Charger, for the 2010 or 2011 model year.

Iacocca’s return to the site for the first time since a 1991 dedication will help crystallize a positive legacy for the retired executive, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.

Chrysler welcomes a hero - detnews.com

From the article: “:Chrysler LLC, facing liquidity pressures amid a steep decline in the U.S. automotive market and rising commodity costs, tapped a $2 billion credit line made available as part of its sale last year from Daimler AG to Cerberus Capital Management LP.

The move comes as Chrysler scrambles to respond to a dramatic customer shift away from pickup trucks and sport-utility vehicles, which make up the majority of its product portfolio. Chrysler has also been stung by its relatively high reliance on the U.S. market, which accounts for 90% of its sales.

The credit line was established in August when DaimlerChrysler untied its nine-year-long partnership, selling an 80.1% stake in Chrysler to Cerberus. A Chrysler spokeswoman had no immediate comment on what the money will be used for and why it was drawn at this time. Daimler reported the loan Tuesday.”

What will be Daimler’s involvement now that they have their skin in the game?

Chrysler Taps $2 Billion Credit Line - wsj.com

From the article: “Cerberus Capital Management, the US private equity group, is hunkering down for the long haul at Chrysler, admitting it may be a decade before it sells the struggling carmaker acquired in a $7.4bn (£3.7bn) deal that epitomised last year’s bull market.

Timothy Price, managing director of Cerberus, told the Financial Times that his group often owned companies longer than rivals before seeking an exit.

“We have a model that is buy, fix and hold,” he said. “It is not a problem for us to have a 10-year holding period.”

Shrugging off the sharp fall in car sales in the US, which triggered a 25 per cent drop in sales of its Chrysler, Dodge and Jeep brands in May compared with a year earlier, Mr Price said “everything is going better than expected”.

Cerberus up for Chrysler challenge - ft.com

Dave over at Allpar has a couple of new spy shots of the Sebring. Take a look at the pics and judge for yourself: spy shots or mule? From the description on the site, it sounds like Chrysler is trying to standardize the Sebring to get production costs down. After look at the pics, post your opinion below.

What to expect for 2009 - allpar.com