Chrysler LLC CEO Robert Nardelli told a group of employees this week that the company is headed for a US$1.6 billion loss this year, according to a source familiar with his statements.
Nardelli told a group of designers and engineers that revenue will be less than US$63 billion but costs will exceed US$64 billion, said the source, who requested anonymity because Chrysler is a private company and no longer has to report its earnings.
Nardelli, the former CEO of The Home Depot Inc, was hired in August by Chrysler's new private equity owner, Cerberus Capital Management LP.
If his prediction is correct, it would be the company's second straight year of losses. Chrysler lost US$618 million last year, but made US$1.8 billion in 2005.
Chrysler spokeswoman Shawn Morgan said the company will not comment on its financial performance because it is privately owned.
Nardelli's statements are similar to those made by Steven Landry, executive vice president of North American sales, who told a group of Canadian business students last week that the company is likely to lose US$1 billion this year as its new leadership tries to cut costs and streamline the automaker's model lineup.
Chrysler, Landry said, is poised to break even next year and make money in 2009 and 2010, and he added that the company plans to "right size" itself and reduce its model lineup from 28 to around 20 while focusing on top-quality interiors.
Landry said the automaker will take in about US$64 billion in revenue this year but spend about US$65 billion.
Chrysler announced plans last month to cut up to 12,000 jobs just after employees represented by the United Auto Workers ratified a new four-year contract with the company.
The cuts include 8,500 to 10,000 hourly jobs and 2,100 salaried jobs through next year -- or about 15 percent of the company's work force.
The cuts came on top of 13,000 Chrysler job reductions that were announced in February.
Chrysler already has said it will eliminate four products by the end of next year: the Dodge Magnum wagon, the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica crossover and the Chrysler Crossfire sports car.
Within the same time frame, Chrysler plans to add two new products: the Dodge Journey crossover and Dodge Challenger sports car, along with two hybrid models, the Chrysler Aspen and Dodge Durango.
Chrysler became a private company this year when Cerberus bought an 80.1 percent stake from what was then DaimlerChrysler AG.
Nardelli's comments were reported on Wednesday on The Wall Street Journal's Web site.
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