Chrysler Group reduced cash burn after emerging from bankruptcy on 10 June while new partner Fiat doesn’t need cash, and met operating profit and cash generation targets in the second quarter, the US automaker’s new CEO Sergio Marchionne has said.
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“We are still burning cash, but it’s slowed down by far,” Marchionne, also CEO of Fiat, told Bloomberg News during a wide-ranging interview in New York on Tuesday. “The question is how quickly we can stop the bleeding. That is priority No. 1.”
Chrysler, recently reorganised to retain choice assets with US$6bn of fresh funding from US and Canadian governments, burned through $9.6bn in cash in 2008, Bloomberg said.
Marchionne declined to say how quickly ‘new Chrysler’ was consuming cash and denied seeking another partner in Europe or Asia, after Fiat lost its recent bid for Opel to Magna’s consortium.
Marchionne told Bloomberg he wanted to disclose Chrysler’s financial information even though the automaker wasn’t listed on any share market.
“It would be very useful for the public, and the people who have funded us, including the taxpayers, to know how we’re doing,” he said. He added he was working with the US treasury to decide what information Chrysler might report and when to release it.
He also told Bloomberg a plan to spin off or list new partner Fiat’s car making operations separately had been put on hold since the Opel bid faltered.
‘We need a very clear industrial plan to get that done,’’ Marchionne said. “Opel would have been a real opportunity, which would have allowed us to get to 6m units, but we’re not there yet.”
Fiat doesn’t need cash, and met operating profit and cash generation objectives in the second quarter, he added – it would announce results on 22 July.
“We said our position was going to improve in the second quarter and it has,” Marchionne said. “We’re OK with operating profit, and we’re hopefully going to generate the level of cash flow that’s required.”
Marchionne added he expected Fiat to generate even more cash over the next 12 months as market conditions improved.
“These things are great cash machines when production runs,” Marchionne said. “When they don’t run, they are huge cash absorbers.
“One of the things we’ve shown we know how to do is manage operating leverage.”
