Isn't private equity a beautiful thing?
The advantages solve so many problems. There are always trade-offs in considering long- versus short-term results. A company's operations - the quality, depth, and ramifications of a company's decisions - can be really difficult for stockholders to understand. Then there's the influence of trying to do things that will be well-received on the Street. You can make decisions that are not good for the ongoing strength and growth of the company.
Cerberus has backed up Chrysler in supporting a $3-billion-a-year investment in capital expenditures, and there are an awful lot of funds earmarked for development of technology, vehicles, plant equipment that will improve quality, and more efficient production.
Could you explain the relationship of the triumvirate - you, co-president Tom LaSorda, and CEO Bob Nardelli?
The proposed organization chart reminded me a little of when Toyota started up in the early days. We brought together disparate individuals that created an interesting synergy that no one could match. So here you've got Bob Nardelli, who is a world-class executive [from GE and The Home Depot] with an understanding of business principles that apply to any business. He brings to us a sort of top of the umbrella that connects demand and supply. Tom is supply, and I'm demand. It makes a lot of sense.
Tom is also the keeper of the flame. He's fourth-generation Chrysler. He has the tribal knowledge, he understands the heritage, and he has the passion. You put the three of us together, and we can make good, quality decisions; we can have good vision; and we can focus the organization.
You built Toyota from a limited number of models to a full-line car company. Here, you have to filter it back down . . .
First, I didn't build Toyota up; I had the honor of working with people who contributed an awful lot. So I have some knowledge of what is needed for success. It was a long, arduous process. Here, you've got the framework. The bones are good. You have to make some adjustments, refocus some priorities, instead of starting with a clean sheet of paper. We can build on that much faster than at Toyota, where we started with nothing. We had to wait for the trees to grow. There ar6e engineers here with twenty, thirty years of experience. The products have a really solid base. But I think we can do a lot better job of getting them in tune with what the customer wants.
We think the lineup is pretty fractured . . .
In some ways, the K-car hatched the egg of the segment where the Camry is. The K-car was the first one; it was the right size and a front-drive sedan. The poor company has now gone through all these iterations, but the core of that K-car is still here. How much easier will it be to create an effective Camry competitor building on that foundation? People here know how to do it because they've done it. Focused on the right priorities, we can build world-class products faster than people think.
Any Chrysler dealers left have been through the fire. What are they telling you?
Isn't it true that the hottest fire makes the strongest steel? They are giving me good feedback. There's complexity we don't need and features we do need. We need visual appeal.
Any cars you're going to push off the cliff?
We have models that overlap - two or three vehicles that serve the same customer - and that's not efficient. We also have markets where we have insufficient coverage. We're developing a long-term strategic vision, not just a quick answer, of what the product portfolio should look like five to twelve years from now. And then where the current product fits in. We need to make sure we're executing product direction from the customer. [Chrysler announced on November 1 that it will discontinue production of the Dodge Magnum, the Chrysler Pacifica, the Chrysler PT Cruiser convertible, and the Chrysler Crossfire - Ed.]
Will you make a Demon for us?
OK. I don't know what it is, but . . .
Give it another week and you'll know everything.