Chrysler not viable as stand-alone company: York

By David Bailey

CHICAGO (Reuters) - Chrysler LLC cannot succeed as an independent company over the long term given its lack of international business and overall weak vehicle lineup, an adviser to billionaire investor Kirk Kerkorian said on Friday.

"Chrysler as a stand-alone company is not viable," Jerry York, a former Chrysler chief financial officer, said at a panel discussion held following the Chicago Auto Show.

York was responding to a question about whether he expected Chrysler's turnaround under new majority owner Cerberus Capital Management to succeed, or whether it would sell the car maker off in parts. Daimler AG (DAIGn.DE) has retained 20 percent ownership in Chrysler.

Later, York said he was referring to Chrysler's ability to exist as an independent company over a 5 to 10-year period.

"When I left Chrysler in 1993, 10 percent of its sales were outside of North America," York said during the panel discussion. "When Daimler sold 80 percent to Cerberus, guess what? Ten percent of its sales were still outside North America. It's a travesty that that situation was not markedly improved during this period."

A Cerberus spokesman said it remained "extremely enthusiastic" about the investment in Chrysler and the company was already on track to exceed its multiyear restructuring and recovery plan on virtually all key metrics.

In a speech at a J.D. Power and Associates conference in San Francisco, Chrysler President Jim Press said: "Cerberus is committed to a stand-alone revival of a great American icon."

York previously served on General Motors Corp's GM.N board and Kerkorian in the past has tried to buy Chrysler. York declined to respond to any questions about Kerkorian.

Last November, York said at the Reuters Autos Summit that he ultimately expected Chrysler to be combined with an overseas automaker once Cerberus fixed it up. Some analysts have suggested Carlos Ghosn, chief executive officer of Japan's Nissan Motor Co Ltd (7201.T), might be a willing partner.

"I think Plan A was to go as far as they could in terms of fixing it up, but then ultimately recognize that the company would have to be merged with a foreign producer," York said of Cerberus. "Now, my guess is that they would consider every conceivable option because of the huge pressure the company is under."

Speaking on the same panel at the Stout Risius Ross conference, former Tower Automotive CEO Kathleen Ligocki said she thought a sale of Chrysler in parts would be "Plan B," but Cerberus would keep its options open.

Cerberus acquired Tower under the supplier's bankruptcy reorganization plan and took that company private.

"Their Plan A is clearly to make money by turning Chrysler around," Ligocki said. "If not, they would have to be able to reserve the ability to see if they can unlock value by selling it off in parts. I'm sure for them it is a Plan B and not one they would want to do."

Chrysler executives repeatedly laud the speed with which restructuring decisions have been made since Cerberus acquired the company, including cutting some underselling vehicles and approving changes in others to address customer complaints.

The Wall Street Journal reported on Friday that Chrysler plans to cut its product lineup by around half and dramatically shrink its dealership network to sell its Chrysler, Jeep and Dodge brands under one roof.