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Chrysler Oz: 'Alive, well and in business'

Play on: Chrysler Australia has sufficient stock to weather the restructuring storm in the US.

It’s business as usual for the Australian arm of Chrysler, says MD

Chrysler logo1 May 2009

CHRYSLER Australia managing director Gerry Jenkins has declared his company “alive, well and in business” after today’s announcement that parent company Chrysler LLC had filed for Chapter 11 bankruptcy.

Speaking to the media at Chrysler Australia’s head office in Melbourne, Mr Jenkins said that after a long period of uncertainty, his company could now move forward and grow in Australia, thanks to its partnership with Fiat SpA of Italy.

None of Chrysler Australia’s 47 direct employees will be affected by the announcement.

Mr Jenkins revealed that it was still too early to talk about Fiat Group vehicle distributorship in Australia, except that he believed that it unlikely to change from Ateco Automotive’s stewardship in the short-to-medium term.

Mr Jenkins said Chrysler was now a serious automotive company force thanks to the alliance with Fiat, and that the Australian arm of Chrysler LLC was in a healthy financial position thanks to market share gains over the past year.

And while the 30-year Chrysler veteran admitted that stocks of some models such as the popular Dodge Nitro and Jeep Wrangler were lower than he would like, there was still at least six months’ supply (about 4000 vehicles) at Chrysler’s Australian holding yards and dealerships.

This was more than adequate to tide the importer over Chrysler’s announced manufacturing shutdown of up to 60 days in the US under the terms of Chrysler LLC’s Chapter 11 bankruptcy filing.

 center imageNo Chrysler dealership in Australia would be shut as a direct result, as all bar one in Queensland were multi-franchised operations.

Nor would Chrysler LLC’s adoption of GMAC as its preferred lender for Chrysler dealers and consumer businesses apply in Australia, as most of Chrysler Australia’s dealer body had finance arrangements with other firms such as Daimler Finance, St George or Esanda.

Mr Jenkins announced that the “back office” agreement that Chrysler Australia has had with Mercedes-Benz Australia/Pacific Pty Ltd would continue unchanged, even though Daimler had relinquished its remaining 19.9 per cent share in Chrysler LLC.

Mr Jenkins said he did not know what new vehicles or vehicle technology sharing opportunities would arise from the Chrysler/Fiat partnership, although he expected the union to bear fruit within two years – and even earlier for powertrains.

“The number one message is that Chrysler Australia is alive, well and in business,” he said. “We are excited about the future and the prospects of the future.

“From a broader scale, Chrysler is alive and in business, and also has a new partner in Fiat, and I am excited about the product that that is going to lead to.

“Our US company has decided to go to Chapter 11 … to the establishment of a new company that will be leaner and free of the legacy costs so that we are in an extremely competitive position on the other side of it.

“Our alignment with Fiat will make us a serious global automotive company.

“I emphasise that Chrysler’s operations outside of the US are not affected by this bankruptcy – that is Canada, Mexico, Australia and New Zealand.

“We here in Australia are in a very healthy financial position we are very cashed up.

“We have made tremendous gains over the past three years in regards to our market share, and even this year, our sales are not off as much as the industry. Consequently, our market share has improved."Mr Jenkins said Chrysler Australia had called all of its dealers this morning to explain the US events and address any concerns they might have had.

“They were quite enthused that Chrysler is finally at the crossroads – the path for the future has clearly been identified and that we can now go forward.

“In effect, it has taken the monkey off our back and all of our dealers are quite happy to be in this position, to know clearly where Chrysler is going and to know financially that we are going to be there in the future, and there is a great deal of comfort knowing what they know today.

“And when they know that the future is bright, they will continue to invest and continue to support us – and that is really critical in this scenario.

“Our plan is not to go backwards in Australia, and we want to continue to make inroads in the Australian market. We are currently 16th ... and we would like to be much higher up the ladder, obviously.”

Mr Jenkins admitted that North America, Latin America and Europe would be the first regions to benefit from the Fiat tie-up, pushing Australia and New Zealand down the list of priorities.

“Right now, there is no intention of taking over the wholesaling of Fiat products in Australia, but we look forward to seeing if we could co-operate on several issues going forward. Those discussions are yet to be had.

“There is no sense of urgency saying that ‘as of tomorrow we want to start the distribution of Fiat products. We will try to learn from what happens outside of Australia (in terms of distribution)."Mr Jenkins said that, while Chapter 11 bankruptcy was not the preferred choice to move Chrysler forward, it would bring clarity and resolution for consumers who were previously afraid for the company’s future.

“I think now that it is quite clear that we have a strategy, and we know where we are going from this point onwards there is a higher degree of consumer confidence – or at least, we are hoping so.

“Certainly, the world ‘bankruptcy’ means certain things to certain people. I’m from Canada, and I know that it is very similar in Australia, that when you hear the word ‘bankrupt’ you assume that the doors are closed and the bars are up.

“In this case it is really a tactic used in the United States, for allowing a company to restructure itself and prepare itself for the future, more or less in a ‘phoenix’ way of approach.

“We explained it to our dealers as well as possible, and we hope that our dealers understand it well enough, and that they can explain it to their employees well enough so that they can explain it to the customer.”

Read more:

Bankrupt Chrysler seals Fiat deal

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Unions pave way for Chrysler survival deal

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