However, its survival maybe more detrimental to the industry as a whole than their demise, says Mark Warnsman, a Calyon Securities analyst.
“Even as the prospects for the U.S. auto industry will improve when the economy turns the corner, Chrysler may prove to be a drag on that recovery," Warnsman wrote. "As a large, newly private concern Chrysler has and, in our view, will continue to present a challenge to the remainder of the industry as the industry adapts to the reality and potential for sharp changes in the competitive landscape driven by Chrysler's actions.”
This comment is in response to the dramatic changes that have followed Cerberus Capital Management’s acquisition of Chrysler LLC. Thus far, they have eliminated four models, plan on cutting a total of 28,000 jobs, taken 1.1 million units out of capacity, and ended its leasing program. None of these tactics inspire investor confidence.
A certain amount of transparency is always present for a publicly held company, which provides warning for investors. Chrysler is no longer required to publicly reveal such information, and understandably, this makes investors wary.
"Chrysler has embraced its status as a private entity as an enabler for a series of decisions that, at best, are unsettling to the rest of the industry. At worst, they could prove to be highly disruptive," Warnsman wrote.
Chrysler has become slightly more vocal about its finances in recent weeks, and execs have cited their recent relationship with Nissan as evidence that their numbers are sustainable. Tom LaSorda, Chrysler president and vice chairman, stated “Nissan did quite a bit of due diligence before deciding to turn its truck platform over to us,” something that would not have happened if Chrysler’s books had problems.
via Detroit Free Press