Chrysler Group may not survive in its current form, report says

Article by Christian Andrei, on August 29, 2010

Only days before Chrysler Group CEO Sergio Marchionne unveils his five-year restructuring plan for the company, auto analyst Max Warburton has spoken out against it. Warburton, of Bernstein Research in London, said that despite the profit posted in March, Chrysler may not be able to endure in its current form.

Warburton said that Marchionne's efforts to cut costs were impressive but there are still many questions about the rescue strategy.

Marchionne is set to introduce the restructuring plan for Fiat Sp.A. in Turin on April 21. Warburton believes that Marchionne will announce that Chrysler, which was saved from bankruptcy last year by Fiat, had almost broken even for the first quarter after making a profit last March.

In Warburton's report, which was written as an analysis for Fiat investors, the firm remains unconvinced that Chrysler will survive despite "Marchionne's blood, sweat and tears."

Warburton said further that shareholders would have to consider Marchionne‚ strategy if he won't be able to "preserve Chrysler as it exists today."

The report added that what looks like a realistic exit plan would be to trim down Chrysler to only carry Ram and Jeep, and have a US production for Fiat.

Bernstein Research said that its conclusions were based on interviews with four "very senior industry sources" from Detroit.

The firm didn't name these sources or how they were connected to Chrysler. The carmaker has yet to comment on this report.

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