Chrysler Punishes Former CEO

August 6, 2007 by Douglas A. McIntyre

Tom LaSorda, Chrysler’s CEO, was kicked out of the corner office today. Maladroit manager Robert Nardelli, who did his best to sink Home Deport (HD) while CEO there, gets the top job at the car maker.

Why? First, Cerberus, the new owner of just over 80% of Chrysler, probably looks at LaSorda, who will now become president of the company, as part of the firm’s problems. He was not able to deliver the kinds of concessions that Ford (F) and GM (GM) got from the UAW over the last year. And, it was on LaSorda’s watch that Chrysler reported the huge losses that lead Daimler to jettison the operation.

LaSorda may be needed for continuity, but his time with Chrysler is probably not long.

What is surprising is that Cerberus did not turn to another car executive, even Carlos Ghosn of Nissan or the ancient Lee Iaccoca. Perhaps neither likes Chrysler’s odds in a troubled US car market.

Perhaps Cerberus believes that Nardelli will get along better with the UAW, although he appears to have been dislike by his own employees and investors.

Whatever the reason, as June and July sales show, the US vehicle market is contracting due to high fuel prices and the tough times in housing. Toyota (TM) and Honda (HMC) are stepping up their assaults on the weak US companies, and even concessions from the UAW will not drive up flagging sales.

LaSorda may have been sent to the whipping post, but a new CEO can’t solve Chrysler’s problems. The people at Daimler who dumped it are no fools.

Douglas A. McIntyre

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