New Chrysler Group LLC and Fiat Finalize Global Strategic Alliance; New Global Brand-Focused Structure
With the US Supreme Court yesterday clearing the final potential obstacle, Chrysler Group LLC and Fiat Group finalized their previously announced global strategic alliance, forming the “new" Chrysler. The “old” Chrysler had entered bankruptcy on 30 April 2009. The new Chrysler will begin operations immediately.
Under the terms approved by the US Bankruptcy Court in New York and various regulatory and antitrust regulators, the company formerly known as Chrysler LLC today formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC.
Chrysler Group in turn issued to a subsidiary of Fiat a 20% equity interest on a fully diluted basis in the new company. Fiat has also entered into a series of agreements necessary to transfer certain technology, platforms and powertrains to the new Chrysler. Fiat’s equity interest will increase in increments by up to a total of 35% in the event that certain milestones mandated by the agreement are achieved, but Fiat cannot obtain a majority stake in Chrysler until all taxpayer funds are repaid. (Earlier post.)
Similarly, the United Auto Workers’ Retiree Medical Benefits Trust, a voluntary employees’ beneficiary association trust (VEBA) has been issued an equity interest in Chrysler Group equal to 55% on a fully diluted basis. The US Treasury and the Canadian Government have been issued an equity interest equal to 8% and 2% on a fully diluted basis, respectively. These interests reflect the anticipated share dilution as a result of Fiat’s incremental equity assumption once the milestones outlined in the strategic alliance agreement are achieved.
In addition to Marchionne, currently the Chief Executive Officer of Fiat S.p.A. serving as CEO of the new Chrysler, the company will be managed by a nine-member Board of Directors, consisting of three directors to be appointed by Fiat, four directors to be appointed by the US Government, one director to be appointed by the Canadian Government and one director to be appointed by the United Auto Workers’ Retiree Medical Benefits Trust. The Board is expected to name C. Robert Kidder as Chairman. The process of determining additional board members is continuing and updates will be announced as appropriate.
As previously announced, Chrysler has entered into an agreement with GMAC Financial Services to provide automotive financing products and services to the Company’s North American (NAFTA) dealers and customers. GMAC Financial Services will be the preferred lender in North America for Chrysler, Jeep and Dodge dealer and consumer business, including wholesale of new and used vehicles as well as retail.
Chrysler Group’s new organization is based on a global brand-focused structure comprised of the Chrysler, Jeep, Dodge and Mopar brands, each with full profit and loss accountability. Common Commercial, Industrial and Corporate functions have been put in place to support the development, manufacture, distribution and sale of Chrysler, Jeep and Dodge products and Mopar parts by the brand organizations.
To assist the new company in the transition, Jim Press is appointed Deputy CEO and Special Advisor, reporting to Marchionne. In this position, Press will be instrumental in the restructuring of the Chrysler Group LLC. Press served most recently as Chrysler LLC Vice Chairman & President.
In support of the Chrysler Group’s brand operations, the company announced the following appointments reporting to Marchionne:
Peter Fong is appointed President & Chief Executive Officer, Chrysler Brand, with full profit and loss responsibility for the Chrysler product portfolio. Fong will be the lead executive for the Sales organization with enterprise-wide responsibility. He served most recently as the Director of the Mid-Atlantic Business Center.
Michael Manley is appointed President & Chief Executive Officer, Jeep Brand, with full profit and loss responsibility for the Jeep product portfolio. Manley will also have enterprise-wide responsibility for the Product Planning organization with responsibility for coordinating the product plan and volume requirements of the Chrysler, Jeep and Dodge brand functions. He will work with the other brand Presidents to translate these into operating plans for the product development and manufacturing organizations. Manley served most recently as Executive Vice President, International Sales & Global Product Planning Operations.
Michael Accavitti is appointed President & Chief Executive Officer, Dodge Brand, with full profit and loss responsibility for the Dodge product portfolio. Accavitti will also have enterprise-wide responsibility for the Marketing organization with responsibility to coordinate worldwide marketing strategies, brand development and advertising for the Chrysler, Jeep and Dodge brands. Accavitti served most recently as Director, Dodge Brand Marketing.
Pietro Gorlier is appointed President & Chief Executive Officer, Mopar Service & Parts and Customer Services, with full profit and loss responsibility for the Mopar product portfolio and Service & Parts operations as well as Chrysler’s Customer Service operations. Gorlier will have shared accountability with the brands, responsible for parts and services growth and delivery and an integrated world-class approach to customer support. Mr. Gorlier joins Chrysler Group from Fiat Group Automobiles and CNH, where he most recently served as the head of the Network and Owned Dealerships organization.
Joe ChamaSrour will continue to lead the new company’s operations in Mexico as President & CEO, Chrysler de Mexico.
Reid Bigland will continue to lead the new company’s operations in Canada as President & CEO, Chrysler Canada.
In support of the industrial operations of Chrysler Group LLC, the following appointments are announced, reporting to Marchionne:
Scott Kunselman is appointed to lead the Product Engineering organization as Senior Vice President. Kunselman replaces Frank Klegon, who has announced his intention to retire. In this position, Kunselman has responsibility for all product development strategy and advanced-vehicle engineering. He also oversees product-development processes, testing and validation. Mr. Kunselman recently served as Vice President, Truck Product Team and Core Team Leader
Ralph Gilles will continue to lead the Product Design organization as Senior Vice President.
Frank Ewasyshyn will continue to lead the Manufacturing organization as Executive Vice President and assumes responsibility for the World Class Manufacturing processes which are in the process of being rolled out throughout Chrysler’s manufacturing footprint.
Doug Betts will continue to lead the Quality organization as Senior Vice President.
Scott Garberding will continue to lead the Procurement organization as Senior Vice President.
Michael Keegan is appointed to lead the Supply Chain Management organization as Senior Vice President. In this position, Keegan is responsible for the critical volume planning and logistics functions in close coordination with the Brand CEOs. Keegan is also responsible for driving improvements in service levels, working capital efficiency and complexity reduction; optimizing demand and supply to benefit balancing the needs and requirements of the individual brands; and, establishing consistent and effective supply chain processes. Keegan recently served as Vice President, Volume Planning and Sales Operations.