A financial incentive is a powerful thing.

Bob Nardelli, Jim Press and Tom LaSorda, the improbable triumvirate now heading Chrysler, came into the Financial Times office in New York this week to talk to a group of us about their turnaround efforts.

On the face of it, the idea that these three men will carry on working smoothly together until Chrysler is restored to profit and perhaps floated or merged with another company is improbable.

Mr LaSorda was in effect demoted from being in charge of Chrysler under DaimlerChrysler, Mr Press is used to running his own show at Toyota, where he was formerly the most senior US executive, and Mr Nardelli wants to prove himself after the debacle at Home Depot.

Yet they have a strong motive to stick together. Cerberus Capital, which now owns Chrysler, has a financial plan to restore it to profitability within “a couple of years”, as Mr Nardelli put it. When that happens, the prospect of a juicy exit looms for all three men and they are free to bid farewell to each other.

Until then, they must get along. At the Detroit motor show in January, there were rumours of friction between Mr Nardelli and Mr Press, so this week’s joint appearance was clearly intended to show that they are a harmonious trio.

“We are kind of seamless and our offices are right next door to each other. Not a day goes by that we do not see each other and even confront each other and we end up better for that,” was how Mr Nardelli put it.

One thing that must help is that they have distinct skills and roles and there is a lot to do. Mr Nardelli is there to bring an outsider’s discipline to the inward-looking Detroit culture and restore the operational and management functions ripped when Chrysler was sold by DaimlerChrysler.

Mr LaSorda describes the roles of he and Mr Press as: “Jim is the demand guy and I am the supply guy”. In other words, Mr Press is responsible for marketing and sales, including relations with the dealers, while Mr LaSorda runs engineering and manufacturing.

Mr Press has his work cut out to consolidate the network of 3,500 dealers split among Chrysler, Dodge and Jeep brands. It wants to push them into a smaller network of multi-brand dealers without having to pay anything like the estimated $1bn that General Motors paid to buy out Oldsmobile dealers when it shut down the brand.

Mr Press says he is doing that by getting all the dealers in an district together and telling them that Chrysler plans to stop producing a full range of vehicles under each brand, so it is in their own interests to work out which dealers takes over the three brands and which others sell out.

Meanwhile, Mr LaSorda must shift the product line from its emphasis on vans, trucks and SUVs and find a way of making new small and medium-sized cars. By the way, he has to do that without the global resources of a Ford or GM, which can adapt cars they make in Asia and Europe for the US.

There is a lot to do to keep them busy until 2009 or 2010. Mr Nardelli says that Cerberus has not given them a deadline for when it wants to exit its investment. But I suspect that each of these has a date in mind.

March 21st, 2008 in Autos | Permalink