Subcommittee on the Automotive Industry in Canada Committee on March 11th, 2009

[Thomas LaSorda]

Yes, that's a very good question, because when you look at Chrysler's portfolio, we're at what we call a C-segment and bigger, which is really like a Caliber, a Jeep Compass, or Jeep Patriot.

The deal with Fiat, which is one of the world's best small car producers, is to merge with us where they will take A-segment. The car they have is the Fiat 500, the Cinquecento. It's a very hot seller throughout the world. But it's not built or sold here, and there are other small cars in the B-segment. We will bring them into this region and build them and sell them not only in the United States but Canada as well.

[Robert Vincent, Bloc, Shefford, QC]

Excellent.

We talked about a stimulus package. In the documents that you have provided to us and in various press releases, I read that some gas-guzzling models will be discontinued, such as the Jeep Compass. If I'm not mistaken, you have cut them from the line-up or will do so this year or next year.

Will you bring back other models, other than the Fiat, that you said you would be bringing back? What other ways will you encourage consumers to buy Chrysler products?

[Thomas LaSorda]

We have a big electric car program that we launched in the United States over a year ago. We call it ENVI. We launched a new all-electric sports car. We're looking at range-extended electric vehicles that in the first 40 miles would be all electric. We have applications, and they're under testing now in a minivan--a Jeep Wrangler. We're looking at putting that in other products as well. We've talked about that in a Jeep Patriot. Those were shown at the Detroit Auto Show.

The other application we're looking at is whether or not diesel, which is a popular application in Canada, should come here as well.

We have almost a seven-year product portfolio. We're going to launch 24 different models over the next four years, which includes these electric cars as well.

[Robert Vincent, Bloc, Shefford, QC]

Approximately how much will these new vehicles cost?

[Thomas LaSorda]

As high as we can to make profit. But I'll turn to Reid to talk about pricing.

[Reid Bigland]

To build on Tom's comments a little, we have a number of products right now in the Canadian marketplace that are available for under $20,000. In fact, the Jeep Compass that you mentioned is still a cornerstone of our product portfolio, as well as the Jeep Patriot and Dodge Caliber, all available for around the $15,000 mark, yielding fuel economy of up to 40 miles to the gallon. Our award-winning Dodge Grand Caravan, which so far this year is the second-highest-selling vehicle in Canada out of almost 300 different name plates that it competes against, has an entry-level price of under $20,000, and our Dodge Journey, which is the number one selling cross-over vehicle in Canada, also has an entry-level price at under $20,000.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Bigland.

Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chairman.

Thank you for coming this evening.

I'm going to focus on the three issues that you have listed here as critical for competitiveness. On the transfer issue for pricing, I'm assuming that's unique to Chrysler. Would that be accurate?

[Thomas LaSorda]

Yes. What we're asking for is really simple, from our perspective--and I'll turn it over to Lori, who's our legal public affairs expert in government affairs. We're saying--and thanks to the Canadian government and the IRS--that they've agreed to go to competent authority, which is a bifocused entity where there's a treaty under which they'll meet when there's a tax dispute between the two countries. They've agreed to fast authority. We've asked them for a simple letter that says there will be no more deposits required from Chrysler until they render a final decision.

[Mike Wallace, Conservative, Burlington, ON]

In a year, two years?

[Thomas LaSorda]

The process could be six years. The new one, we hope, is a year or more.

[Mike Wallace, Conservative, Burlington, ON]

No further cash payments or requirements?

[Thomas LaSorda]

Exactly.

[Mike Wallace, Conservative, Burlington, ON]

All right. I just want to be clear that it was just for Chrysler and what the issue was.

[Thomas LaSorda]

That's right.

[Mike Wallace, Conservative, Burlington, ON]

On the labour costs, you've talked about the $20 gap. Have you shown leadership? I think you mentioned that south of the border the executives took pay cuts or compensation cuts. Is that the same north of the border?

[Reid Bigland]

Those same U.S. Treasury requirements of the United States have also come over to Canada, as well as the elimination of merit increases, the elimination of bonuses--

[Mike Wallace, Conservative, Burlington, ON]

Has that all happened thus far?

[Reid Bigland]

That has all happened thus far.

[Mike Wallace, Conservative, Burlington, ON]

Now, on government assistance, I've questioned others about the credit side in terms of securitizing their lending so that they're able to produce more leases and so on. That's one of your issues, of course, but another issue is that you're one of the companies actually asking for restructuring money, on top of just financial support for credit purposes.

My question to some of your competitors that aren't in the same boat is this. What would they consider fair, if their concern is that you use taxpayers' money to get a competitive advantage? For example, you might turn over the money you got into Chrysler Financial to produce a cheaper lease that makes you more competitive on the financial side or other areas. What would you say to give me, as a member of Parliament, comfort that you will not use whatever that loan...? I'm assuming it will materialize; let's assume it materializes. How is that fair, and are we assured you will not be using it to get a competitive advantage over others, who are producing in Canada but not asking for this kind of loan?

[Reid Bigland]

I can mention right now unequivocally that any funds received from the Canadian government will not go to our Chrysler Financial operations in Canada, and the bulk of those funds will go towards the new product investments in our Windsor and Brampton assembly plants and to shore up our overall liquidity challenges right now.

[Mike Wallace, Conservative, Burlington, ON]

So when you say liquidity challenges, that's for the company itself.

[Reid Bigland]

Yes.

[Mike Wallace, Conservative, Burlington, ON]

Not for your liquidity issues in terms of being able to have money to lend to people to buy your vehicles, to get them off the lots.

[Reid Bigland]

Correct.