Message from Bob Nardelli

Dear Employees,

Let me start with some very good news. When we made our recent request for a government bridge loan for Chrysler LLC, we also stressed the need for Chrysler Financial to receive access to federal TARP (Troubled Assets Relief Program) funds. Today we were pleased to learn that Chrysler Financial has qualified for $1.5 billion from TARP, greatly enhancing its ability to support our dealers and provide credit to our customers. This news has enabled us to announce aggressive new customer incentives, and you can find the details on The Scoop.

This week also was highlighted by media days at the North American International Auto Show in Detroit. For us, it was an opportunity to show the world four pre-production ENVI electric-vehicle prototypes as well as the stunning new Chrysler 200C EV concept range-extended electric vehicle. I hope you have a chance to see and learn about these products in person, or on The Scoop. These vehicles are proof positive that we are hard at work designing and engineering the vehicles that will ensure a successful future for Chrysler.

But to get to this promising future, we must seek concessions from all of our constituents including owners, lenders, employees, dealers and suppliers, as required under terms of the U.S. government’s bridge loan. This process is officially under way, and in total, we need to identify billions of dollars in concessions by the Feb. 17 deadline to provide the Government with a plan to achieve and sustain long-term viability.

Throughout the Chrysler organization, employees will need to continue doing their part to help save costs and to do more with less. Already, we have reduced costs related to salary workers with the suspension of the company’s match for 401(k) plans, tuition reimbursement program and performance bonuses, as well as the phasing out of the lease car program. Going forward, we will fully comply with the limits on executive compensation set by the Government, and we will not offer stock options or restricted stock. In addition, it is important to note that at all levels, each salaried employee is being asked for increased productivity as a result of reducing approximately 12,000 employees over the past two years and the subsequent de-layering and restructuring of our organization.

We also will continue to work with our union partners to save costs as we continue to align our operations to reflect lower marketplace demand. Since 2007, we eliminated 1.2 million units of capacity, which represents more than 30 percent of Chrysler’s previous capacity and the elimination of 12 production shifts.

We will continue to review all operating expenses in our plants, office buildings, technical centers and parts depots in order to reduce costs where possible. For example, we saved more than $230,000 at CTC/HQ during the holiday shutdown by reducing energy and building services. More than $1 billion in non-earning assets have been identified for sale, including a new project to sell pieces of artwork on display in our headquarters and technical center in Auburn Hills. In total, more than 70 percent of those assets have been disposed of to date.

If you get the chance to attend the auto show in Detroit, you will see that our vehicles are showcased in a straightforward manner. We will save millions of dollars during the media and public days through this approach. It’s important that we continue to promote our products, but we will examine every cost to ensure we’re getting the best bang for our buck.  We’ll be represented at auto shows in Chicago, Geneva and New York City, but we will not participate in this year’s Tokyo Motor Show.

It’s important that all of us continue to spread the good word about Chrysler’s current and future products. Our quality has never been better – in fact, we have achieved the lowest warranty claim rate in the history of our company, with a 30 percent improvement compared with last year. In addition, we had the fewest number of recalls of any manufacturer last year. We also continue to improve fuel efficiency, with 73 percent of our 2009 model year vehicles delivering improved mileage versus the 2008 model.

The federal bridge loan will help us continue our restructuring and transformation so we can build the fuel-efficient, high-quality cars and trucks people want to buy, will enjoy driving and will want to drive again. Our viability plan includes 24 major product launches in 48 months, including all-new versions of key products such as the Chrysler 300, Dodge Charger, Jeep Grand Cherokee and Dodge Durango. We have focused on battery-electric drive as our primary clean-vehicle technology, including the introduction of our first full-function electric-drive model in 2010, and expansion to additional models by 2013. This will allow consumers to enjoy an environmentally friendly, clean, quiet and inspiring driving experience, while reducing dependence on imported oil.

As we’ve said many times before, alliances and partnerships are part of our long-term strategy for viability, but we are not involved in any discussions to sell our brands or our plants. It’s unfortunate that speculation about Chrysler’s future has become commonplace, with rumor and innuendo sometimes passing for news.  I hope you won’t be distracted by the speculation, and I assure you that you’ll hear directly from the company if any announcements are to be made. In the meantime, let’s all stay focused on the job at hand, remain positive about our future and keep supporting one another.

Thank you for your continued commitment to Chrysler.