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AUBURN HILLS, Michigan: The new chief executive of Chrysler, Robert Nardelli, said Thursday he believed a cut in interest rates would help re-energise the sluggish US economy.
Nardelli, the former chairman of the Home Depot, who took over as Chrysler's CEO only last week, said he would have no problem endorsing an interest rate reduction by the US Federal Reserve in the wake of the troubles in the housing market, which have led to financial turmoil in markets around the world.
Nardelli is one of the first executives of a non-financial company to call for an adjustment in rates.
"I don't think it had a direct impact" on the car industry and consumers, he said of the turmoil in the markets.
"But it had a psychological impact," he said.
Nardelli noted General Motors, Ford and Toyota have all reduced their market forecasts for the balance of 2007 and now anticipate slower sales.
"I think there is a natural tendency to pull back," he said. "Expenses become scrutinised and then deferred."
"Let's see what happens. Let's see what the Fed does with rates. If inflation continues to moderate, maybe we'll see something from the Fed."
"But certainly I would say we should be looking at that to get some confidence, some consumer confidence back and to get some energy back into the markets and some cash back into the markets, which would be good for all of us," he said during a brief meeting with reporters.
"No one was more sensitive to the housing industry than I was for six years," said Nardelli, who previously ran the huge Home Depot chain of big-box hardware and construction materials stores.
"When the housing market was robust, people were spending money on their home because they saw it as an investment. Quite honestly, they were able to get the capital gain out of that probably faster than out of the stock market. If they invested in a bathroom or a kitchen, they were able to get that and a multiple of that when the home sold."
Nardelli also said Chrysler has adequate resources to execute its turnaround plan and does not foresee any need to cut capital spending to conserve cash.
"I don't see that," he said.
He said he has spent the past week going into different parts of the company and talking directly with managers and employees. "I've gone to their offices ... The best thing I can do right now is act like a sponge and absorb everything. ... There is lot of talent here."
"What I can bring is fresh eyes," he added. - AFP/ac
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