Dear Colleagues,
I know you have many questions as a result of the DaimlerChrysler Annual Press Conference last week and the resulting rumors about the future of the Chrysler Group. I’m sending this letter because I want to provide you the information that I can, and share with you my personal thoughts.

Journalists and analysts have been busy conjecturing over what will happen. To a certain extent, that is the nature of their business and we need to keep it in perspective. I know that you’ve been reading and discussing these stories, but I want you to keep in mind that Dieter Zetsche and the Board of Management strongly endorsed the Chrysler Group’s new Recovery and Transformation Plan. Dieter added that the company will look into “further strategic options with partners beyond that business cooperation” that I outlined in the Recovery and Transformation Plan, which set off the frenzy of rumors.

We simply cannot respond to these reports. The Board of Management has a duty to consider all options; but while this process is ongoing, the Board – including myself – can’t comment on developments because of strict legal requirements.
It may take weeks or months before official comments can be made on some issues. However, I can tell you that further information on the voluntary separation and early retirement programs for employees will be communicated in the next few days.

Meanwhile, our job is very clear. Our mission is to produce great cars and trucks, to take care of our customers and to restore profitability. Whatever fork in the road we may take, we first have to make sure we’re on the road – and the Recovery and Transformation Plan is that road. The plan is designed to make us profitable by 2008 and put us on solid footing to stay there. This is a sound plan that includes a substantial investment in our long-term competitiveness, and we must focus our attention on executing it.

The Chrysler Group has been around for more than 80 years and has been through difficult times before. We went through a restructuring in 2001, but our situation today is much different. For one thing, we’re leaner. Another important difference is that we have a full product pipeline with at least 20 new and 13 refreshed vehicles on their way from 2007 to 2009.

We also have achieved areas of operational excellence that are the benchmark of the world. Capacity for the fuel-efficient, four-cylinder World Engine in Dundee, Michigan, will increase to 840,000 units a year over the next few years, compared to the 260,000 we built last year. Our improvements in manufacturing productivity lead the industry over the past four years. We’ve also made great strides in product quality – for example, the Chrysler Town & Country minivan led its segment in the 2006 Initial Quality Survey from J.D. Power, beating Toyota and Honda.

Importantly, we are continuing to invest in our future. In addition to the barrage of new products, we will invest $3 billion in new powertrains, including a new family of world-class V-6 engines and a new dual-clutch transmission that we are developing with Getrag.

To sum up, we are a much leaner and stronger organization than before, and we are continuing to make the necessary investments to be competitive into the future. We are a good company with great talent and a clearly defined plan of action. The best way to secure a successful future for the Chrysler Group is to focus on what we can control – that is the Recovery and Transformation Plan. Many of you may be familiar with the adage about accepting what you cannot change and taking charge of what you can control. We can learn a lot from this message.

We have an obligation to each other, to our shareholders, to our dealers and to our customers to make this plan successful. Your support and best effort have never been more important, and I thank you for your continued dedication to the job at hand. In the meantime, you have my promise that we will continue to communicate as openly and directly with you as possible.

Sincerely,

Tom