By on February 17, 2009

Chrysler has just released its 177-page “Viability Plan.” It will no doubt take plenty of time to go through (and this, of course, was unintentional on Chrysler’s part). In the interim, some highlights:

—Chrysler wants $5 billion by the end of March for “working capital and other operating expenses.” This would mean a total bailout purse of $9 billion, an increase over the $7 billion requested in December.

—The theme is “pay us now or it’s going to cost you more money than you can possibly imagine— or print.” This sounds suspiciously like like some word I learned once. Axtortion? No. Extourtan? What was it?

—There’s plenty of bankruptcy and liquidation analysis, projecting what the costs would be if they went bust.

—The “Stand Alone” business plan includes a $600 million profit in 2010, followed by a loss of the same amount in 2011, then another loss of $600 million in 2012, then a break-even year in 2013, followed by a projected $1B in profits in 2014.

—24 product launches in 48 months. I can only assume they are counting different paint colors as individual product launches.

—Fiat could, in theory, take another 20% stake of Chrysler for a majority share of 55%.

—”No American taxpayer money would go to Fiat.” Semantics.

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45 Comments on “Bailout Watch 401: Chrysler Requests $5B To Forestall the Inevitable...”


  • avatar
    NickR

    The “Stand Alone” business plan includes a $600 million profit in 2010

    How they arrive at those figures is something I’d really like to see. The slight of hand (outright fictions) must be something to behold.

  • avatar
    Justin Berkowitz

    @NickR:

    How they arrive at those figures is something I’d really like to see
    Erm, bailout money?

  • avatar
    beller

    This is a cluster@#$%

  • avatar
    KixStart

    One of the very best movies of the ’90′s, “Quiz Show,” opens with Rob Morrow, as Richard Goodwin, a lawyer who appears to believe he’s at the top of his game, checking out a Chrysler 300 of about that vintage. A great scene, a great movie and an iconic car.

    In the late ’50′s/early ’60′s, writer Art Buchwald wrote a series of columns about his auto trip into the Soviet Union. For this trip, he chose another iconic car, the Chrysler Imperial (“with Total Contact Braking and Oriflow Transmission,” as I recall, Buchwald repeated that line several times). He didn’t dwell on the car all that much, but he did mention it as the deliberate choice for the trip to The Worker’s Paradise.

    Friends had an Imperial of about that vintage… it was quite a car; it certainly seemed to me (junior high at the time) to rival my grandfather’s Cadillac for luxury.

    What does Chrysler offer today that could support scenes like those for a contemporary novel or movie? Nobody moves “up” to a 300, nowadays. There is no longer an Imperial nor, I think, can there ever be: the K-car derivative ruined it (even if they could pay Sinatra enough $$ to shill it).

    Chrysler saved itself, with just a little bit of help, some decades ago but there’s no longer anything to save nor any way to save it.

    It seems to me that killing Chrysler is some of the best help that can be offered to Ford and GM.

  • avatar
    no_slushbox

    We cannot allow Chrysler to go into Chapter 11.

    It needs to go immediately into Chapter 7.

    The minivan, Ram and Wrangler lines might as well be sold off while they still have any value left.

    Chrysler’s business model is already to pay people to sit at home while its factories are closed. We might as well eliminate the middle man and achieve the savings of only having to pay the workers unemployment to sit at home, not almost full pay and benefits.

  • avatar
    getacargetacheck

    Losses until 2014. More government billions needed. And that’s if the economy doesn’t go even further south in the meantime. How many Fiats and at what profit margin would need to be sold to start paying back $9B and rising in loans? Get real. LIQUIDATE this thing.

  • avatar
    Ken Elias

    Chrysler’s plan is not a plan…it’s a game to get enough gov’t money to continue through the downturn until maybe someday…

    It’s time to pull the plug on Chrysler and part it out. And GM needs to go bk now and reorganize.

  • avatar
    psarhjinian

    Just out of curiosity: if one was to do something as insane as buy a modern Chrysler (say, oh, a gently-used-but-heavily-discounted 2008 Grand Caravan), what’s the popular take on what would happen to warranty and repair support.

    And yes, that “one” is me.

  • avatar
    Justin Berkowitz

    psarhjinian:

    The popular speculation has been that the government would bailout the warranties, like the FDIC.

    Should this happen, I can only assume there would be mechanics (either remnants of dealers or private shops) authorized to do warranty repair work.

  • avatar
    like.a.kite

    $600m gain-loss-loss? I need not say I wouldn’t mind being informed of the thought process behind it [all].

  • avatar
    DweezilSFV

    psarhjinian: you could always use the savings from the discount to buy an after market warranty from a reputable company. If there is one….

    Or pop for a new one and you get the “lifetime” warranty. Backed by the government.

  • avatar
    Kevin

    Alls I want to know is, how can I get in on this boondoggle?

  • avatar
    TEW

    The best part of the free market is that some aftermarket parts maker will fill the void in the short term and in the long term there will be enough junkers to pick the parts clean. You can then take the car to a local mechanic and they can most likely be able to fix it.

  • avatar
    Mr. Sparky

    Poor Sweet Chrysler…

    You were beaten down by the Germans…
    You were mauled by a three-headed dog…

    I’m sorry old boy… It’s time for Uncle Sam to take you behind the barn and put you down…

    Be at peace Sweet Chrysler… Say hi to Studebaker for me…

  • avatar
    jolo

    Blackmail and extortion, pure and simple. And GM is playing the same cards, wants $30B AND will cut an additional 47,000 jobs. We’re supposed to give them money so they only fire 47k people?

    President Obama, let them die like they should have months (actually, years) ago.

  • avatar
    gogogodzilla

    The sad thing is that Fiat’s small engines and small car portfolio is just about the only iron in the fire for Chrysler.

    And they’d probably do better to liquidate… and then have Fiat buy, for pennies on the dollar… the Chrysler dealer network and factories. Then they’d start selling their cars, made in American factories, in America.

  • avatar
    MrDot

    What a farce. Get our money back and let the Chinese have the scraps.

  • avatar
    Seth L

    Do they even have a product to launch in calendar year 2009? I can’t think of one. And no, “maybe the Fiat 500″ doesn’t count.

  • avatar
    jkross22

    “followed by a projected $1b profitable year in 2014.”

    It would be telling to see the drill down on how this number was reached.

    It’s not saying $1B in profits. It’s a $1B profitable year.

    More smoke and mirrors intended to confuse rather than communicate real world numbers.

  • avatar
    Justin Berkowitz

    @jkross:

    The language of $1b profitable year is mine. Check the report, linked at the bottom of the original post, for Chrysler’s description.

  • avatar
    Blunozer

    Chrysler’s planning reminds me of the Underpants Gnomes in South Park.

    Phase 1: Steal Underpants (Get bailout money)

    Phase 2: ???

    Phase 3: Profit!

    http://en.wikipedia.org/wiki/Gnomes_(South_Park_episode)

  • avatar
    OldandSlow

    “24 product launches in 48 months.” from this train wreck is pure fantasy.

    More taxpayer money will only delay the inevitable.

  • avatar
    Detroit Todd

    I listened to the Chrysler press conference live today.

    The plans put forward were for either additional government assistance, or a liquidation. No where was there discussion of a Ch. 11 (reorganization).

    Chrysler is absolutely beyond a reorganization, and they know it. They wouldn’t (shouldn’t) even contemplate a Ch. 11 filing.

    The Obama administration can either pull the plug — resulting in tens of thousands of Chrysler-UAW workers and retirees suddenly finding themselves very pissed off with lots of time on their hands — or they can write another check for $5 (Very) Large.

    Five Billion Dollars isn’t a lot in the Federal budget. Not really. I doubt it would be more than the cost of the Pension Benefit Guaranty Corporation finding themeselves with tens of thousands of new recipients.

    So, my guess is that Chrysler receives a check along with some made-for-TV finger-wagging from the politicians, and lives to die (softly) another day.

  • avatar
    CommanderFish

    Justin:

    From talking to people “in the know”, 24 models includes same vehicles with different types of powertrains.

    Example:

    The Ram 1500 diesel that is coming is a new model, as is the Ram Hybrid, minivan hybrid, etc.

    Here’s the ones that have been rumored at least. I don’t know how many of these are still on-track

    Ram hybrid (Two-mode, I believe)
    Ram 1500 diesel (Cummins 4.2L V6)
    Town and Country hybrid (see ENVI concept)
    Wrangler hybrid (ENVI concept)
    Circuit (Lotus Europa)
    New 300
    New Charger
    New Grand Cherokee (Apparently a NY Auto show unveiling)
    New Durango (GC w/ 3rd row)

    A little more “out there” rumors…

    200 (conventional powertrain of the 200C concept)
    200 hybrid (ENVI powertrain)
    Patriot hybrid (ENVI powertrain)
    Hornet (Nissan Cube-based subcompact. Apparently on hold or switching to become a Fiat?)

    That’s 13 I can come up with.

  • avatar
    Justin Berkowitz

    @CommanderFish:

    Good work.

    If you add the proposed Fiat products into the mix, we’ve also got the Fiat 500 and the Alfa 149 (or whatever the new C-segment Alfa is called). Since I’m just spitballing here, why not the Fiat 500 cabrio and call that a separate model, too. So there’s three more for you.

  • avatar
    Seth L

    Justin:

    Sebring and Avenger Coupe?

    300 Touring?

  • avatar
    like.a.kite

    I quite like the way the Jeep rendering looks, but this new 300 is a total misfire.

    Seth L: I believe in the UK they sell a 300 wagon, which is a Magnum clone with a different face. Before I learned this it had never occurred to me how similar they look, but now it all makes sense.

  • avatar
    Runfromcheney

    The fact that that image previewing the new 300 reads like an advertisement just shows how desperate they are.

  • avatar
    CommanderFish

    Seth:

    Sebring ‘vert will probably stay around in some shape or form, although the current model has done a good job trashing the best-selling convertible’s nameplate. Speculation is leaning toward the Sebring being replaced by the 200, which means we could see an Avenger ‘vert for the next gen?

    By 300 Touring I’m assuming you’re meaning the wagon (Touring is also a trim level in North America). I’m going to guess probably not. They had this silly idea to make all Dodges wagons (Caliber, Magnum, even the Avenger concept was a hatch). We all saw how that turned out.

    This one could definitely go under wild ass rumor of the day:

    LX platform (300/Charger) to underpin Alfa Romeo 169. Go get some popcorn, folks, this could get interesting…

  • avatar
    Justin Berkowitz

    CommanderFish:
    LX platform (300/Charger) to underpin Alfa Romeo 169. Go get some popcorn, folks, this could get interesting…

    I’ve read that in a few places, and I seriously doubt it. The trouble is that only makes sense on the surface — that the LX is approximately the right size and RWD.

    I would be willing to bet huge, huge sums of money that it won’t happen.

  • avatar
    Ingvar

    The Chrysler 300 Touring is a car sold in Europe, it’s a Dodge Magnum with a Chrysler 300 front end. If I’m not mistaken, it’s produced in Austria.

  • avatar
    guyincognito

    @ NickR :

    “‘The “Stand Alone” business plan includes a $600 million profit in 2010′

    ‘How they arrive at those figures is something I’d really like to see. The slight of hand (outright fictions) must be something to behold.’”

    I believe this is accounting based on the Tesla Motors model…’if we get the $350 million loan we will be profitable’. So, they will be profitable in that there will still be $600M left of the $9B by the end of fiscal 2010.

  • avatar
    like.a.kite

    Ingvar: I said it first!

  • avatar

    No one has mentioned Fiat money, a term usually associated with the monetary collapse of a nation’s currency, as in Weimar Republic or Kenya.
    It goes something like this: when a nation can’t raise money (through taxes or whatever), it merely prints it. This Is Fiat Money.
    Those on the right side (ahem.) of politics may think that bailing these negative Ponzi companies will debase our currency to point of being Fiat Money…and Fiat will own Chrysler (a match made in heaven)

  • avatar
    MisterB

    I wonder if letting Chrysler go Chapter 7 and saving GM from BK is an option? This could make the politicians seem fiscally responsible.

    I think almost everyone agrees that Chrysler is a hopeless case. On the other hand maybe GM is too big to fail.

  • avatar
    obbop

    Thoughts of the “Rapid Transit System” of yore crawl through my ancient cranial cavity.

    In some ways a simpler time.

    Had to actually seek out products minus the “made in the USA” label.

    Rock n’ roll could either be some groovy music or blasting away at VC and NVA on full-automatic.

    A different mind-set not really all that long ago.

    I also wonder if the elites and the BIG corporations were, perhaps, a little less greedy and held a bit more concern for the USA as a whole.

  • avatar
    Seth L

    Right, the European 300C Estate, sorry.

    Sell it here, call it a crossover, easy money.

    How do yall think the MSM is going to report on the bailouts tomorrow?

  • avatar
    Justin Berkowitz

    Stewart Dean :

    No one has mentioned Fiat money, a term usually associated with the monetary collapse of a nation’s currency, as in Weimar Republic or Kenya.

    Isn’t fiat money any currency not either made of some precious metal (gold, tillium, dilithium), or directly tied to a commodity? In other words, Fiat money is money that’s worth something merely because we all agree that it’s worth that much.

    Fiat currency doesn’t just have to be the land of hyperinflation in Weimar germany. America has had Fiat currency since we went off the Gold standard in 1971. (thank you note to Germany is in the mail).

  • avatar
    Landcrusher

    The profitability plan is likely the result of a bunch of highly educated people sitting around coming up with something that they can make an argument that it might happen, and that will not look made up, and that might give the pols sufficient cover to sign the checks.

  • avatar
    telrbm1

    the first gen 300 was hot. the more they refine it the uglier it gets. that car in the picture will never sell.

  • avatar

    *sighs*
    I’d say screw it and let Chrysler fall, this is getting annoying.

    Economic ripples it may cause but seriously…when was Chrysler ever recently helping with anything? It cost us money…to eventually let them now rethink “gee we need even MORE $$!”

    Meanwhile Ford has managed to churn out some new, decent looking/performing cars by its lonesome. GM strapped for cash at least has/had some cool models in the future lineup(if it makes it). Chrysler…uhhhh, um the refreshed 300 and electric vaporware; yeah that’ll save em.

  • avatar
    Campisi

    Chrysler needs to do whatever it takes for them to be dead and Fiat in the United States by 2010.

  • avatar
    Kurt.

    Let me ask this question…Is Chrysler in BETTER shape than GM?

    I ask because Chrysler is only asking for $5Bn while GM is asking for $22Bn.

    Is Cerebus just asking for the smaller amount becasue it might actually get it and be able to skim some of it before C7, whereas if they asked for a REAL amount (say $22Bn to $50Bn) Obama and company would just through them into C7?

    And another thing…

    Since Cerebus owns Chrysler, will they have to fess up the taxpayers loan if they go C7? We know the money to GM will never be returned. Could the govt squeeze Cerebus to repay the loan?

  • avatar
    SpeedJebus

    Ok, hypothetical question:

    What will cost more:

    Continued life support for another 5 years, until “sustained profitability”, or funding the health care obligations of retirees and the current employees with “X” amount of tenure, for the next say, 10 years?

    The smoke and mirrors will continue until the government pulls out, and the workers are *still* out of a job.

    Same end result, why not get a head start?

  • avatar
    psarhjinian

    Let me ask this question…Is Chrysler in BETTER shape than GM?

    That’s actually a good question, and possibly worth an ‘In defense of… Chrysler‘ by someone who knows more than I do.

    I think they might be. Chrysler is smaller, which is a good start in a crunched market, and has historically been the most agile of the American makes. With decent oversight (eg, not Cerberus or Daimler) they could probably be salvaged, if not completely reinvented. Forced to go public and brought under the auspices of Magna or Fiat, they might do well.

    You’d have to pry them out from under Cerberus’ thumb, though, which would be hard.

    GM, by comparison, could be considered too big to succeed. The management is perenially sick, and it shows no signs of wanting to get better. There’s some technical brilliance, but the management is aggressively incompetent. You could make the case that GM ought to be dissected and the parts that aren’t too ridden with gangrene parcelled out to healthy competitors.


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