Just a few years ago, Walter Chrysler’s namesake was riding high. The “partnership of equals” between America’s Chrysler Corporation and Germany’s Daimler-Benz bore fruit in the form of the critically acclaimed Chrysler 300 and Dodge Magnum. “Hemi” was the performance buzzword. “SRT” indicated the performance deal of the decade. Fast forward to ’06 and everything Chrysler’s doing seems strangely, willfully, specifically designed to push the automaker to the brink of self-annihilation.
Post-Katrina, when the market for pickups and SUV’s tanked, Chrysler’s management kept the production lines humming. As of early November, the North Jefferson Assembly Plant in Detroit (Grand Cherokees and Commanders) and the Windsor Assembly plant in Ontario (Pacificas, Grand Caravans and Town & Countries) were both working overtime shifts, producing more and more moribund vehicles. The result has been as frightening as it is predictable: excess inventory on an epic scale. We’re talking 500k unsold vehicles.
The ungainly Jeep Commander sits on dealer lots for 157 days before selling. The gainly Jeep Grand Cherokee remains welded to dealer pavement for 120 days. The answer to a question no one asked, the Chrysler Pacifica, stays put for 142 days. The once mighty Dodge and Chrysler minivans hang around 133 and 117 days respectively. In total, excluding fleet sales, Chrysler has 126 days of unsold inventory (compared to Toyota’s 30). And still the production lines keep flowing.
What’s worse, this super-abundance of slow-selling models joins a glut of last year’s models. Roughly 45 percent of the vehicles at Chrysler and Dodge stores are ’06 models. In comparison, ‘06’s make up less than 20 percent of GM’s and about 25 percent of Ford’s current inventories. But wait! This figure doesn’t include all the cars and trucks in DCX’ increasingly-infamous “order bank”: a repository of vehicles that dealers won’t/can’t accept, which drains DCX of hundreds of thousands of dollars a day in storage costs.
And the hits keep not happening. The majority of the machines in Chrysler’s sales banks are base-level vehicles without the equipment most buyers seek. In the words of the dealers, Chrysler is giving them “weirdly packaged minivans” and trucks spec’d-up with “every mismatched combination and permutation of features” they can make.
No wonder Chrysler is resorting to bribery to try and move the metal. They’re offering dealers $200 for every 2007 model they take above their normal allocation, and $400 for every 2006 model they accept from the sales bank. No sale; the payments don’t even cover dealers’ interest payments on the increased inventory. Chrysler Group is also attempting to bribe existing and potential customers with $1k coupons mailed to 3.4m consumers. Will a one percent response rate even cover the postage? Watch this space.
The payment may help ameliorate the negative effects of the company’s financing deals. Customers can now lease a fully-equipped ’07 van or truck for just a few dollars a month more than the lower-line ‘06 models. For another, they’re using bully-boy tactics to cram unsold cars down dealers’ throats. A $3m lawsuit in NY federal court claims Chrysler tried to force one of its larger dealerships to stock cars it never ordered, and then gave competing dealers unfair price breaks.
The situation is so horrific that industry and financial analysts are calling for DaimlerChrysler to divest itself of the Chrysler Group– before the American automaker destroys its German host. Despite Dr. Z’s repeated declarations that Chrysler is not for sale, several important investors agree: DCX should dump Chrysler as soon as humanly possible. OK, but— several analysts put the Chrysler Group’s worth at “zero or less.” In the words of one investment banker, “No one would buy it… perhaps the Chinese would take it if they didn’t have to pay anything for it.”
Moody’s Investors Service has already downgraded DCX’ debt rating once and may do so again. “We would certainly consider a different rating… if Chrysler were no longer in the group.” JP Morgan remains convinced that management patience towards Chrysler has “worn thin and increases the likelihood that DCX will reduce exposure to Chrysler.” It’s the investment community’s equivalent of yelling “jump!” to someone standing on a ledge.
Clearly, Chrysler needs to reduce production until dealer inventories return to manageable levels, and rethink their whole product portfolio. At the same time, the UAW must agree to some contract concessions. If Chrysler can’t cut costs and quickly make production changes– including temporarily shutting down entire assembly lines– they’ll keep driving the company and their union workers into inventory bloated oblivion. Despite recent “cut and run to China” moves, Chrysler’s long-term survival ultimately depends on unpicking this Gordian knot.
Of course, leaving this difficult endeavor to DCX’ current executive team may not be a wise move; the entire situation reeks of mismanagement at the highest possible levels. Heads must roll (we’re looking at you sales chief Joe Eberhardt), or nothing will change. Meanwhile, Chrysler’s woes raise a troubling question: if DCX can’t turn this ship around, what effect would bankruptcy have on the rest of Detroit’s home team?
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I pass a Chrysler dealer everyday and there are more large monster trucks on that lot than you could imagine. I could offer them a bicycle in trade and drive off with one.
It’s becoming clear that riding on Mercedes Benz’s reputation will only go so far. Convincing people they are buyinga MB for the price of a Sebring was a tough sell. the resale market was not impressed. Just like Ford and GM, buying a Chrysler means cliff face depreciation and virtually no trade in later. You really have to love the car to be willing to lose so much.
My mother has a T&C minivan, 22K on it and the transmission went. So much for that German Engineering solving all the old tranny problems.
As for the UAW, after they get done with GM and Ford, DCX will be the next victim. Anybody that believes they are going to emerge unscathed is wrong.
In the last 15 years, the market for brand building seminars, books and consultancies exploded.
The automakers were among the biggest buyers – and look where it’s gotten them. They’re all pushed to the edge of the precipice and staring into the abyss.
When I first heard of it, I thought the merger between Daimler and Chrysler was stupid. By now I am convinced.
The mb-chrysler merger was probably doomed by chrysler’s image as a rental car builder. I have a 300C and it is a good car, but the companie’s other stuff is not there. The jeep line has been allowed to fall behind hummer. And they will not ever get back the full sized pickup sales they once enjoyed. In case you haven’t looked fuel has crept back to $63.00 a barrel and american’s will not trust a five year payment on a 8 mile per gallon truck or suv. Chrylser builds too many products (and too many of them) in light of the rest of the marketplace. I and others thought that chrysler could be the exception compared to ford and gm. But with pattern union contracts and a history of building shoddy stuff they have their own rock to push up hill. Zetche tried to say chrysler’s were low dollar mercedes but they are not. When benz puts it’s star on the small and box like A class in Europe is sells. A cab driver said he’s trading in his opel for a A class because it lasts longer in germany. Chrysler cannot even think of this image here in the states. So the question for mercedes, do you just bring in more of the real thing with the magic name on it or do you keep selling surugate cars through chrysler. By the way, ever wonder why chrysler overbuilt in 2006? The financial model would have been just as terrible if they built less given their labor and parts contracts. So they gambled and lost, but the alternatives weren’t pretty. Now we will get to see thoses alternatives of downsizing etc.
Sad to see what’s happened to a once great company. One question, couldn’t Chrysler be spun off from Daimler? It would have to issue stock, and it wouldn’t at this time at least have a high price per share, but all the pieces that were there before the so called merger are still there now.
If memory serves me Joe Eberhardt is a Daimler guy. So much for vaunted German management. I pine for the “good ol’ days” of Gayle, Caistang, Stallkamp, and yes even Lutz, when everything they made was a head turner and a serious contender in it’s market segment.
A couple of years ago I was at the Concours d’Elegance on Ameila Island FL and DCX had a tent with a 300C inside and a Hemi engine display. Outside of the tent in broad daylight they had the 300N concept convertible. This was the Tom Gayle et. al. creation that was going to replace the 300M (pre “merger of equals”).
Just beautiful to look at.
And rear wheel drive.
And Hemi powered.
And they didn’t make it.
When you look at it next to the current 300C or even SRT it makes the latter seem like a baroque monstrosity.
Why does the UAW always get the blame? They have stepped in to provide for their members what all other industrialized nations provide all their citizens, single-payer health care. That said, DCX has made a turd sandwich from cake. This is a familiar tune, as in recent memory all the domestics were flying high, but neglecting R&D. I want them to turn it around, but loyalty is a two-way street. I am old enough to remember the debacle of the sales bank. I was an elementary school age kid with my Dad in Louisville to bid on transit- damaged cars. We went around a corner, and BAM- 1966 Chargers, Darts etc etc in every spare spot you could see. If memory serves, at that time Convoy Co. was payed to marshal the cars until sale. They were even parked on the street. Whoever failed to learn from history should be hung by his balls.
Wow! Cherokees still in inventory? Didn’t they stop making those in 2001? Chrysler really is in trouble if they still have Cherokees in inventory.
My father-in-law rented a brand new PT Cruiser. The plastic was unbelievably cheap, but the most glaring problem were the window controls. Located in the middle of the light gray “retro” dash, were windows black window controls that just looked horrible. Reminded me of Legos when you need a piece that is one color and you just don’t have it. Parts bin nonsense.
Would Mercedes let this happen? How much would it have cost to spray paint a bunch of these switches the right color?
Trying to play off Mercedes will end up damaging that brand, do they expect us to believe the new Sebring (shudder) is related to any Mercedes sedan?
K.
American companies talk about quality but act almost solely based on cost and short-term profit. This is true in many of our industries and is the reason for so many of them eventually dying (and is also the cause for most of our huge medical care costs). This is what happens when product portfolios and business strategies (or lack thereof) are dictated by MBAs and accountants.
jerry -
How do you figure Jeep is falling behind Hummer? Hummer is scrambling to get somethign out there to compete with the new Wrangler. Hummer has 2 models, niether of which is new or exciting. I’d guess hummer has a couple years left to exist, if they are lucky.
BimmerHead:
Close. From wikipedia:
Jeep Cherokee
From Wikipedia
Jeep Cherokee can refer to four different SUV models produced by Jeep from 1974 to the present:
* Jeep Cherokee (SJ), a full-size SUV produced 1974–1983
* Jeep Cherokee (XJ), a compact SUV produced 1984–2001
* Jeep Grand Cherokee (ZJ, WJ & WK), a mid-size SUV produced 1993–present
* Jeep Liberty (KJ), a mid-size SUV produced 2002–present, sold under the Cherokee name in Australia, Europe and Asia.
(I think you were thiking of the XJ…)
Wow! Cherokees still in inventory? Didn’t they stop making those in 2001? Chrysler really is in trouble if they still have Cherokees in inventory.
If you read the paragraph above the "Cherokee" reference, you'll see I'm talking about the GRAND Cherokee – the only model Jeep currently produces with "Cherokee" in its name. What's so hard to understand about that?
seldomawake… why would I care what they call the liberty in other countries? I thought we were talking about Chrysler and unsold models in AMERICA.
My one big hope for DCX is the fact that they are going to diesel AND hybrid, instead of just hybrid like almost everyone else. The M-B Bluetec is 50-state ready and they even licensed it to Audi the other day. My hope is that rather than simply using diesel to provide better towing/hauling in trucks (with similar mpg to gas), they should also consider smaller V-6 diesels with comparable torque to the gas V-8. At the moment, the upcoming Grand Cherokee diesel only nets a couple mpg better than the gas version, so I really don’t see a big advantage. It’s a step in the right direction, but I figured that a new engine’s debut ought to have a little more value to it.
If midsize trucks can just shoot for that magic number of 30mpg on the highway (full size should be able to see 25mpg), I think the single biggest stigma of large trucks will be eliminated. The technology is ready to go, now they just have to work on the market acceptance. And based on all DCX ads I’ve seen in the past year, I’m a little worried.
From the moment we got a glimpse of the new Sebring, I figured this column was imminent.
Wow. Great piece, Frank. It makes me realize that as bad as things are at GM and Ford, Chrysler is the sickest of the 2.5. For a while, we’ve heard that the new product coming out at Chrysler was going to fix their problems. But even if the Nitro, Caliber and Avenger do well (which is plausible, at least for a year or two), they don’t fix the problems in Chrysler’s bread-and-butter: minivans, pickups and midsize SUVs.
The only solution is to halt the assembly lines until inventory — ALL inventory including the sales bank — is reduced to 50 days of sales. It will result in the mother of all lousy quarters, but there is no other short term solution. Long term, they need to reduce platforms, cut losers (Patriot, Aspen, Commander) and reduce payroll.
Perhaps Chrysler’s challenges are beyond the abilities of American and even German managers. Their only hope may lie with a certain Lebanese/Brazilian/French/Japanese CEO. Which is typical of companies that live on the brink — always looking for the next savior.
they need to make a GOOD small truck. most ppl dont need a monster truck. the rampage concept they shows looks like a step in the right direction. give it a diesel and its a hit
i see dodge surviving, chrysler will die, jeep will become a two model company.
Americans are clamoring for Diesels. So, DCX kills off the CRD Liberty.
A 1/2 ton Diesel pick-up would sell like hotcakes. So, DCX foreits those sales to Toyota who has such a truck in the tube.
DCX teases every male in America with the Jeep Gladiator (http://www.jeepgladiator.org), then decides not to produce it on the existing Wrangler platform.
What is wrong with these people?
Tommy,
I believe the CRD Liberty’s death was emissions-related. I would be shocked if they didn’t bring the 3.2cdi back in it sometime soon, probably at a couple thousand dollar premium to the old one. They’re putting that engine in the GC for next year. I’d love to see it in the 4-door Wrangler, they’d have a near-definite buyer right here. I’d also love to see it in the Town and Country, too–the UK already has a 2.8crd T&C (Grand Voyager over there), which returns 29mpg imperial combined city/hwy.
I hate to sound like the broken record of diesel, but I really feel that we’re in the dark ages here in the States. Several major US industrial powerhouses flirting with bankruptcy, due primarily to the fact that their larger vehicles suck up too much fuel.
What happened to the Caliber hybrid which was promised? Clean diesel is fine for those who want one, but why not offer both? Or even, both together?
Someone related a sales bank issue in 1966, I have to say the one in the late 1970’s was what nearly destroyed Chrysler before it even owned American Motors / Jeep, and Lee Iacocca said “NEVER again” – but obviously, the powers that be in Daimler-Chrysler (never forgetting that it was largely the Germans who have run this company into the ground) did not pay attention to this lesson.
Know what else is really ironic? Every company that Jeeps are built by, fails at the expense of Jeep.
Willys – R.I.P. 1954
Kaiser – R.I.P. 1970
American Motors – R.I.P. 1989
Daimler-Chrysler – R.I.P. 2007?
Anyone out there wanna buy a nice Jeep company?
I wonder if the Germans could simply say “shut ‘er down” and write off the U.S./Canadian/Mexican automotive operations including Jeep, and survive?
Did anyone else notice the automotive news that said that Chery of China was “probably” going to build the “Dodge” Hornet B-class cars, AND that Malcolm Bricklin had dropped his Visionary Vehicle’s relationship with Chery? He is also apparently looking for another car-builder in China.
It would be highly ironic that if in 5 years, there are Visionary Vehicles made by whomever, available all throughout the U.S., and Jeep, Chrysler and Dodge were only a memory (and no Chery cars available in any form in the U.S.)
Frank and RF,
I notice there is no caption under the photo of the guy standing on the ledge. Would you like us to suggest some to you?
Chrysler’s “success” over the last few years has been a fantastic smoke and mirrors act. They let a huge number of people go before Ford and GM did, have had consistently bad scores on J.D. Powers for over a decade, and have had mostly frustration in their bread-and-butter models.
The LX cars (300, Charger, Magnum) were the only cars in the showroom anyone looked at for the last two years. The Neon (non-SRT) was os bad it wasn’t invited to comparos anymore, and even the SRT was too brutal for typical buyers. The Stratus/Sebring? Fleet Queens and almost giveaways.
Even the Ram pickup rarely makes up any ground on the F-eries or C/K series trucks…HEMI or no.
Chrysler was exempt from a lot of printed battering that Ford and GM received until very recently. It’s been like the auto press finally saw the wires in Chrysler’s sad little magic act, and all the dismal sales and equally dismal quality ratings are catching up fast.
I’m not sure that people are clamoring for diesels – honda and toyota doen have any i dont think, yet they are selling as fast as ever.
Also, the Mariner hybrid, a perfectly good trucklet, is sitting on dealer lots unsold. So I’m not sure that its about hybrids either.
I think the probelm might be that american cars are no longer “cool”. Someone said that here once, i shuttered. I hope I’m wrong.
At last, another DW series that should have started a long time ago, (ford should be at the hundred by now) at least its begun….wonder what it will run to.
Its ironic that Chrysler propped up mercedes a few years back. Why the short memory on the Germans part?….
Jeep needs to become more focused and have fewer models so there is less confusing overlap and sales cannibalisation within itself.
Chrylser needs more product like the hornet, something cool, appealing and economical. And the sooner diesels start appearing in the 2.5’s vehicles the better, you yanks have to get over this problem with oil burners.
jerseydevil,
Honda’s passenger car diesel will be out next fall (probably Accord), according to everything I’ve read. I’ve also heard rumors that Toyota will be bringing them to both the Tundra and Tacoma around the same time. It’s gonna be “go time” again for the marketplace next fall, and once again virtually all of the domestics are going to be behind the curve (again), just as they were/are with hybrids.
Why do I keep seeing mention of the “Patriot” needing to go? I even saw it included with the Compass in TWAT nominations.
THE FIRST PATROIT HAS NOT EVEN BEEN PRODUCED YET! They don’t come out until spring. Yes, they are the same platform as the Compass/Caliber but they have a completely different body, and are actually decent looking IMO. At least let it turn a wheel before you determine it’s fate.
Also the new Liberty will be out next fall, and will be the long-awaited (at least by the Jeepers) successor to the XJ Cherokee that the current Liberty couldn’t match.
As for the minivans, isn’t there a true redesign coming soon? The “current” version came out in 1996 for God’s sake. I have no idea if it will be good or not, but I think the new version will probably determine the fate of DCJ.
That said, it still doesn’t look good for DCJ.
Relating to how Chrysler’s US operations helped to save Mercedes’ bacon awhile back, DCX already have given us a clue as to how they’ll operate by the way the management treated Mitsubishi’s request for support some 2 years ago.
Rug yank.
Mitsubishi are no longer part-owned by DCX but now supported by the company’s original parents, Mitsubishi Bank and Mitsubishi Heavy Industries.
Hyundai likewise saw the handwriting on the wall and “asked” DCX to sell back the 10% of Hyundai it’d bought.
Hey, DCX? Give me a hundred million, rights to the AMC name, the factory in Belvedere Illinois, rights to the Caliber design, 1/3 ownership in the four cylinder engine plant in Michigan, and rights to all Chrysler dealers in North America and I’ll take ‘er off your hands. Oh by the way, before I take it, you can write off any and all debts for the operations. And, I’ll take the Plymouth Road engineering and HQ building, too, thanks, and cherry-pick my choice of engineers, designers and executives.
At least “some” jobs would survive.
Then, for mid-sized sedans, I’d hire Mitsubishi to build them on contract for the company in Normal Illinois on a 3 year contract until I could develop my own, and import badged Mitsubishi Grandis minivans with four cylinder engines. It’s a small market, and Mitsubishi’s badge chachet doesn’t warrant any minivan offerings in the US, but through wearing an AMC Rambler badge, it’d work. Too bad Volvo got the “Cross-Country” name once used by AMC.
the 2.5 should throw in the cards. give up. then scrape together anything they can and form one company called “Phoenix” imagine the marketing possibilities
Well, on the surface it seems the problem could be easily resolved. Fire whatever idiots are responsible for the overbuild, then fire anyone within three management levels abive and below them, and have a nice big fire sale on the overstock. Mark ‘em down hard, because with those weird option sets their only hope is to make them REALLY financially attractive to people who never buy new cars to begin with. Or fleet the buggers off, again at huge markdowns. DCX can eat it as a short term loss over a couple quarters or so and get on with life. I can’t see shutting the plants down. They will have to build something that the dealers and new car buyers want, and from the sounds of it the stuff in the orders bank ain’t it.
With the dollar collapsing in value (happening as I write), this will mean imported goods will go up in price. Including those from Canada and Mexico. Companies like Electrolux (Frigidaire) which sent all those jobs away from a profit-making Michigan refrigerator company (and TO Mexico) for example, will see their additional profits and U.S. market share, blow away in the wind.
Likewise the big 2.5 have exported tons of jobs to China, India, Mexico and Canada.
The same situation behind the dollar falling is going to probably give us a huge recession, if not full blown depression. That “situation” is called 3rd world banana-republic levels of national debt for our government and a populace who likewise has learned to spend money beyond what it earns and save nothing (in fact, for the first time ever last year, we Americans have spent more than we earn, on average). Which will mean the end of the big 2.5.
Sorry to be the bearer of bad news folks. But, hang on to your hat, you ain’t seen nothin’ yet. And just as in 1929, our economic collapse will have far-ranging consequences world-wide because of the trade with do with other nations.
Plus multiple other companies have built plants in the U.S. and sell in the U.S., and they build care competently, with exellent quality and durability. Those remaining car buyers won’t want to buy cars from a company ready to fold, will they?
Once the collapse is cleaned up (hopefully it won’t take the 8 years it took from 1929-1937, followed by a 1938 recession) my guess is that there will be a handful of companies left in the United States manufacturing automobiles, in order of size and sales.
Toyota and Subaru (joined).
Honda.
Nissan and Mitsubishi (joined).
Hyundai and Kia.
Those companies (above) which built plants within the U.S. will be the only survivors. Not Mexican plants (I’m speaking to you, Volkswagen, Chrysler, Ford, GM).
Notice too that virtually none of the companies are UAW “dis-organized”.
The best thing going for Chrysler over the last few years has been the remarkable effectiveness of its p.r. operations.
As a case in point, until very recently the CW in the automotive press has been that Ford and GM could save themselves if they offered more highly styled cars like Chrysler’s 300. Yet the 300 and its derivatives never came anywhere close to big-league sales levels . . . and Magnum sales have been decidedly underwhelming even compared to the Dodge it replaced.
Essentially the company has been playing a confidence game. That’s why they ignored their own sad history in reviving the sales bank.
All this might have worked if their latest round of products had any legs. Unfortunately, product planners have been neither frugal nor particularly effective. Chrysler might actually be in better shape right now if Bill Ford had been in charge and the company had sat on its hands, e.g., the Commander, Compass and forthcoming Challenger will likely never pay for themselves.
I remember the last auto show I attended, the Chrysler products where so cheap and crappy looking, I just scratched my head wondering how they’re still in business.
jerseydevil: Yup, people are not clamoring for diesels. I for one am OK with buying cars that don’t have super acceleration, but I worry that a diesel version of my car will be too slow even for me!
The “Chrysler propping up DC” event was an aberration…. Chrysler would have been gone by 2002 if not for the ‘98 ‘merger’ with a strong partner. Sure, Daimler has taken missteps, but truthfully Chrysler brings little to the game.
300 et al. – rotting in the sun
Sebring – stillborn rental queen. Can’t even hold Camry/Accord/Fusion’s gym bag
Caliber – flash in the pan
minivans – a “squared-off” Caravan/T&C with continued substandard materials will fail (ala Uplander/Montana).
Challenger – a limited market grand slam (that should have been here long ago)
PT Cruiser – surprisingly, a pleasant, roomy car at it’s price point
Ram – worthy but thirsty
Dakota – needs to downsize
Pacifica – uh, why?
Grand Cherokee – nice but pricey. Upgrade materials
CJ – classic (even the new one). Reason for Jeep’s existance
Compass – up there with Sebring for fugliest car in recent memory
Patriot – ok, I see a reason for this. Upgrade interior.
Commander – hideous for a number of reasons
If the ineptness of the Detroit executives and greedy unions wasn’t so devastating to HUNDREDS OF THOUSANDS OF FAMILIES, it would be comical.
But it isn’t a recent phenomina, it’s been happening for 30 years – I distinctly remember the appearance of the Honda Accord on our market in 1976, and the impact a reliable, practical, fun to drive, reasonably priced hatchback had on me and my college friends. Why play patsy for Detroit (and I did, buying a new GM and Ford POS before I “converted”)when I can get my money’s worth elsewhere?
And THIRTY YEARS LATER, Detroit has yet to match the Accord.
Strange days indeed.
Rodster,
You’re right. I meant Compass should go, not Patriot.
The initial reviews of the Lancer (still embargoed) sound very positive, so we can posit that the platform itself is decent. Perhaps by taking their time on the Patriot, DCX will bring out a decent product. We’ll see, although if I wanted a small ute with Jeep capabilities, I’d get a CPO Liberty, wouldn’t you?
I agree with you on the minivans — at least Chrysler is still in the game, as opposed to their domestic brethren. But when you have the fifth-best product out there in its last year, you need to limit production to demand, no?
And just as in 1929, our economic collapse will have far-ranging consequences
Glenn A. — slow down … take a deep breath … relax … there’s a reason nice Mr. Doctor prescribed you those pills, and you really shouldn’t forget to take them…
If I were Daimler, I would dump Chrysler like yesterday’s news – while their head is still above the quicksand…
Glenn A: “Third-world levels of national debt?” What world are you living in? As measured by size of the economy, our current deficit is de minimis — despite the eggregious gov’t spending of the past several years. Total debt is still (though arguably) reasonable given the size of our economy. Is the economy on a slippery slope? Possibly. But we aren’t heading back to the future, as you suggest.
HEADLINE NEWS
Dollar falls to 14-year low vs sterling
Reuters Dec 01, 2006
Gold Heads for Second-Straight Weekly Gain on Dollar’s Slump
Bloomberg Dec 01, 2006
When you read this, you must understand that fiat money is “not” Italian rust-buckets, (I know, we’re mostly car-guys around here) but money “not backed by anything but promises” (i.e. not backed by silver, gold, palladium, platinum or diamonds, just for some examples of things with both rarity and intrinsic value). Have a read for yourself – this is only one example of articles floating around.
http://www.goldcentral.com/marketcommentary/6513.html
Yeah, don’t worry, be happy. Nothing to see here, just put your head back in the sand, everyone (except don’t forget to pull out those credit cards and shop ’til you drop).
In my opinion, Chrysler had a pretty decent model lineup before the sellout. True, the Sebring sedans were ugly as dirt and the Neon desperately needed a facial but the Grand Cherokees were handsome and popular as were the 300Ms. The LH platform with the longitudinal engine layout, like Audi, lent itself well to all wheel drive, yet could also be sold in an economical front wheel drive version. One of the reasons for the ongoing success of BMW, Audi, and M-B sedans are the existence models that allow for the use of a wide range of engines. They can thus respond to demand and fuel prices without having to produce completely new designs. One can imagine a bi-turbo 400 HP all wheel drive performance model LH in the same series as a 2.7 L front wheel drive econo-car. Chrysler’s plans back then were to build the first rear wheel drive platform as the Challenger and then, if successful, to use it to replace some of the LH line. The presumed soccer-mom image of the mini-van could have been dispelled with a high performance and highly optioned version – which is exactly what the Pacifica prototype was. Instead of blowing money on a range of goofy new models, it should have been spent, instead, on streamlining production to respond more quickly and easily to changes in consumer demand. Of course there is no excuse for simply building cars far in excess of demand, as they have now evidently done.
From my empirical knowledge, manufacturing is a very serious business. Logistics, planning, resource allocation, just in time all that good stuff is taught at high level in undergrad and grad school.
And they ain’t joking.
Manufacturing goods, whatever they are, require the science of most efficient operations, just in time delivery of raw material, smooth flow of parts, economy of movement and all.
Well, I thought it was serious business. Then I learned a few month back that DCX had been building product without even dealer orders, piling them up, hoping maybe to sell them someday. maybe.
So I realized I had academic visions of how manufacturing is supposed to be. In the real world, leaders are just clowns and make stupid decisions.
Who told you it was a good idea to build more cars that consumers demand? Who told you it was a good idea to build more cars that even your distributors will know will sell? And even build these cars in advance, storing them at the factory?
Idiots.
Time for a GM-ford-DCX Merger with our uncle sugar stepping in to take care of the health care going fwd – then take the whole company private, maybe with a big outside investor(Ghosn, Chinese?) to help?
Either that or America continues to slide twds 2rd world status.
Odd how $9,888 PT Cruisers and $13 or $14K base model V6 Ram’s with painted steel wheels don’t sell at those prices. Just not compelling enough. Just too bland, average, more of the same.
They either need to move into the future, or look into the past for some help/ideas.
How good were car sales in the 1950’s? How and why? What sold well and why? If you were making a best selling vehicle of the 1950’s, would it sell today? How about the 1960’s? I really liked it when the Mustang got restyled/changed up every 2 years from 1964.5 to 1973. Great times. I know lots of people that owned many new Mustangs during that time.
This right here says a lot. Just look at these engine choices, prices, and options:
http://www.remarkablecars.com/main/ford/1965-mustang.html
Great times! Potentially some of the best ever.
How about the future? Maybe the gasoline engine is just dead as far as marketing it goes? They never give us ultra performance with it so I don’t want what they offer. Or if they do, they always want about the amount a house costs for it.
Let’s see here… hybrid, hydrogen, electric… Same cars, different power plants. It’s a tough sell, I agree. Everyone already has a car or multiple cars. And getting a new one is not a cheap proposition.
How about the OEMS giving the dealers the vehicles on consignment? How about the dealers selling the cars off at $100 or $200 a month interest free? You want them to sit on your lot for 6 months or make them go away and get ~$200 a month from everyone of them?
Glenn A: Goldbugs claiming the end is nigh? I’m shocked, shocked. Paging Oliver Stone. But first, back to the sand…
I agree that the inventory problems need to be resolved ASAP and the “sales bank” needs to be eliminated yesterday. No lineup is going to overcome stupid management decisions to overproduce and store excess inventory at tremendous cost.
As much grief as DCX has gotten over the Sebring and Compass, they have quietly put out a string of hits this year:
Caliber – still under 30 days on the lot….HIT
Nitro – DOUBLE HIT. 50K backlog of orders already?
Wrangler – HIT of all hits. 58K backlog of orders
Add to this quiet yet important revisions to struggling models such as Durango (new front end, prep for Hybrid) and Pacifica (6 speed auto and 4.0L V6).
Patriot, Avenger and Sebring Convertible have HIT written all over them.
Minivans will be all new for 2008. Liberty will be all new for 2008. Spyshots of both look very promising.
DCX has a potentially great lineup in 07-08 if they can get their blundering managers out of the way.
Uh, Honda is going into Diesel too…
They have a really, REALLY nice diesel with the 2.2L i-CDTi turbo diesel. Its Tier2 bin 5 already (California 2008 emissions spec), and has been sold in europe for 4 years now.
The engine is reasonably light for a diesel (72 lbs more than the 2.4L gas), gets OK power for a small diesel (132 hp, but 250 ft-lbs at 2500 RPM) great mileage, and VERY low noise/high convenience.
(EG, it uses an electric heater, so you can have the heater work right away. Little touches like that.)
Toyota also has diesels in europe/canada (eg, there is a Yaris 1.4L diesel!), but they don’t meet us emissions specs.
Glenn A: Goldbugs claiming the end is nigh? I’m shocked, shocked. Paging Oliver Stone. But first, back to the sand…
Don’t scoff albnyc, I’ve got all my economics education from the marketing newsletters of glorified pawn shops. They’re sure good at separating certain types of people from their money.
BTW, Chryslers sales were up 2.9% in November, the general figure just came out. Up 3% despite the production cuts, that is a good sign. Looking forward to the full numbers later today, as well as the inventory figure
HawaiiJim:
December 1st, 2006 at 1:11 pm
jerseydevil: Yup, people are not clamoring for diesels. I for one am OK with buying cars that don’t have super acceleration, but I worry that a diesel version of my car will be too slow even for me!
Good god, are you living in 1981? since when can you call a modern turbo diesel car slow? I’m not saying that most of them are going to win any races (oh…wait), but slow is something I’d much more equate with cars that put up torque numbers equal to that of the collective IQ of managment in Auburn Hills.
the new hot hatches in europe are diesels, just think speed and economy, ooooohhhh aaaahhhhhh gasped the crowd. welcome to the future america. soon you’ll be not using your cheque books, like europe hasnt for years……..
Glenn A:
The dollar is not going to crash. Given how many SIGNIFICANT foreign entities have SIGNIFICANT investments in the US dollar, they will not let it crash. Other countries have too much to lose. The dollar will be fine.