Well, the fat lady done sung. Only it was a thin president who ended TTAC’s Chrysler Suicide Watch. Lucky for us (if no one else), the Prez also promised to keep the dead automaker alive, through a fresh injection of federal funds. Obama didn’t specify the price tag for this zombification, but the bidding starts with the familiar “b” word, and octo-mom would recognize the number. As you know, Obama justified his ongoing intervention in Chrysler’s journey to liquidation by pimping the un-dead (now dead) American automaker to Italy’s own automotive English patient. So it’s time to get on with the business of tearing the Fiat “merger” idea to shreds. In this unenviable (but gainful) task, I’m aided by Jennifer Clark of the Dow Jones News Service. Jenny’s Chrysler-on-the-block piece arrives under the odd title “Chrysler Chapter 11 Filing May Aid Fiat Turnaround.” Go figure.
Miss Clark’s analysis begins with some Detroit News-like cheerleading from a hand-picked optimist. “A Chrysler bankruptcy filing could be a wonderful opportunity for Fiat,” said Jerry Reisman, a bankruptcy lawyer at Reisman, Peirez & Reisman, who predicts a speedy procedure. “All of Chrysler’s debt will be dealt with in court, so Fiat will know exactly what it’s buying. It will be a new Chrysler.”
It’s a shame Reisman wasn’t my divorce lawyer. Or, conversely, it’s a blessing. The Chrysler C11 case will involve hundreds of Chrysler creditors. Thousands of Chrysler dealers. Dozens of Chrysler debt holders. And they’ll all be represented by Reisman’s colleagues AND hamstrung by a building full of megalomaniacal bureaucrats. Reisman’s faith that a bankruptcy judge will sort this Fiat-finagled farrago in short order is almost as delusional as Chrysler’s initial hopes for the Sebring.
And the clock is ticking. “How will the company keep going for 18 or 24 months until the new product is brought to market?” asked Mark Fulthorpe, director of European vehicle forecast at CSM Worldwide. “They can’t rely on the U.S. government.” Silly me; I thought that was the whole point. But point taken. Even if Chrysler’s new boss opts for a short-term “solution” to the automaker’s glaring lack of commercially appealing products—say, by slapping a Chrysler badge on an imported Fiat—the federalization process required is neither cheap nor fast.
If, heaven forfend, the Presidential Task on Automobiles (PTFOA) bullies the National Highway Traffic Safety Administration (NHTSA) to relax its rules on product safety, Chrysler would still be SOL (shit out of luck). The move would open the way for Ford to bring over its Euro-models, which would slaughter Fiat’s models in the market.
Or not. There is no proof that anyone’s European models would do well in the US and plenty of indication that the exact opposite is true (Merkur much?) Otherwise, plan B (or plan A as it’s called) calls for retooling American factories to build Fiats. Huh? Why not just improve current Chrysler models? If American automakers should have learned one thing from this debacle, it’s that the constant pursuit of the next big thing puts an automaker on a hiding to nowhere.
And then there are the cultural problems. Let’s assume that the PTFOA is calling the shots at post-C11 Chrysler (only because it is). So now they have to ming with Fiat. And Chrysler’s new CEO (to be named later). And the United Auto Workers. Let’s also assume they can all work together in perfect harmony. Quickly, efficiently and, above all, profitably. And while we’re at it, let’s assume that someone makes a non-fat, low-calorie ice cream that tastes better than Häagen-Dazs ice cream for, I dunno, half the price. Yum.
Funny thing about Häagen-Dazs: it’s a made-up name created by two Polish immigrants in the Bronx. But the branding is killer. As is Chrysler’s, only in the literal sense of the word. Even with Barack Obama personally guaranteeing Chrysler’s warranties, the automaker’s Chapter 11 is the kiss of death. On a corpse, if we’re going down the icky route.
I know: I recommended a ChryCo C11 at the start of the old series. Well, as any S.E. Hinton fan will tell you, that was then, this is now. Now that Detroit has used up all its goodwill by sucking up seemingly endless (’cause they are) subsidies, the stench of bankruptcy is overpowering. If buyers avoided Chrysler like the plague before, they will now avoid the Auburn Hills zombie like Ebola. Which, coincidentally, ends with a vowel, Italian style.
Counterpoint! ”Carlos Ghosn proves it can be done: Ghosn is chief executive of France’s Renault SA and alliance partner Nissan Motor Co. of Japan.” Yes and no. Ghosn brought Nissan back to life, but he didn’t do it by selling rebadged (or retooled) Renaults in the US market. He did it the hard way, through evolution, over time. And Nissan still got slammed by the economic meltdown.
Nope. Chrysler is an evolutionary dead end, a walking zombie waiting for the marketplace to blow its head off. And TTAC will be there.
68 Comments on “Chrysler Zombie Watch 1: Fiatsco!...”
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I do love a happy ending.
“happy ending”, huh?
You DO realize…9 months from now, you will be the PROUD parent of a baby which will never stop screaming, shitting, puking….
Oh the JOY of parenthood!!! Congratulations!!!!
The move would open the way for Ford to bring over its Euro-models, which would slaughter Fiat’s models in the market.
I’d take a badge-engineered Alfa Brera known as a “Dodge Rampage” over the Euro Focus. Or anything Ford Europe makes.
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If we’re going to be paying for the “New Chrysler” no matter what, I would rather see it work out than fail.
Mmmm…. Zombie Challengers at $18K fully loaded. I’ll even be able to afford two (one fer drivin’ and one fer fixin’).
Chrysler won’t be kept alive by Fiat; Chrysler will be kept alive by fiat.
I’ve always thought that Carlos was overrated. Carlos did some necessary cutting, but Nissan had some pretty good products in the pipeline (2002 Nissan Altima) and had a fairly flexible manufacturing base. If anything, Carlos benefitted more so from his predecessor’s product decisions, than his budget cutting.
Chrysler is much different fron Nissan. Chrysler has no compelling products in the pipeline (well, none that are realistic i.e. ENVI), a bloated dealer network, poor quality public perception, and damaged brands. Further, bringing Fiats over to the US will take some time, something which neither Chrysler or Fiat have the luxury of.
Which begs the question: when will you begin the Fiat Death Watch?
Robert lays it down so it stays down. Hard to get around the big rock candy logic mountain he piles up here. Still, sentimentalists amongst us can’t help be sad when we recall the greatness that was Chrysler.
http://www.examiner.com/x-6882-LA-Classic-Cars-Examiner~y2009m4d30-Chrylser-files-Chapter-11-Bankruptcya-chance-for-survival-with-Fiat
OH JOY! Fi-sler Birth Watch 1 is born!
Oh well, at least the lawyers will be happy.
Well, I guess the anti-Deathwatch fans have something to celebrate, though a bunch of them are eating crow about now.
The only way for Chrysler to ever grow again is for it to first “rightsize”. That means they need to be about what, a third the size they are now? How does the UAW do that? I suppose they are the only ones who could. Nixon to China so to speak.
Fiatsco! I continue to love TTAC writing.
John
Robert Farago said “Or not. There is no proof that anyone’s European models would do well in the U.S., and plenty of indication that the exact opposite is true (Merkur much?)”
What? BMW (plus Mini), Merc, Audi, VW… these don’t do well in the U.S.? Europeans seem to be able to make cars Americans like. It is only when the American automakers try to adapt the European models (Merkur, Catera, Saturn L and Astra) to what they think Americans like do they fail. Of course they have a poor record of making their own cars the way people like so why should the do any better with captive imports?
The current Fiat lineup seems to be head and shoulders above Chrysler’s in terms of styling and materials used (not a large feat), not to mention they are funky. Time will tell but if the Bravo were to replace the Avenger, would that be a bad thing?
That’s a great photo, evokes hideously bad horrible small rusty s**tbox crap product.
Thing is, I would buy a new one if they were available. I would expect 2009 era electronics, galvanizing, gasketing, and so on, but a modern X1-9 would be huge fun.
What’s the shortest amount of time to adapt a novel vehicle to the US market? I read that the Scion tC was derived from the Toyota Avensis in just over 13 months, although there were some problems such as the shattering sunroof. Needless to say, Chrysler could have used some competitive small-car product years ago.
Does anybody seriously believe that Fiat has the expertise to fix Chrysler? I wonder if their end-game is to get Chrysler (sorry, the US taxpayer) to ante up another $2 Bil or so for them to go away…. anyone remember the GM deal a few years ago?
Just saw your Pres on the news. I think his words were “Fiat has cutting edge technology”… Fiat! Cutting edge? You can’t be serious! The subtext I heard was that this (once) great company (and by extension, other US companies), no longer has the talent and drive to be able to compete with the best in the world. Is this what the B&B also believe? Sad times……
What are you complaining about? More Chrysler ads to keep TTAC on life support. See, this is a good thing. This is Reagonomics, you know, trickle down.
And so, the great experiment begins. Those who believed a Chapter 11 filing to be the great panacea should take note, and when the dust settles, you tell me if this is the way to save a car company.
Richard Chen:
The Challenger was done in about 20 months.
I think the PT Cruiser was also done in a similar amount of time.
Another problem with the Merkur was that it was an overpriced rebranding of the already available Tempo. I think we may have gotten over the notion that the desirability of any given vehicle is directly proportional to it’s curb weight.
There are a few nuggets (specks) of gold in the slag-heap that is the Chrysler portfolio. It seems like c11 allows them to dispose of the rubbish and keep anything worth saving. Or maybe we should take the nihilist approach and just put a few Pentastars on pikes throughout Detroit as a LESSON TO OTHERS. (maybe hand a few teabags from them as well so that they’ll know we’re serious.)
Seems like there ought to be a middle ground somewhere
Feces-iat is going to fall flat on its face.
So long Chrysler, it was fun while it lasted.
I’m sure most of the TTAC readers will be celebrating this historic event!
Sad,really Sad!
A once proud and(the most)innovative American automaker,that was destroyed by Mercedes,bites the dust!
When all your wishes become reality….watch out!
I’m sure most of the TTAC readers will be celebrating this historic event!
I don’t usually feed the trolls, but no, “celebrating” is the wrong word. I bemoan the loss of Chrysler, but it was lost long ago. Ch. 11 isn’t necessarily bad; if it’s done prudently which isn’t happening in this case.
Here’s some of the reasons why I know this won’t work, without another pile of billions poured in by Uncle Sam, and then forgiven.
According to what the President said, Fiat doesn’t get to “own” Chrysler until the taxpayers are paid back. That’s $12 billion today. In Chrysler’s last good year, they made 1.8 million vehicles including SUVs and pickup trucks, minivans and money-losing cars. So we know how the President feels about gashogs. He hates them so much he traded his in before he ran for office.
Oh, anyway. Why this won’t fly:
1. Dodge Omni/Plymouth Horizon. Designed originally by Simca, modified for US market. Sales winner? No.
2. Ford Escort #1 “The World Car.” Designed by Ford of Europe, modified for US market. Another loser.
3. AMC/Renault Alliance and Encore. Designed by Renault in Europe, modified for US market. Failed.
4. VW Rabbit. The original version was fun to drive. My roommate had one, and when the drinking got tough, I drove. We had a friend with a Pennsylvania built Rabbit. When the drinking got tough, I drove that too. Same name, Same basic shape, not the same car. The PA-built Rabbit had been modified to sell in large numbers. It was garbage.
5. What do you think is going to happen to the largest car in the Fiat fleet? It will be modified to appeal to US buyers. US buyers are a lot larger (we’re a nation of fatties) and that will have to be accounted for. This car doesn’t have a chance.
6. Remember when Chrysler dealers sold Alfa-Romeos? I do. We know how that worked.
7. Remember when ANY domestic dealers sold “captive” imports. Well, the answer is “How many days inventory does GM have of the G3 and Aveo?”
@Rosso: Merkur XR4Ti was a rebranded RWD EU Ford Sierra, a completely different car vs. the US Tempo. But it was sent over by Bob Lutz…
Fiat doesn’t get to “own” Chrysler until the taxpayers are paid back. That’s $12 billion today.
The deal is structured in order to motivate Fiat to make the company more valuable If Fiat hit benchmarks and creates value for the business, it should be able to have some sort of IPO and turn the stock into cash, at which point it can repay the loans and fatten its coffers with the proceeds raised from the stock sale.
That’s not a bad theory. The one downside here is that it appears to be all carrot and no stick. If Fiat wins, it does well and we’re repaid, which is fine. But without other commitments, if it loses, it doesn’t lose much, which isn’t so fine. They should be both hungry to succeed and frightened to lose, and I’m not seeing the fear factor here.
Dave, “cutting edge technology” to our politicians here means “gets more than 30mpg.”
Cheers,
Jeremy
The Dodge/Plymouth Omni and Ford Escort where both very successful in their day.
@ Jimal :
The Euro luxury brand cars succeed and the standard brand models typically fail because the market demands are different in the US vs. Europe. The cost structure usually makes low to mid priced imports from Europe unprofitable here. Fiats will also be unprofitable if they are built in Italy.
@ Rosso:
The Tempo and Merkurs (either XR4Ti or Scorpio) had no relationship to Tempo. The Tempo was FWD while both Merkurs were RWD.
Those who think the Fiat products are a silver bullet have not looked at them closely. There is a market for them, but at the right price (probably similar to Japanese branded cars of the same class). And that market is much smaller in volume than most domestic product lines have been. Can Chrysler make money selling 40-50,000 of a product line instead of 150,000? I guess we’ll see, but their factories are not flexible enough to produce small volumes of many different products simultaneously. This is something the Japanese brands excel at.
Also interesting, nobody’s saying much about Jeep. This is really Chrysler’s crown jewel. This can be the cornerstone the company is built around. I guess SUVs are still so politically incorrect that it’s taboo.
At the risk of often being wrong in forecasting, I will try again:
Fiat will be as successful selling Fiats in North America as Dodge Ram Pickups will be successfully marketed in Italy.
All this talk of future iron is years away given the need to homologate to US standards.
In the meantime, as Bill Griffeth said on CNBC, it’s gonna take the “mother of all incentives” to move Chryslers.
Pch101, FIAT is doing the deal precisely because they have very little to lose in doing so. Chrysler needs FIAT much more than the other way around.
Cheers,
Jeremy
The Tempo and Merkurs (either XR4Ti or Scorpio) had no relationship to Tempo.
If I’m not mistaken, the 2.3 liter turbo used in the XR4Ti was a US market drivetrain not used in Europe. But you’re right about it not being a rebodied Tempo.
Chrysler needs FIAT much more than the other way around.
Actually, Fiat really does need Chrysler, because otherwise, it has little chance of getting the market share or global footprint that it needs to be competitive.
Fiat may just be playing better poker here. Or a better theory may be that the federal government doesn’t really care, just so long as whatever failure that occurs is delayed. If Fiat fails with this venture, the administration can remain blameless, because it will have been Fiat’s fault for the death. That factor alone may be good enough.
It seems to me that Chrysler needs competitive small and midsize sedans to fill out what is now potentially a decent showroom. Chrysler’s minivans still sell in volume an hold their own in the market with Honda and Toyota. The 300C sold well and with continued development is a flagship fullsize. The Ram pickup is brand new and trucks are acknowledged to be one of Chrysler’s competencies. Add a few Jeeps (Wrangler & Unlimited, Grand Cherokee, Patriot, & J8 pickup for a small pickup in the line). Kill just about everything else (after selling Viper – the car has enough of a following to possibly be profitable in limited production).
I wonder how much GM wants for the Pontiac brand. Likewise with Viper. Hell, I don’t know what their financials are but it might be worth it for Mattel or Maisto to buy the Viper brand just for the licensing rights.
It will be interesting to see who bids for the Viper brand, tooling and associated intellectual property in bankruptcy court.
I still don’t see how Fiat can take over Chrysler and put up no cash. That’s bullshit. Put up some cash Fiat, or shut up. Oh, excuse me, Fiat has no cash. They have the taxpayers for that. And if President Obama thinks Fiat has all this great technology and product, he really needs his head examined.(And I like the guy) Why did he shitcan his Chrysler 300 for a hybrid Ford Escape? He should buy a Fiat/Chrysler. If GM goes down, his Cadillac Escalade limousine may end being replaced by a Fiat Punto limousine complete with a genuine Italian pizza recipe from Sergio Marchionne.
Of the elites for the elites and by the elites to ensure the elites remain wealthy and to reward cronies, minions and lackeys.
“When will they ever learn… when will they ever learn…” that the USA is undergoing class warfare.
The Tempo and Merkurs (either XR4Ti or Scorpio) had no relationship to Tempo.
If I’m not mistaken, the 2.3 liter turbo used in the XR4Ti was a US market drivetrain not used in Europe. But you’re right about it not being a rebodied Tempo.
The XR4Ti shared the engine and a highly advanced 3 speed automatic with the Ford Thunderbird of same vintage. I referred to mine as the ‘exploding Merkur’. It refused to hold coolant in the radiator in summertime Phoenix and within a few months totally fragged the transmission. Other than that it was a comfortable well balanced touring car. My 4 year old son liked to call it the ‘car with wings’.
@ amadorgmowner:
My opinion is that Obama sold his 300 and replaced it with a hybrid as a highly visible signal to voters primarily concerned with “green” issues.
@ Ronnie Schreiber:
Strongly agree with your take on Chrysler. It seems like they’d be farther ahead to kill off some of their more undesirable cars, resurrect a Neon successor in sedan and hatchback form, and focus on the few cars they do well right now. Personally, I just don’t see how this Fiat mess works out in the end.
oldyak :
I’m sure most of the TTAC readers will be celebrating this historic event!
Sad,really Sad!
A once proud and(the most)innovative American automaker,that was destroyed by Mercedes,bites the dust!
Actually, Chrysler merged with Daimler because it was in dire financial straits. Chrysler frequently seems to hit a brick wall. In the 80’s, Uncle Sam came to the rescue. In the 90’s, it was Daimler. Now it’s Uncle Sam AND Fiat. I’m starting to see a trend here.
BRAINS!!!!
Pch101:
Actually, Fiat really does need Chrysler, because otherwise, it has little chance of getting the market share or global footprint that it needs to be competitive.
That sounds a lot like the “stick” you think they need. If they can’t make the deal work, seems that they lose quite a bit, after all.
Cheers,
Jeremy
Ghosn brought Nissan back to life, but he didn’t do it by selling rebadged (or retooled) Renaults in the US market.
The Nissan Versa is a rebadged Renault Clio.
If they can’t make the deal work, seems that they lose quite a bit, after all.
That isn’t quite enough. Current cash at risk is more of a motivator than is lost future opportunity.
In any case, Chrysler is going to need working capital immediately. I do hope that 100% of that cash isn’t coming from us.
Actually, Chrysler merged with Daimler because it was in dire financial straits. Chrysler frequently seems to hit a brick wall. In the 80’s, Uncle Sam came to the rescue. In the 90’s, it was Daimler. Now it’s Uncle Sam AND Fiat. I’m starting to see a trend here.
Chrysler was not in dire straights in when they merged with Daimler-Benz in 1998. At the time of the merger, their stock was $53 a share and they were the world’s most profitable car company. They were banking on the success of their minivans and Ram pickup and were enjoying the popularity of the newly introduced Neon and cab-forward designed LH vehicles.
i want an abarth, or at least a 500.
now.
Pch101:
That isn’t quite enough. Current cash at risk is more of a motivator than is lost future opportunity.
But if this is true:
Fiat really does need Chrysler, because otherwise, it has little chance of getting the market share or global footprint that it needs to be competitive.
then it sounds like there’s a lot more than “lost future opportunity” at stake for FIAT. Sounds more like survival to me–an economic downturn such as the one we’re in can turn an uncompetitive automaker into the next Chrysler in pretty short order.
Cheers,
Jeremy
Sounds more like survival to me–an economic downturn such as the one we’re in can turn an uncompetitive automaker into the next Chrysler in pretty short order.
Immediate risk is more compelling than medium- to long-term risk. Look at the recent banking crisis for an obvious example. The opportunity for short-term profits were more compelling for most than the possibility of future losses.
It is not wise for the government to give Fiat the opportunity to fail without getting clubbed in the head for it. I’m hoping that’s now how it turns out.
Fiat can’t compete against Toyota, Honda, and Mazda NOW. Sure, they may improve with the ‘backing’ of Chrysler stores and the US Government.
But it’s not like the competition is going to stand still. This zombie will be bleeding taxpayers 2 years from now.
Consumer Reports made a list of recommended cars by maker, there was not even one on the Chrysler list, zero percent!
General Motors 17%
Ford 70%
Chrysler 0%
Out of all vehicles tested by the same maker.
How do you recover from something like that?
dror
The same way Ford has been recovering from their lost decade. Hard work, a coherent business plan, and a desirable vehicle lineup.