They kept him housed and fed for a year, but when the year had passed, he was stoned to death or cast from a cliff taking (it was hoped) all the evil and misfortune with him.

Scapegoat Chrysler. It’s worth a try.

“Seriously, no rational human being can possibly think that Chrysler has any kind of long term future at this point.”

You may be right, but what I don’t understand is, why do you think Chrysler is DOA but not GM? GM’s last “golden age” if you believe the B&B here was 50-40 years ago, not 15-10 years ago like Chrysler. Even with the new as-we-know-it GM going forward without Pontiac and 1200 or so less dealers (and that’s if they can pull it off), they will still have too many brands and too many dealers. They are still run by beancounters, they still have not gotten out of the denial stage that everyone here talks about. I said along time ago that GM is not viable, no matter what happens to Chrysler or Ford. And Ford is getting closer to that state with every passing month. Now I wonder who is in denial.

You know I’m beginning to think that Chrysler is like the Portrait of Dorian Grey. All the mistakes, miscues, bad designs, bad business decisions, office politics, faulty engineering, and underestimation of foreign competition by Ford and GM are added to the same by Chrysler and then it’s all dumped into that company so that like the portrait it becomes ugly and detestable
so that Ford and GM can look good in our eyes. Then if we could just get rid of Chrysler once and for all it will be sunshine and roses for the remaining two. I know there is a psychological term for this somewhere…

There doesn’t seem to be a plan in all this. There ARE good domestic dealers out in low density areas – but I doubt there’s much of a plan to identify & keep them going.

If they’re going to hose dealers left and right, GM might as well use C-11 to completely tear up the current dealer business model (and b**chslap the states’ Car Franchise Law Protection Racket in the process). Separate the sales and service missions to start with – that’s where I’d start.

threeer:
I guess looking at buying that used Jeep Wrangler is now perhaps not such a good idea…

Everything moves at a certain price.

A well capitalized investor group could start WranglersAndRams dot com, and buy, in 1000 vehicle lots, distressed inventory at $8K (or $5K? or $3K !?!) per NEW vehicle. With 50 percent markup, sales via net only, and a respected 3rd party warranty provider, you’d have a solid business.

P.S. Great editorial RF! Your best yet.

Honestly it would be cheaper to let the government take over all the pension obligations of the two current companies tell any worker under a set age to “suck it” and negotiate with the new owners. It can’t be any worse for the economy than things are right now.

Robert, correct me if I’m wrong, but didn’t you recommend C11 for GM and C7 for Chrysler? I don’t have time to go back and re-read all the various editorials and postings, but you or someone(s) who writes for you said Chrysler should liquidate. I just don’t remember any talk of C11.

The problem is (or was) that sales (and also supply) will suffer enough under bankruptcy that running out of cash and options would have been the result no matter if it had been tried a year or two ago. There are a number of reasons why that’s so, but it really doesn’t matter now.

The ideal solution would have been to merge the companies several years ago. If we had a real industrial policy in this country, those running that policy would have gently suggested to the leadership at the Detroit companies that it was time to consider such a move. If they would have been unreceptive to it, a more forceful suggestion would have been made. The amount of arm-twisting would have increased until the desired result occurred. This “imposition” of a solution might have been construed by business and the public to be government meddling into private industry affairs, but avoiding that then hasn’t prevented it from happening now, has it?. Only now, in the actual turmoil of bankruptcy, and with the speed that is required to get things done in a public arena tied to the speed with which you can realistically get things done through bankruptcy, I believe we are well and truely f%#ked.

This kind of application of industrial policy is something that happens in Japan. It’s something I’m familiar with after having spent many years working with the Japanese, and having gone through one of these events with them.

The difference is, doing it this way, you can keep control of product development, marketing, manufacturing, distribution and sales while the downsizing/merging goes through. You can “manage” public expectations and mitigate against panic. All the stakeholders manage their interests behind the veil of the negotiations that happen pursuant to the creation of the documents governing the merger.

Think of how seemlessly the Daimler/Chrysler merger happened with respect to the customers and suppliers (relative to how things are going with BK now).

Of course the DCX merger didn’t have the folks managing industrial policy (tongue-in-cheek) watching over it with our long-term interests in mind, so that merger was cocked in a hat before it even started. But that wasn’t the fault of the process.

The point is, what could have been an orderly sizing-down, with a resulting stronger domestic-based industry ready to face 21st century competition, will now turn out to be a meltdown, destroying marketshare, the domestic supply base and the careers of many thousands of talented people.

It’s the difference between nurturing an industry that we want to be successful going into the future, and just not giving a damn until things blow up in our face.

But then, we couldn’t have an industrial policy in this country, could we? Nah, not here in the land of the free.

I never thought automakers sales wouldn’t suffer under CH11. However, it still seemed the better option than running out of cash and options. No question, CH11 is going to be really ugly now for both GM and Chrysler. Maybe a few years ago they could have survived it.

As for Ford, I agree completely. Ford is heading down the same path. They haven’t got enough cash to weather the upcoming supplier implosion or the GM and Chrysler fire sales.

I didn’t look too hard on this, but I don’t think they’re paying at all. All I’ve seen on this is contributing X billions imaginary money’s worth of “R&D”.

My take: GM really should have done it after 2003, when it was clear big trucks were becoming increasingly vulnerable. Ditto Ford. And Chrysler, well, they were doing really will till ze Germans bought ‘em (with a deal that at the time was universally haled as genius.) After that, difficult to say.

Non-TARP Saviors of The Universe (TM)…

LOL! Where do I send my licensing fee so that I can use that in future posts?

Many people used the analogy with airline bankruptcies to support the claim that bankruptcy for the car-makers was the best path. These folks were insistant that the auto-maker’s sales would not suffer too much in backruptcy. In disagreeing with this claim, those of us who knew better were cast as shills for Detroit.

Things are going to get a lot worse. And here’s the next big new issue nobody is talking about yet: How is Ford, at this point the only privately held and independent major producer of vehicles left in the US, going to be able stand under their debt?

All it needs is a petition, which nobody would oppose, stating that they want to do it, and the judge would sign instantly.

Everyone knows that stories like that destroy what little brand equity remains, and that such a petition would prevent it.

That such a petition never happened, and still hasn’t happened, shows just how incompetent Chrysler mis-management really is.

Sure – Just buy an 8 yr old one and buy the dealer’s warranty.

Seriously, the interesting question is this. Bankruptcy makes a big distinction between pre-petition claims and post-petition claims. Clearly, if you drove into your dealer on April 15 with a warranty issue, it is a pre-petition claim, and you have to wait in line with the rest of the unsecured creditors.

But What if you drive in today? The car was manufactured pre-petition, the warranty was issued to the original purchaser pre-petition, but the warranty claim is post-petition. A post petition expense is a current expense that must be paid on a current basis (at least as I remember my bankruptcy law).

I would suspect (but would love to hear from toxicroach on this) that any warranty repair made after bankruptcy filing would be a post-petiton claim which would have to be paid as a current expense. The opposing argument would be that the warranty obligation was pre-petition, and any claim arising therefrom would be a pre-petition debt. If this argument rules the day, I see no reason to buy any Chrysler car presently in existence, as you will essentially have no warranty until the government gets around to reimbursing you.

I agree, which is why I expect that the new company will pay these claims once the plan is approved.

The president was in a tough position. If he hadn’t made the promise, the companies would have really tanked. But now that he did, he can’t keep it timely, at least not for everyone.

None of the options were satisfactory. I certainly don’t blame the buyers of the cars if they are angry. I do hope that the new company pays for them, even if that really means that I’m the one paying for it.

But to be fair, a lot of people argued before the fact that bankruptcy wouldn’t or shouldn’t impact sales or service. As it turns out, it did, and it did.

Of course Chrysler cannot make payments under their warranties because of bankruptcy law.

However, the President got on TV and encouraged Mr. & Mrs. America to buy cars from GM and Chrysler and assured them that the warranties would be backed by the US Government.

What he did NOT do was tell Mr. & Mrs. America to buy cars from GM and Chrysler and, once their warranty claims are declined in bankruptcy court because they are unsecured creditors who will not be paid because there will be no money left to pay them, submit a form in triplicate to the Treasury department, and you should have your car fixed or your money back in about 5 years.

Personally, I don’t think he should have made the committment. But he did. And personally, I would not have bought a GM or Chrysler car at this stage for this very reason. But I suspect that there are a lot of people who did so based on what our President said to them. I also suspect that they are not feeling very well taken care of right now.

New Chrysler has no business taking on warranty claims from Old Chrysler. But in this politicized bankruptcy, I suppose that the government would rather “suggest” that they do so in order to avoid the government having to set up a claims process for direct reimbursment. That is, after congress passes a bill giving the government the authority to do so.

Because once BK is filed, it’s going to become a bit of a mess, at least temporarily. If the bondholders put up a fight, it will create delays that could impact you, because money gets tied up until these things are resolved.

Let’s jump ahead 3 months when it’s all settled. Why is anybody going to want a Chrysler product other than as a gift? But even then where would warranty work be done even if it’s paid for by tax money? It would be interesting to know what Marchionne really thinks he’s going to end up with. I suppose he thinks the worst case will be access to the US market for his small stuff. He’ll be competing with Honda, Toyota and whatever Ford has; known quantities with top ranking small cars in fuel economy and reliability.

I don’t see many rational people wanting to take a fling on Fiat. But losing his entire investment won’t hurt much.

The question is: is this going to be any better than it would have had the government not stepped in with billions of taxpayer dollars? Things look very bad for the car companies formerly known as two of the Big3.