Jeep and Dodge trucks still have a loyal following, even if many of those customers have been scared off by fuel prices and then the overall economy. Their minivans sell if only because they’re cheaper than Honda and Toyota. The 300 and Challenger also have a fan base, regardless of how much the Challenger is derided on TTAC as being portly versus the Mustang. Chrysler’s biggest problem is that the rest of their line-up is composed of also-rans, and a hole where a compact car should be.

As Matt51 just reminded us, Chrysler may be the underdog in this fight, but that wouldn’t have been the case if Bush hadn’t thrown bailout money at them. By GM’s own admission, they wouldn’t have made it to 2009 without the bailout. Chrysler would have made it through another quarter or so.

On that note, I’ll turn the premise of this editorial around just to be the devil’s advocate: We can agree that all of the D3 need to shed unused manufacturing capacity as part of their restructuring efforts. Chrysler is already a smaller company, so marketshare gained from the death of GM should help Chrysler “right-size” more than the death of Chrysler would help GM. Historically, they’ve also shown a good track record for “doing more with less”, unlike GM with their chronic ADD. While Chrysler has some second-rate vehicles, GM is saddled with entire brands that need to be euthanized. If GMNA was liquidated and Chrysler allowed to survive, I think they could be returned to profitability with less government funding than if Chrysler died and GM was propped-up.

yes, well put. Maybe more accurate to list Nardelli, Wagoner and Mulally as the three stooges. All three companies appear doomed at this point without massive govt subsidy. So lets speculate on not just killing Chrysler, but killing GM and or Found on Road Dead. GM would have died first, if the govt had not intervened. My least favorite products come from Fix or Repair Daily. Killing GM spreads the most sugar among the then surviving two. Killing Ford kills the most boring car lineup in America (the Mustang excepted). So there are advantages to letting those two go under. Or all three. I would hate to be an employee of one of those companies with a Stooge as CEO.

Interesting point, but incorrect. Total market sales have fallen but GM and Ford have maintained their relative market share positions of late. Hence, they are no longer losing sales to imports.

Assuming this trend continues, then the only way to add to the Detroit 2 production would be for Chrysler to go away. While some Mopar buyers would defect to imports, the pick up truck business would remain mostly with Detroit as would a good chunk of the commercial and rental fleet business as well.

Frankly, the mass public doesn’t give really care about Chrysler, they mostly left its brands years ago. At least 40% or more of Chrysler’s products today are sold to fleet buyers, not retail. So if Chrysler can live through 2009, only 600,000 or fewer vehicles will be sold at retail, or roughly 200 units per Chrysler dealer for the year! Do the math, it doesn’t make sense for Chrysler to soldier on. Better to help GM and Ford survive with less government money rather than handing out our tax dollars to keep all three on life support.

However, I think a large part of the public sees the current situation as a common plight of the Big-3, despite Ford’s attempts to distance itself from the negative press by not taking bailout money (yet). If Mulally or Wagoner voiced the opinion that Chrysler must die, public opinion may turn on them. Also, as Conslaw said, some die-hard Mopar fans will boycott the other domestics altogether if they’re both behind this plan.

As it has been said, when you and your friends are running from a bear, you don’t have to outrun the bear, just your friends. What happens if you trip one of your friends so he falls down and everyone in the village sees it?

I was thinking the same thing. When the first bailout happened, the government seemed blinded to the real problem, just going “OMG! We have to save the jobs!” They didn’t realize that GM ran itself into the ground, and that Chrysler was just smoke and mirrors put up by Cerberus. I am afraid that for round two, they will just do the same thing, going “WE HAVE TO SAVE JOBS! TAKE THE CHECK!”, instead of realizing that Chrysler is dead, and has to die for GM and Ford to survive. I always thought that a Darwinism approach had to happen here, and it looks like I was right, it HAS to happen if we want ANY of the big three to survive.

Good analogy, but it only works if all Stooges are infected with a spore-like disease that sprouts when the host body dies. The spores then infect and sicken other Stooges.

So, assume Larry (GM) and Moe (Ford) want Curly (Chrysler) for dinner. They have to weigh the short term pain and possible death from spore disease (clearance Ram’s & 300’s) against the long term benefit from eating Curly (more market share).

Also, when the spring thaw (economic recovery) finally arrives, Larry and Moe have to battle ninja warriors (Toyota and Honda).

OTOH, since I’m looking for a new Ram 4×4 for around $8K, I guess I’m a spore in this picture.

The 1970s Ford Pinto and the ‘78 Dodge Omni/Plymouth Horizon were the first cars I remember working on that needed metric wrenches.

Everything I’ve worked on that’s ’80s or newer has had metric fasteners.

I haven’t done much on a car with my SAE wrenches in a long time.

Firstly, not everyone drives on the right. (Here in South Africa, left-hand-drive vehicles may not be imported, even vintage ones.)

Secondly, we are also worried about spares and maintenance. If spares are likely to dry up, and we don’t have trained mechanics with the correct tools and diagnostic machinery, even cheap cars may not be a good buy.

There is an Afrikaans expression — Goedkoop is duurkoop (Buying cheap is expensive) — that is relevant here.

Oh, and there’s the matter of the pesky metric system. It seems the US hasn’t heard of it, but it means your nuts don’t fit our spanners, and we can’t just pop down to the hardware store to buy the missing bolt — it has to be a special import.

As to Ford, at least down here they’re going nowhere. They historically have had 15-20% (always #3) but over time that eroded and after having reched just 8% (the new 4th place in the market) 4 years back they rebounded to 12% but did not keep momentum. Right now they’re back at 8% and I bet they are going lower this year (to 6,5% to 7%).

In Europe however they look strong. Do they make enough money to keep Ford alive?

@hazard

Good luck with your idea. If you’re thinking Bolivia or Zimbabwe it might work, but if you’re thinking Brazil and Argentina and South Africa…sorry. We’re a iittle more sophisticated than that (our markets that is).

It’s going to take more than just the closure of Chrysler (with a run-down of inventory over time) to make the industry healthier. This will be shocking to many, but Chrysler and GM have to close with the “best” parts absorbed into Ford.

Why? Even at a mostly impossible run rate of 12m units in NA, GM’s taxpayer funded “restructure” had them still insolvent after 2 years.

Perhaps Ford could provide a counter-plan to Nardelli’s silly Fiat merger nonplan. The plan would be that Ford picks up Jeeps & minivans, sells the Ram business to the highest bidder. The government provides a soft landing to the workers in the other plants. Dealers? Ok, I don’t have any plan for the dealers.

Cerberus borrowed $10B to finance Chryco Motors in August, 2007. Within five months, the primary lenders insisted that a portion of the borrowed funds be repaid – so $3B was returned to the bank from cash. (There are some questions regarding where this cash came from – “stay tuned” as Rick Wagoner would say.) This past summer, Chrysler borrowed $2B from Daimler/Cerberus.

Unfortunately, the Feds loaned another $4B to the Motorco in December – when the primary lenders over a year ago got fearful and wanted some money back.

Agreed.

Looks great, has no real advantages to back up the looks. It’s like the Fabio of American pickups.

My fear is that the Federal government will be afraid to face the fact that Chrysler must die, and will continue to loan them money, which only serves to further weaken GM and Ford, to the point they all go under.

One, the banks aren’t lending anyway, despite the government ramming money down their throat (even when a particular bank doesn’t want it).

Two, I would argue that such destruction of capital would benefit the government because it would allow them to replace that money via the printing press and T-bills without inflating the overall money supply.

Three, a lot of that debt would have be swapped for equity for pennies on the dollar anyway if the government would have their way.

Here is a link to the loans that financed Cerberus’ deal to buy Chrysler…

http://www.calculatedriskblog.com/2007/08/cerberus-closes-chrysler-jpmorgan-owns.html

Looks like $10B was financed. Assuming little to none has been repaid, if Chryco shuts down it would kill at least $10B in capital

Given a conservative fractional reserve lending of 10:1, this equals $100B less available to lend.

Add in GM’s debt and Ford’s debt, assume a 10:1 multiplier and you would easily wipe out $2 Trillion in lending if they all go into bankruptcy.

So the government will easily cough up a few hundred billion for the Big 3 to avoid this.

As for this little problem:

The fire sale will sop-up “excess” demand, most likely from the D2. So there will be short term pain at Ford and GM stores. But it’s a pill worth swallowing.

There’s a solution to clearing Chrysler’s inventory without hurting GM and Ford. Yes, some of it will be fire-saled to US & Canadian customers (note that discounts for Chrysler merchandise are already high), but some of the people buying a Sebring at an auction for $5k are the people who wouldn’t buy a new car anyway – they’re either too poor or a are buying a 2nd/3rd car for cheap since they can – i.e., they are not taking up demand that would otherwise go to someone else.

But what do to with say, half of the inventory? Ship it out of the States. The government can help with that, since it will save them bailout bucks vis-a-vis Chrysler (cheaper than keeping them on life support) and Ford/GM (supporting their drop in sales due to a ChryCo liquidation).

There’s plenty of people around the world who would buy up brand-new American cars for cheap. Isn’t Mexico a huge market for used US cars? Latin America, Asia (esp. Middle East), Eastern Europe, the few more developed African countries. In a lot of these places a well-discounted 300C would sell very well. Chrysler has dealer networks in many of these countries so the distribution channel is already there.