By on December 1, 2006

jumper222.jpgJust 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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82 Comments on “Chrysler Suicide Watch 1: Jump?...”

  • avatar

    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.

  • avatar

    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.

  • avatar
    jerry weber

    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.

  • avatar

    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.

  • avatar

    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.

  • avatar

    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.

  • avatar

    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?


  • avatar

    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.

  • avatar

    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.

  • avatar


    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…)

  • avatar

    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?

  • avatar

    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.

  • avatar

    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.

  • avatar

    From the moment we got a glimpse of the new Sebring, I figured this column was imminent.

  • avatar

    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.

  • avatar

    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.

  • avatar
    Tommy Jefferson

    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 (, then decides not to produce it on the existing Wrangler platform.

    What is wrong with these people?

  • avatar


    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.

  • avatar
    Glenn A.

    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.)

  • avatar

    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?

  • avatar

    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.

  • avatar

    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.

  • avatar

    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.

  • avatar


    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.

  • avatar

    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.

  • avatar
    Glenn A.

    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.

  • avatar

    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

  • avatar

    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.

  • avatar
    Glenn A.

    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).
    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”.

  • avatar
    Steven T.

    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.

  • avatar

    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.

  • avatar

    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!

  • avatar
    Dave M.

    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.

  • avatar

    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?

  • avatar

    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…

  • avatar

    If I were Daimler, I would dump Chrysler like yesterday’s news – while their head is still above the quicksand…

  • avatar

    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.

  • avatar
    Glenn A.


    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.

    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).

  • avatar

    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.

  • avatar

    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?


  • avatar

    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.

  • avatar

    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:

    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?

  • avatar

    Glenn A: Goldbugs claiming the end is nigh? I’m shocked, shocked. Paging Oliver Stone. But first, back to the sand…

  • avatar

    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.

  • avatar

    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.

  • avatar

    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.

  • avatar

    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

  • avatar

    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.

  • avatar

    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……..

  • avatar

    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.

  • avatar

    Brave the words, the only country with too much to lose is the US, with current feeling around the world i don’t think people will care. I guess its like the die hards not wanting to see GM and Ford go down, a continuing weakening of the dollar looks likely with hints of further slowdown of the economy, which could easily snowball. I guess currency is like shares, if they see an investment shrinking with a worsening exchange rate wouldnt you move into something more profitable, China for example IS moving more into the euro and diversifying as it sees further problems and weakness with the US economy so it’ll lose out on its investment. Is this the slow painful end of the American Dream and the American Empire. If any/all of the not so big 2.5 go down it will definately be the beginning as the repurcussions are enormous despite what the die hards say.

  • avatar

    I was out driving an Alfa Romeo 159 with a diesel engine the other day. Zippity-zip.

  • avatar

    didnt Audi win le-man with a diesel?

  • avatar

    Hi all,

    I actually had hope the DCX merger would work. German engineering and leadership, buying established North American brands with lots of production capacity. That is America’s weakness right now, not much engineering. We graduated more psychologists last year then all engineering disciplines combined.

    It may be that Chrysler is just too far gone to make a comeback, and the Germans haven’t done enough to upgrade the cars. My parents have a Jeep Liberty which are everywhere here. Its actually quite a nice looking vehicle, and so far no mechanical problems after 2 years. My parents love the rounded headlights and curved surfaces.. they hate the commander which the new liberty seems to take after.

    Jazbo123 said, “This is what happens when product portfolios and business strategies (or lack thereof) are dictated by MBAs and accountants.”

    I totally agree.. we’ve seen one industry after another die here.. As business degree types cut costs get short term profits, then see the customers slowly disappear to the foreign engineer ran competition. One thing besides the training is an engineering degree is simply far more difficult to get. So by choosing engineers you are unknowlingly culling all of the stupid people out of the running. On the knowing side you are getting people who actually understand the product on a material level, versus accountants who wouldn’t know a muffler from a toaster but have to decide which muffler to buy from which supplier. So they choose the cheapest one.

    I don’t think the business degree holders are going to purged from in charge of American corporate life anytime soon though. Especially considering they are the ones in control. We’ll likely have to wait until they collapse all the companies they are in charge of.

  • avatar

    With Benz in the same corp, I just couldn’t understand why can’t they convert these excessive capacity to build C class or E class instead. Sure, they have to put more money in to convert the line over but at least they can spend all these excessive union labor on the cars that actually sells, and they can use less automation and spend more time on each because they are supposely “hand build”.

    IMO the whole auto industry should follow the semiconductor industry’s model: foundry. Very few chip companies have their own fab which cost billions of dollar, they outsource their manufacturing to 2+ manufactures to reduce risks and fixed cost. If the auto industry is split into designer and manufacture, then there will be more capacity for cars that people actually buy.

  • avatar

    I think DCX is doing a good job of keeping their core customer-the truck/muscle/tough guy demographic.

    With their 300C, Magnum, Charger, RAM, Nito, and Jeep badges appealing to core demographic witch all look like trucks. Bad news, I don’t think they are gaining any market share back from the Japanese.

    If, DCX is smart they should not go head-to-head with the Japanese and stick to their core demographic.

    Nevertheless, MB should drop DCX ASAP as they are drawing too many resources away from MB. My un-MB like E-Class is proof this “parntership” is hurting MB.

  • avatar

    “Chrysler Suicide Watch”

    A fitting title to the article, I would say.

    Chrysler’s sales being up in November means nothing really. They have about 500,000 units currently in inventory, as the article mentions. Chrysler is definitely going to have a lousy 4th quarter. I’m guessing over a Billion in terms of losses.

    Chrysler is also, by far, spending the most on incentives out of any automaker. We’re talking an average of over $4,000 per vehicle. That’s definitely eating into any profits they might have.

    Just like GM and Ford, Chrysler is in a big mess, and the sad part is the execs still don’t get it. At least with Ford and GM, execs acknowledge they’re in deep trouble. Acceptance is the first step.

  • avatar

    It appears it is going to be a 3-horse race to the chapter 11 finish line. Any wagers on the Trifecta results?

    I live a few miles from a huge autopark and even the Toyota back-lot is filling up. The Dodge dealers lot is not only overflowing into the street but is backing all the way to the main enterance road. When Toyota lots are filling you know 2.5 are in deep trouble.

  • avatar

    Wow, is this the Service Economy we keep hearing about? The one where everyone will get paid to be a financial engineer, lawyer and Master of Marketing? These functions of a corporation need to be there to SUPPORT the fundamental effort, not to make the key decisions.

    The beginning of the end of American competitiveness seems to be highly coordinated with the rise of the MBA. Once you put the finance and flim-flam people in charge, the end is brutal and certain. Only the timeline is up for questioning.

    The engineers running Honda and other great manufacturing companies must shake their heads about how easy it is to knock off these overpaid lightweights who “run” American manufacturing companies.

    By way of disclosure, I hold a BSEE which was very hard to get. The business school is where those who couldn’t hack a difficult major went. Check with your local university and compare the difficulty of real Calculus 101 with Calculus for Business Students.

  • avatar
    Steve Green


    I’m sure your column contains several valid, well-put, and interesting points. However, last year I took a vow which prevents me from reading your Death Watch.

    You see, whenever I read an automobile article and come across the phrase, “The answer to a question no one asked,” I am compelled to hit the back arrow button on my web browser.

    I suggest you (and Mr. Farago) Google the offending phrase and take a quick scan of the results. With luck, it will never return.

    And with more luck, I’ll never again suffer TTAC interreuptus.

  • avatar

    murphysamber: No, I am not living in 1981. I am living with the February 2006 issue of a respected national publication which puts the Jetta TDI (a 1.9 liter turbodiesel) at 12.2 seconds for the 0-60. Also, sure, maybe some larger turbos are fast, but I don’t like turbo lag. Keep educating me though, as I am not a piston head. I am an Accord-Civic-BMW325i-Subaru Forester kind of guy. If I am wrong about diesels I will admit it.

  • avatar

    exactly jthorner:

    In my position I have to deal with MBA hucksters all the time (I to am an EE). Sometimes I think retarded children are more aware of what is actually happening around them. If I hear the phrase “Perception IS reality” out of their mouths one more time I think Im going to smack um… Wheres my Prozac…

    Maybe after the 2.5 chapter 11, 2.5 will rise from the ashes with a Soichiro Honda or Ferdinand Porsche at the helm…. Hahhhh.

  • avatar

    Good post jthorner.. These support guys have forgotten that they are support for the fundamental operation. When you have a well engineered, catchy designed product your hire marketing people to inform potential customers of your option. But the marketing people think they actually create the value through perception like Luther said.

    I also think the engineer managers at Honda must laugh at how stupid the management decisions at their NA competition are. And I am a finance guy. But I understand my role.. I invest peoples money for a good return. If you look at the valuatiosn of the companies the finance guys are quite good at that. Honda worth 80 billion, DCX worth 50, Ford and GM just under 20 each. But managing part of an auto company I would not be a good choice. Why choose me over a mechanical engineer for product design and purchasing management.. or an automation engineer for the manufacturing side?

  • avatar

    If you want to really have something to think about, note that China’s highest level political authority, the Central Committee, is made up almost entirely of people with engineering degrees. I don’t agree with China on human rights issues at all, but the turn about in China’s economic system is dramatic.

    For example, consider the short bio of Jiang Zemin, General Secretary of the CPC Central Committee: “Born on August 17, 1926, of an intellectual familyin Yangzhou, a culturally famous city in east China’s Jiangsu Province,Jiang received his higher education in the prestigious Shanghai JiaotongUniversity and his major was electrical engineering.”

    China is being led primarily by engineers while the US is being led primarily by lawyers. The long term implications are bone chilling.

  • avatar


    Chilling for whom?

  • avatar
    Steven T.

    jhorner, I think you are astute to point to how the professional backgrounds of a company’s leadership can profoundly color its performance. Detroit hasn’t had enough car guys in key roles to develop truly competitive products.

    Private companies are very different animals than governments. I wouldn’t want engineers to dominate the U.S. government. Democracy is built upon the principle of citizen involvement and compromise among competing factions. The engineers I’ve worked with tend to be very impatient with political processes.

  • avatar

    Democracy is built upon the principle of citizen involvement and compromise among competing factions.

    AKA – Tribal Warfare.

    Chilling for whom?

    People that place individual freedom, free markets, and property rights above all.

    Wheres my Prozac…..

  • avatar

    “Chilling for whom?”

    To anyone who cares about the wellbeing of the citizens and residents of the US. Winning international competitions of various kinds is fun. Loosing them is generally not fun at all on many levels.

  • avatar

    “I wouldn’t want engineers to dominate the U.S. government. Democracy is built upon the principle of citizen involvement and compromise among competing factions.”

    I wouldn’t want a government dominated by engineers either. However, I really don’t enjoy having a government dominated by lawyers, which is what we have. A balanced representation of the various professions would be great, but I don’t see it happening.

  • avatar

    I’d rather live in communist Russia with electricity, a well built apartment, refridgerators, heaters, aquatic centers and so on.. Then in a village in India with no running water or basic health care. Even though in India I would have good political representation.

    Hopefully though we have more choices then that. One of the greatest thinkers I’ve seen is the guys who wrote the bottomless well, why we’ll never run out of energy. One of the guys who wrote that is a lawyer, and his bachelor’s degree is in mechanical engineering. Now there is a powerful combination!

  • avatar

    December 3rd, 2006 at 1:11 am

    I’d rather live in communist Russia with electricity, a well built apartment…

    They were not well built appartments during the communist era. They were cheaply built and falling apart almost as soon as they were finished. Big cracks from shifting foundations, etc.

    You should NEVER trade personal freedom for economic or personal security. At least in India they have a chance to develope a middle class and rise out of poverty, something they could never do in Soviet Russia.

  • avatar

    Communism is just hay and a barn for herded cattle and actually obtaining the hay and barn are questionable. The only growth that occured in Communist Russia was Vodka and facial warts.

    After you work your way to 400-level college physics you will realize that “running out of energy” is physically impossible. You also start to realize that purchasing a Hummer H1 and flooring it down the autobahn is actually better for the environment than putting around in a Prius or Citroen Duck.

  • avatar

    Sadly, I can’t think of any appealing Chrysler products. Contrast this with other makes in similar price categories (Honda, Toyota, Nissan), and you soon realize the problem is that neither GM, Ford or Chrysler turn out desirable cars consistently. They don’t have to make BMW’s, but turning out crap is the main reason those companies are sinking ships.

    There is no excuse for this. Unfortunately, excuses seem to be the only things they’re full of…. well, maybe they’re full of a few other things.

  • avatar

    HawaiiJim, Apologies for the OT comment, but I sold my (thirsty) caddy catera for a small deisel citycar. I was new to diesels, and was downgrading from a 2.5l 177hp V6 to a 1.5l 65hp NON turbo deisel. Since the torque is all at the fornt end, it doesn’t feel slow at all! It just depends what’s more important to you – 0-60 times or economy. They’re inversely proportional. I average 53mpg US driving round a UK city, and I can out accelerate most traffic if I’m inclined to put pedal-to-metal.

    Related point – And green et al recently broke the diesel speed record: The engine is based on the agricultural block. Zippety-zip indeed!

  • avatar
    Glenn A.

    Luther wrote: “After you work your way to 400-level college physics you will realize that “running out of energy” is physically impossible. You also start to realize that purchasing a Hummer H1 and flooring it down the autobahn is actually better for the environment than putting around in a Prius or Citroen Duck.”

    Sorry to be so “ignorant” Luther, but I think when people say “we’re running out of energy” it is the short-form of saying “we’re running out of cheap oil on which our entire way of life is based.”

    Some plain facts.

    The oil underground is NOT infinite. Nobody in the oil industry even thinks this is the case.

    The Saudis are pumping increasing amounts of sea water down their wells in an attempt to get as much oil out as they can, from the biggest fields on earth, but they know it is going to end some day. They even have a saying “my father rode a camel, I fly a private jet, my son will ride a camel.”

    As for your comment about Hummers on the autobahn being more environmentall friendly than putting around town in a Prius, I’m presuming you were making some kind of joke.

    If you are referring to some B-S seen on the web stating how the “lifetime footprint of a Hummer was less than a Prius” then you’ve been scammed. It has been proved to have been totally biased AND false (the life-time of the Hummer being “assumed” to be way beyond that of the Prius, for example).

    There are lies, damn lies and statistics. And, cooked figures (just ask the SEC about cooked GM books, for another example).

  • avatar


    After you work your way to 400-level college physics you will realize that “running out of energy” is physically impossible

    THATS funny

  • avatar

    Eberhardt resigns:

  • avatar

    Glenn A.

    1. Oil is infinite. It is created by sun energy. Call it “Liquid Sunshine”. Oil can also be synthesized with enough energy.
    2. CO2 is not “bad” for the environment. It is “good”.

    In Fact what is “bad” for the environment is the O3 generated from the hybrid’s electric motors.

    More than 50 years after harnessing the energy of the atom, we are still oxidizing hydrocarbons for energy. It is quite primitive.


  • avatar
    Glenn A.

    I’ll defer to an auto writer on the subject of whether oil is infinite or finite.

  • avatar
    Terry Parkhurst

    This is as sad as it gets. How can a company, whose vintage Hemi-powered F-body cars – Plymouth ‘cudas and Dodge Challengers – bring up to $2 million at auction, become such as has been. Maybe it’s the lack of personality. I went with a friend who simply wanted me to say I was a “family friend” (true in part, to him) not an auto journo, when we visited a Dodge store, so he could drive a Dodge Charger. The Charger was akin to a very fast taxi – four doors indeed. The worst thing about this is, of course, the loss of American jobs. But for we enthusiasts, it sounds as if we won’t get to see a production version of the Challenger concept, supposedly on tap as a 2008 model.

  • avatar

    “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”

    I want your crystal ball so I can pick tomorrow’s lottery number.

  • avatar

    It’s rather creepy, looking back out how the whole Chrysler thing has played out since this was written in December ’06. It’s no wonder it’s on the front page as a top article. I wish I had been along with TTAC for the ride on both GM and Chrysler’s death watches, as it’s very interesting to see how it all came down.

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