By on February 16, 2007

dieter.jpgAccording to the Consumer Federation of America, most large insurance companies rely on computer programs like "Colossus" and "Claims Outcome Advisor." These spreadsheets calculate how much money an insurer can save if they deny ALL their customers’ claims. The companies then set an acceptable claim approval rate and instruct their adjustors to “delay, deny and defend.” Readers with children will recognize Mr. Incredible’s fictional employer Insuricare. Readers without sprogs should recognize DCX.

First, the corporate mothership determines how much money they want to "save." Then the word goes out. Delay. Do not address fundamental problems: runaway health care and pensions costs, stifling union work rules, bloated dealer network, lousy branding and relatively poor product quality. Deny. Keep telling everyone that everything’s going to be alright. Defend. Maintain the status quo at all costs; only make changes that tweak the existing system.

Obviously, Chrysler is not the only American automaker that bases its business on The Triple-D Defense. The media’s fascination with Chrysler’s German ownership has obscured the simple fact that the automaker's plight is, at the deepest level, no different from GM's and Ford's.

While Banc of America celebrity auto analyst Ron Tadross continues to fan the flames of the “Chrysler for sale” conflagration– suggesting that the American automaker is viable as an independent company because its smaller and not quite as FUBAR as GM and Ford–  Chrysler is plenty big enough to stress DCX’ independent-minded shareholders and just as FUBAR as GM and Ford. 

DCX CEO Dieter Zetsche’s response to industry speculation about his American subsidiary’s financial distress underlines Chrysler's underlying weakness. Dieter's public declaration that he's "considering all options" also highlights the point we’ve been making here for some time. Chrysler's equals Germans masters are happy to stand back and watch Chrsyler kill itself.  

Why else would Dieter allow Chrysler’s management to institute Plan X From Outer Space, a carbon copy of Ford’s Way Fordward and GM’s Jump Down Turnaround Sell Every Bale of Hay?

Chrysler will now cut jobs (mortgage its future to shed its union-protected workforce), close factories (amputate market share), reduce inventory (try to match supply against market share it’s already lost), sell the family silver (including “transportation services”), re-invest in what they should have built in the first place (allocate $3b for new engines, transmissions and axles), promise to build something that will sell (hybrids) and, last but not least, die.

The media seems entranced by any discernible difference in Chrysler's story and that of its cross-town rivals. Will GM and Chrysler share the rapidly deflating life preserver known as the GMT900 truck platform? Again, the similarities between Chrsyler's overall situation and that of GM and Ford are far more important than any SUV freak show.

And just as The Big Two's dreams of resurrection are floundering on the rocks of reality, Chrysler's Plan X turns the phrase "product strategy" into an oxymoron.

The official bumph is pretty vague. Chrysler says it will shift its product mix away from trucks and SUV’s towards smaller and more fuel efficient vehicles. Plan X includes unspecified promises to cut three to six models from the company’s 32-vehicle lineup. It has also promised 20 all-new vehicles and 13 refreshed vehicles by 2009.

In other words, beating Ford and GM in the deck chair rearranging sweepstakes is Job One. While it’s true that Chrysler’s virtually perfected the art of badge engineering eliminating development costs (e.g. the "new" Avenger will be a rebodied Sebring), launching so many new models is an inherently expensive business; it costs tens of millions more to introduce a new nameplate than it does to improve and promote an existing one.

Meanwhile, the basic problems besetting Chrysler’s product portfolio remain: weak brands, a farrago of constantly changing, not-entirely-wonderful models, and an ADD-related failure to fully market and support any one model. Of these, bad branding is the company killer. What is a Chrysler? What is a Dodge? What do they make again? Only Jeep remains focused on a definable mission– which the company is busy diluting with soft-roaders and urban flava posemobiles. 

Given Chrysler’s financials, crushing union obligations and “throw it against the wall and see what sticks” product plans, Dieter would have to find The Mother of All Suckers to buy Chrysler. Perhaps he will. Probably he won’t. Which leaves DCX two options: fix their American patient or watch it commit suicide.

In today’s Automotive News, an analyst for investment bank Dresdner Kleinwort claimed that the official German document detailing DaimlerChrysler’s legal obligations makes no mention of Chrysler's health care liabilities. Dresdner theorizes that the Germans could “nurse Chrysler back to health” then float Chrysler on the stock market. The goal: attract the same sort of corporate buy-in that Daimler is so desperate to leave behind.

Back in the real world, Dresdner’s telling DaimlerChrysler stockholders that the German side of the business could leave Chrysler standing on the ledge while successfully defending itself against any future liability claims. So much for being a good neighbor.

[Click below to hear RF read the above text.] 

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106 Comments on “Chrysler Suicide Watch 8: Plan X From Outer Space...”


  • avatar
    amclint

    It’s too bad about Jeep, I would love a Rubicon Wrangler if I had the extra cash to park it when I wasn’t taking it off-road. I didn’t mind the three Grand Cherokees I’ve had on the road, and they were still fine off-road.

    That new compass is so ridiculous it makes me cringe to look at it, almost like I felt the first time I saw the Aztek driving around…almost.

  • avatar
    frontline

    Have you ever observed a squirrel preparing for the winter?

    How many humans practice this way of life ?

    Instant gratification by way of leverage , that`s the American way!

  • avatar

    And all this time you had me thinking “farrago” had only one r. The truth is finally out!

    On Chrysler, the major problem they face is that, with the exception of the new Wrangler, their recently introduced new products have all been a mess. To me, this suggests that the organization is barely functioning. Lutz, Gale, and Castaing’s team would have never let the new Sebring and the Compass see the light of day.

  • avatar
    SuperAROD

    If the Germans want to panic this badly when Chrysler has a bad quarter, I say spin them off and let Chrysler stand back up on its own.

    Additionally, the cuts basically entail shutting down the Durango plant and cutting a shift at two others. The rest of the cutbacks will be done by earlier retirements, voluntary severance and white collar…While difficult for those that lose their jobs, these are not draconian cuts by any means. Durango will be built on the same platform as Jeep Grand Cherokee after 08 anyway, correct?

    As far as brand, Jeep is in fantastic shape. There is but ONE non-trail rated model in the entire lineup: Compass. And that was by design. If anything you can say that maybe Compass needs to go and Commander either needs to be reworked or dropped. Otherwise, they have a steller model lineup for years to come.

    Dodge is ready for it’s coming out party. Caliber, Nitro, new Ram, new Dakota, Charger and Magnum reworked for 08, new Avenger, new Minivans, new Viper, and biggest of all – 2008 Challenger. Dodge is set. Figure out your 2009 midsize SUV and go.

    Chrysler brand needs some work as far as models, holding my breath on the new Crossover to replace the PT, time will tell on Sebring. Pacifica is reworked, 300C will be reworked for 08. New Minivans. What they need is a new halo car that will sell.

    Chrysler Group lost $100 million in the 4th quarter, meaning the bleeding has already almost stopped from the the $1.5 Billion lost in Q3. Taking out Q3 from the total, Chrsler actually made a profit of $400 million in the other 3 quarters.

    Sales the last 4 months have been slightly improved over the previous year even with gaping holes in their lineup, holes which are being filled in the next couple of months.

    I see the glass half full, and there is still room for you on the bandwagon.

  • avatar
    carguy

    Daimler Benz should have learned from the BMW-Rover fiasco and stayed away from international acquisitions. A very rash move from an otherwise very conservative company.

  • avatar
    SuperAROD

    “On Chrysler, the major problem they face is that, with the exception of the new Wrangler, their recently introduced new products have all been a mess”

    Really? Dealers can’t keep enough Nitros and Calibers on the lots either. Patriot is going to be the same thing.

  • avatar
    raz

    Chrysler will not die, I can give you 100% on that. If they will come close to that you will see state, city and federal government buying their cars for local services, like police, or any other government fleets. Also Feds will definitely give them a some sort of a military contract or two, or Feds may ask them to develop “the hybrid engine that will finally set US free of arab oil”…you know a motto George W. Bush lives by and swears by. Basically by that I mean government will try to give them these hidden subsidies in forms of contracts.

    Also if Feds will not step up to bail out Chrysler, that does not mean that states will not give them a tax break here and tax break there.

  • avatar
    starlightmica

    What should be DC’s bread & butter (Sebring) basically pulled a Barbaro, but inside the starting gate. As if to add insult to injury, Sebring also just got a serious beat-down by Consumer Reports.

    Off to the rental fleets, again.

  • avatar

    Robert – Sadly, your DW series is now virtually identical whether you are discussing GM, Ford or Chrysler. This is not a comment on your excellent research and gift for writing, but on the common sickness shared by each company. Each has had opportunities over the past 15 years to recognize the need to be in the CAR business, and each have had bright spots which gave them these opportunities. Instead they put development money in improving their respective shares of the truck market and starving development on any number of competent car platforms.

    The death throes of the Big 2.5 are simply a reflection of the illness afflicting the vast majority of American business. Executive compensation, share price and tax laws are all heavily slanted to short term financial objectives and not to strategic positioning and long term health. It would take a leader of extraordinary courage to stand up to this system and make choices which created long term values. Toyota’s success has not come because they never make mistakes or missteps, but because they relentlessly pursue the creation of products which fit a long term plan for growth.

    Ultimately, the failure of U.S.-based carmakers is an indictment of our ADD population; we have developed a system which rewards short term gains and fails to focus on the strategic value of the product or service offered.

    Why would a young person in America become an engineer, an architect, a journeyman tradesman or even a doctor when those who are seen as “successful” in our system, and who are highly compensated, are those who actually produce nothing? Goldman Sachs partners split nearly 10 billion in profit last year; what is the product? Tort attorneys skim billions from the U.S. economy; what is the product? Real estate brokers routinely outperform builders, yet still have no product.

    Until we as a people decide to change this system, the cancer afflicting American products and services will continue to spread. GM, Ford and Chrysler are simply highly visible tumors on our dying national will to thrive as an economy.

  • avatar
    nweaver

    And whats really pitiful is the one shining light at Chrysler, the success of platform engineering the old E class to create the Magnum/300/Charger/Challenger, was not repeated with the old C class to create the new Sebring/Avenger because of resistance on the part of Mercedes management.

    Imagine if the Sebring was styled like a baby 300 (its a good design language, USE IT), based on a streached older C class RWD (optional AWD), and really was a luxury styled, luxury driving competitor to the Camcordima?

  • avatar

     edgett: Although I don't share your pessimism, I see where you're coming from. I think a large part of the problem stems from the fact that many companies lack a proper focus on their core business. If all the employees within a given company view their work as a mission that creates value, rather than "just a job," a lot of the short AND long term issues resolve themselves. If the executives at the top of the ladder lack that product or service oriented passion, if they don't understand that the bottom line should be a reflection of their corporate culture (rather than its determinant), the companies are doomed.   nweaver: Agreed. If Mercedes had shared its toys (even its old ones), Chrysler wouldn't be in this mess– or at least the mess would have been a LOT smaller.

  • avatar
    starlightmica

    RF, nweaver –

    Agreed. If Mercedes had shared its toys (even its old ones), Chrysler wouldn’t be in this mess– or at least the mess would have been a LOT smaller.

    Would old C-class components have been cheap enough for the 07 Sebring which is going for just over $16k in the local paper? The 300 and triplets are now going for deep discount, with my local dealer dumping 06’s at thousands below invoice. Let’s not forget Crossfire and how poorly the 05’s are still selling.

    If Iacocca didn’t let his ego get in the way and let Lutz take over Chrysler in the 90’s when Eaton did, how different would things be?

  • avatar

    Yesterday, in the Detroit Free Press both the UAW and CAW decried the job cuts at Chrysler as “devastating” and here is the best part….”unnecessary”.

    Are these guys serious? At some point their greed needs to give way to basic survival. They blindly refuse to acknowledge being a part (I said a part) of the problem facing the American auto industry…these cats need to change or die.

    Also, Chrysler outsold Benz in 2005 and 2006….lest other pundits initiate diatribes that Benz is being sullied by its relationship (through marriage) with Chrysler. Not that anyone here would do that, right? Just remember that MB had a 666 million dollar operating loss in 2005. During this time Chrysler posted 2 billion (with a B) in profit.

    For 2006 MB posted 3.2 billion in profit and Chrysler suffered a 1.4 billion loss…

    Does that make them even?

  • avatar
    mikey

    Chrysler needs to do,what Chrysler does best, Build smaller[not small] inexpensive[not cheap] vehicles, Its worked before”Kcars,mini vans come to mind.
    Build a great value vehicle and folks buy them.
    Chrysler as pulled itself out of the fat before,and they can do it again with or without Daimler MB.

  • avatar
    FreeMan

    This strategy includes unspecified plans to cut three to six models from the company’s 32-vehicle lineup. At the same time, Chrysler says they’ll have 20 all-new vehicles and 13 refreshed vehicles in showrooms by 2009.

    Let’s see…
    32 vehicles minus 3 to 6 vehicles is 26 to 29 vehicles.
    20 all-new vehicles + 13 refreshed vehicles is 33 vehicles.

    Either someone’s not that good with story problems, or this is part of the problem with DCX…

    And why, in God’s name, does Cryodgep need a gargantuan GMT900 sized vehicle? Haven’t they noticed the increased price of gas and the perilous drop in large SUV sales? And, really, isn’t the Durango/Aspen big enough? They’re ugly huge!

  • avatar
    ghughes

    “Ultimately, the failure of U.S.-based carmakers is an indictment of our ADD population; we have developed a system which rewards short term gains and fails to focus on the strategic value of the product or service offered. ” – Oh, you mean like taking second mortgages on your house to buy Japanese cars and flat screen tvs?
    While the Japanese save 40% of their income which is used to prop up manufactured exports?

  • avatar
    jrogers

    Last I hear Chrysler had a problem that even Ford and GM avoided: they kept building cars and trucks even though the dealers would take no more. As a result, thousands of unsold cars were rotting in parking lots in Michigan, awaiting a home. Are those vehicules still there? I have this vision of thousands of snow-burried cars and trucks that some sucker will eventually be stuck with. Does anyone know if this is still the case? By the way, it is an industry common knowledge that it is very bad practice to build vehicules that the dealers will not take.

  • avatar
    Steve_S

    By all the Deathwatch and Suicidewatch editorials for the big 2.5 you would think the US auto industry is on the verge of imminent collapse within the next year or two. While times are tough and US automakers face significant adversity I find it a little Chicken Little “The Sky is Falling!”. The industry will adapt and change, slowly and not until they are at the brink (GM has already started with better product) but it will happen.

    If the industry was on the brink financial institutions would not have a share of GM, Ford or Chrysler stock in their funds (at least not the mid and low risk ones). I’m fairly certain there are some really, really smart people who make a whole lot more money than me working for these firms that have a good idea of the profitability of the big 2.5.

  • avatar
    Luther

    Yesterday, in the Detroit Free Press both the UAW and CAW decried the job cuts at Chrysler as “devastating” and here is the best part….”unnecessary”.

    Embarrassing aint it… Like a 5 year old brat screaming at mommy for a candy bar in a checkout line. Why doesnt the UAW buy Chrysler from Daimler using some of their money in the strike fund? Their answer might be “why buy the cow when you can get the milk for free”. They will just end up killing the cow that lays the golden eggs… Something like that. An extortionist mantra might be “I dont want to own anything, I want to control everything”. Good work if you can get it – huh. Id like to control the use of my neighbors Rolls Royce while he pays the bills.

    Chrysler needs a good V6 and transmission overhaul. $3B well spent Id say.

  • avatar
    guyincognito

    One of the major problems I see with all of the big 2.5 is their total lack of product focus. As RF says, its like they are throwing products against the wall and seeing what sticks. Meanwhile they let others die on the vine. Instead of incrementally improving a model, eliminating quality issues, adding new technology, making it more efficient, sprucing up the body, paying off tooling, keeping suppliers in business, etc., they basically start from scratch and launch an entirely new model. Slow product development cycles leave them a step behind at best and totally screwed when the product is a failure.

    With Jeep, DCX had a perfectly focused brand. While they have done well with their core models, the introduction of the Commander, Compass, and now the new little Jeep (whatever its called) signals to me that this cancerous mentality is spreading and isn’t even recognized as a problem.

  • avatar
    jerseydevil

    it is a never ending source of wonder to me why one of these companies does not try to get into the small car business. Instead, they are beating each other over the head with ever larger and more powerfull cars, SUV’s and trucks.

    I prefer small cars and here in the northeast, they are very popular. We have choices like the Honda FIT, Nissan Versa, VW Rabbit and its siblings, some of the Toyotas, maybe a few others… nary a domestic among them, even in name only.

    Mercedes makes some fine smaller cars, we dont get them. We get the same old sh-t, repackaged. I guess people dont want that. DUHHHHH. I feel bad for Chrysler. But they simply do not make a single car that I am interested in. And that is sad.

  • avatar
    Vega

    @Steve_S: Like in 1999? ‘If the Dotcom-industry was on the brink financial institutions would not have a share of GM, Ford or Chrysler stock in their funds (at least not the mid and low risk ones).’

    Relying on fund managers and the stock market to reflect the real state of an industry is not a good idea.

  • avatar
    tony-e30

    Delay, deny, and defend. I agree that this seems to be the tactic chosen by the 2.5 every time they have another “crisis”. If they address the root of their collective problems and focus changes there, they won’t need consumer based miracles to keep them going. The SUV/Truck popularity explosion merely allowed them to ignore the underlying corporate problems and continue business down the same path. Now it seems that history is about to rhyme again. The only problem is how to get the words “Hybrid” and “SUV” to sound the same.
    DCX would be wise to discreetly attempt a Chrysler spin-off, but who would want to take that challenge on?

  • avatar
    AlanW

    ^ DCX would be wise to discreetly attempt a Chrysler spin-off, but who would want to take that challenge on?

    According to the latest from AutoNews:
    General Motors is in negotiations to buy the struggling Chrysler group in its entirety, say sources in Germany and the United States.
    High-level talks are taking place between DaimlerChrysler AG and GM executives.

    This is going to be a hot mess.

  • avatar
    starlightmica

    General Chrysler Suicide DeathWatch (TM)!

  • avatar
    ash78

    Here’s a link to the breaking GM-Chrysler talks:

    clicky

  • avatar
    Steve-O

    “According to the latest from AutoNews:
    General Motors is in negotiations to buy the struggling Chrysler group in its entirety, say sources in Germany and the United States.
    High-level talks are taking place between DaimlerChrysler AG and GM executives.”

    What the —?? How on Earth could that be possible??

  • avatar
    Glenn A.

    raz, my father worked for the Government in the early 1960’s and “suddenly” a lot of government cars were Studebakers, when Studie got into trouble (again, still, yet).

    Seen any new Studebakers lately?

    So I guess I’m trying to say – if you see the government suddenly buying tons of Chrysler products, it’s probably time to sell your DCX stock!

    jerzit, your points about the German size of the biz losing tons of money in ’05 and the US side making even more tons of money that year, reminds me of the fact that the GERMANS don’t really like Americans any more – something like a national power-envy complex is the root of it… so Chrysler to Daimler-Benz is probably doomed to be repeat of what MG-Rover was to BMW. Cut them loose with some loose change, within a few years they’ll sink and shazam, one less competitor on the international marketplace (unless of course the corpse is recuscitated by the Chinese, as with MG-Rover…).

    The bottom line is – international business and much of US business has lost any moral compass (sorry no Jeep jokes).

    Remember how Iacocca “promised” (albiet nothing in WRITING) American Motors that the Kenosha plant would stay open when Chrysler bought it in 1987? Yeah, the ink wasn’t even dry on the purchase agreement and the plant was torn down and tons of AMC parts destroyed.

    Likewise when Chrysler was ‘merged’ with Daimler-Benz, we all know how well that worked out for the Chrysler side.

    Not to mention how DCX treated Mitsubishi when they were in need awhile back – more or less “drop dead” (& bitch-slap).

    Contrast that with 1954 when Hudson and Nash merged in amicable terms and no hidden agendas, to form American Motors, and 1970 when American Motors purchased Jeep from Kaiser Industries…..

  • avatar
    Cowbell

    I hope for the sake of all parties involved the rumors from the “auto trade publications” of GM purchasing Chrysler are as reliable as the one about Subaru eliminating the WRX or Ford making a 4-door Mustang.

  • avatar
    Glenn A.

    OK now I’m totally confused as to what on earth the GM executives could even possibly be THINKING.

    “Gee, our Titanic is listing, taking on water. We’ve sold virtually everything except the ship itself, and the Captain has just jettisoned a bunch of the crew over the side. Let’s go alongside the Lusitania, sinking even faster, and tie fast!”

    Right. That’s what GM needs. MORE UAW contracts they can’t deal with. MORE plants. MORE dealers.

    Would someone please fire the entireGM executive ranks and board? They’ve lost their collective minds.

  • avatar
    SuperAROD

    The bandwagon has a lot of room, you can still get on. Chrysler is setup for a good 2007, mark my words.

  • avatar
    ash78

    It looks like it’s not a sale, it’s a joint venture with the Tahoe platform instead…at least, that’s what I’ve garnered from the less reactionary news reports coming out.

    Far more likely that’s the case, and that the rumors are flying from that.

  • avatar
    jerseydevil

    i thing GM takin chrysler on is a smart move. Continue the Jeep legacy, one or two chryslers, a few dodges, a few trucks… thats all…

  • avatar
    guma

    What the —?? How on Earth could that be possible??

    At least Rick can say GM is still #1 !

    Too bad they are not #1 in what counts the most (profits). Sometimes I wonder if anyone at GM cares about profits anymore.

  • avatar
    AlanW

    While the Chrysler group using the GMT900 platform is a likely scenario, is that really wise for anyone? 9 companies with 9 SUVs that are identical? Fantastic. Obviously, i’m exaggerating about them being identical, but it’s a bit foolish.

  • avatar
    johnnyreno700

    I can see the Chinese buying Chrysler. It’s an instant in to the US market and an easy way to become a real player in world auto manufacturing. Aren’t they already contracted to build the Hornet? It sure makes a lot more sense than, say, building new MGs. As sedans. In Oklahoma.

  • avatar
    jdv

    From Ash’s link above:
    “Report: GM in talks to buy Chrysler”

    Too funny. Evidently GM doesn’t feel they have eough brands and models since Oldsmobile was retired…

    To me it seems the 2.5 needs to chop their product portfolio in half, and then improve it.

    Toyota/Honda didn’t reach the kind of success they have had by having 50 models…

  • avatar
    nweaver

    starlightmica: Hell yeah.

    Firstly, the Camcordima class doesn’t need to be $17k. If you are selling your “cleansheet new” Camcordima competitor for $17K you are in deep DEEP trouble and the design is a failure. $17K is reasonably-loaded Civrolla class. $19K is a good real base pricetag for a Camcordima entry. And RWD/AWD doesn’t really have to cost much more than FWD/AWD, the additional parts count is “not much”, and RWD/AWD

    Second, you can use existing DC engines, drivetrain, and components. Saving on design costs, tooling costs, etc. E.G, for front seats, use the onces from the Magnum/300 platform (make sure the bolt patterns are the same). Use the same V6es. Etc etc etc. Although for the love of pete, at least use a 5-speed slushbox.

    In fact, the engines in a C-class based Sebring would have been exactly the same as the one in the one they built, just mounted differently.

    Benz was upgrading the C class anyway, a huge amount of the old tooling could have just been packed in containers and shipped over.

    It was gross stupidity not to make the Sebring in the same way they made the 300.

  • avatar
    bestertester

    daimler is worth more without chrysler than with it. in other words, chrysler has negative value. therefore, dxc could give it to gm for free.

    gm is in a quandry: it has to downsize but has to stay large enough to have “too big to go bankrupt” status. so there is a point in getting additional capacity on the cheap.

    it would be easier to close down plants at an acquired-by-gm chrysler than it is at owned-by-daimler chrysler. the unions would be more pliable, i think.

    all in all, it would be a cynical ploy, sure to kill what remains of chrysler brand value. but the idea is not preposterous. and maximum bob would be happy to get his hands on chrysler again.

  • avatar
    carguy

    Maybe the lesson from this mess is that not many car company mergers and acquisitions in recent memory have worked well – in particular when they have crossed cultural boundaries. BMW/Rover? GM/Saab? Ford/PAG? It seemes that Nissan/Renault works because it is more of a collaboration than merger.

    DCX was never going to work – either companies identity focus was completely alien to the other. When the Germans got the upper hand they had no idea what to do with Chrysler and embarked on a product strategy that left Chrysler with an incoherent portfolio made up of their Mitsubishi collaboration, Mercedes hand-me-downs and too many average home-grown SUVs.

    The only way Chrysler will survive if they break free from Daimler Benz and focus on the individual identities of their brands – Jeep for real off-roaders, Dodge for trucks and Chrysler for cars.

    The current situation is so sad that if Chrysler went out of business today only the Jeep Wrangler would be a loss to the automotive landscape – everything else is bland and average (and that includes the Viper which is an ox-cart compared to the Corvette).

  • avatar
    jdv

    A motivation for GM to buy Chrysler:
    They keep the title of #1 automaker by adding Chryslers volume.

  • avatar
    Glenn A.

    Well, when GM buys up Chrysler, if they are stupid enough, the entire profitability and net worth of the company STILL won’t be close to what it should be, which speaks absolute volumes about the management and prospects of GM.

    I wonder if the conglomerate company will finally have a stock value higher than TATA a relatively small automotive player in INDIA (and also a corporate conglomerate in the sense that GM used to be).

    Did anyone else notice that GM’s stock is down on these rumors, while DCX’s stock is UP? What does that tell you?!

  • avatar
    NickR

    JRogers Are those vehicules still there?

    I live quite close to the factory that makes the 300/Charger/Magnum.

    In answer to you question, they are there in droves. There are vacant lots all over Toronto and environs full of Chrysler product. Landowners waiting for municipal approvals for redevelopment and whatnot are making a quick buck leasing land to serve as giant parking lots.

    If you are looking for a new 300….wait, there’s plenty that need to be moved and we all know what that means.

  • avatar
    P.J. McCombs

    When the Daimler-Chrysler merger first bore fruit with the LX cars (I was willing to write off the Crossfire as an awkward baby step), I was convinced Dodge and Chrysler were headed straight to the top of the domestic charts.

    But what happened? Every product that’s come through the pipeline since then has been a monumental disappointment. The Caliber and Nitro are selling well because they’re the styling flavor of the month. Otherwise, they’re both underpowered, (relatively) fuel-thirsty, poor-handling, cheaply-trimmed messes. In a year or two, they’ll be selling like anthrax cakes.

    I’m simply blown away by the inferiority of the new Avenger/Sebring. They haven’t advanced much under the skin, and DCX spoiled the only appealing aspect of the prev-gen models: the skin. Fire-sale rebates imminent.

    It saddens me to think that, aside from the LX cars, Chrysler’s most competitive products are the ones that were already in the pipeline before the merger: the PT Cruiser, Pacifica, Caravan, and Ram.

    Even GM is showing signs of a product turnaround. Chrysler has yet to hit rock bottom.

  • avatar
    starlightmica

    nweaver:

    Even with old C-class underpinnings, would Chrysler have been able to make it work?

    After all, the design folks said that they chose the current Sebring as a mini-300 didn’t look right. DCX would they have a RWD Sebring which looked similar to the current one, inside and out, which wouldn’t be that much of an improvement and with packaging compromises d/t the drivetrain.

  • avatar
    jrogers

    NickR–thanks for the info. This is a HUGE problem for Chrysler. Thousands of cars in snow covered lots, rotting..good luck to those who buy one!

    To those who think the answer is for these companies to focus on small cars, the issue is that it is very hard to make any money at all in that market. One company I am very familiar with was selling a small car at a price that did not even cover parts and labor, not to mention overhead. And it was a good car! I am told that Toyota does not make money on the Corolla; if that is true it tells you something about how hard it is to make money in that market. Now imagine you are one of the big 2.5 and you do not even have a competitive cost structure….

  • avatar

    GM and Chrysler merge. The new models they offer boggle the mind: Calibalt Malibring HumJee G8300 Pacificadia Corviper (or Viperette) AvenG6 Chamero Chargala Aspelade

  • avatar
    quasimondo

    While the Chrysler group using the GMT900 platform is a likely scenario, is that really wise for anyone? 9 companies with 9 SUVs that are identical? Fantastic. Obviously, i’m exaggerating about them being identical, but it’s a bit foolish.

    We’ll see when the next Dodge Durango ends up being nothing more than a Chevy Trailblazer with a ram’s head on the hood.

    It doesn’t make any sense for GM to buy out Chrysler, especially when they’ve spent the last few years dumping their holdings in other companies, like Subaru, Fiat, and Isuzu.

    This brings up another question: Where the hell is GM getting the money to buy Chrysler from, especially after they lost twelve billion dollars? Are they getting some kind of killer deal here?

  • avatar
    mikey

    Frank How about a Silverama or bring back a Cudabird.

  • avatar

    This brings up another question: Where the hell is GM getting the money to buy Chrysler from, especially after they lost twelve billion dollars?

    DCX should offer to pay GM to take it off their hands. That would give GM operating capital they badly need and cost DCX less than trying to sustain Chrysler for another year.

    Are they getting some kind of killer deal here?

    With the emphasis on “killer.” The only thing GM could possibly want from Chrysler are decent minivans and the Wrangler. Everything else would be redundant and meet an early demise, either through neglect or euthanasia.

  • avatar
    SuperAROD

    GM is not buying Chrysler. We are wasting our breath even talking about it. The media has it wrong again.

  • avatar
    AlanW

    I like Cudabird the best. Although Aspelade is a close second, if only for the fact that it sounds like it could be a debilitating bowel movement.

  • avatar
    oboylepr

    If DCX is viewed by many as suicidal, any merger with GM would turn it into a suicide pact between lovers. I can't think of anything more likely to hasten the demise of both companies especially GM. Some of the folks running GM seem to be a bit crazy at times, but are they that crazy? Even if DCX gave GM their Chrysler division for free it would be like throwing an anvil into a sinking rowboat! You got to wonder where these guys are at, jointly studying a new large SUV for Chrysler ??? There is a bunch of scientists in 'Frisco right now talking about disappearing glaciers and global warming. There is even speculation that The US might place carbon restrictions on the industry a la Europe. Surely someone in GM and DCX watch CNN occasionally! The tide of public opinion seems to be slowly agreeing with the 'sky is falling' crowd (global warming), another large SUV makes as much sense as snow tires on an F1 car! I wish GM/DCX/Ford would give themselves a fighting chance. (edited for lousy grammer!)

  • avatar
    Glenn A.

    oboylepr said “Even if DCX gave GM their Chrysler division for free it would be like throwing an anvil into a sinking rowboat!”

    I laughed out loud right in the office, and had to explain to friends and colleagues what was up.

    Almost as funny as “hunting deer with a rocket launcher” (a good analogy for driving to work solo in an SUV?) said one of my colleagues as he laughed out loud, too.

  • avatar
    mrcknievel

    Chrysler definitely needs to do two things if they are going to make it:

    1. Adopt some type of cohesive design scheme for their vehicles. You know a BMW because of trademark visual cues. You know can tell that the Cayenne and the 911 are kin. The Yaris is a squished down Camry. There is NOTHING that links the 300 with the Sebring and that’s a problem.

    At least Ford is sticking oversized triple blade razors to the front of all of their stuff now. A good looking car that you can’t identify by brand at first glance (no..I’m not calling the Sebring good looking..) may sell more of that car..a good looking car that is visually linked with the rest of the brand helps to sell not only that car, but the company as well.

    2. As mentioned in previous comments….get Mercedes to cough up a few of the goodies. Not only does it save money in the developement phase but surpluses in parts, etc. The fact that Mercedes is being tight fisted with a chassis that is nearly two models old is a battle worth fighting. The Sebring should have been built around the W202 at bare minimum..and it shouldn’t have been up for discussion.

  • avatar
    ktm

    “Gee, our Titanic is listing, taking on water. We’ve sold virtually everything except the ship itself, and the Captain has just jettisoned a bunch of the crew over the side. Let’s go alongside the Lusitania, sinking even faster, and tie fast!”

    Great analogy Glenn. You had me laughing.

  • avatar
    hondaboy55

    Another giant Stupid Useless Vehicle as the sales of such are in rapid decline is a testimate to whom or what department is running the company. And without current data, or effective forward looking thinking, the bean counting department concludes that a 4,000 lb. vehicle earns more profit per-pound, than a 2600 lb vehicle.

    There has been a lot said about the cost of labor, retirement benefits, etc. I am wondering, while US manufacturers have few nameplates with history, Toyota and Honda more often than not redesign their flagship nameplates well before a design may experience a sales drop because the lines are getting old. I wonder TTAC writers…. What can you write about that cost experienced by the transplants. Namely, the cost of freshening a model well before it gets old. Compare the cost to the company, and the model of an LTD, to an Accord. (LTD=Crown Vic) lets say over the last 16 years.
    While some may consider the accord at 4 years to be old, and may think it needs updating sooner, compare it to the mustang, at 16 years to a redsign, the LTD which is more or less 10 years out.

    Have fun…..
    bye.

  • avatar
    hondaboy55

    I guess GM could buy Chrysler for the only purpose of keeping their title as largest automaker in the US for a few more years, by the numbers anyway. But then in year 2 it would be a funny mess.

    I bet they do it, just to keep the title one more year……..yah.

  • avatar
    Joe Chiaramonte

    Word now from the anal-ysts is that GM and Chrysler are merely debating the merits of GM loaning DCX the GMT900 platform for a new vehicle.

    God forbid they should be talking about working together on a B-Class fuel-efficient shared platform. No, it’s gotta be a way to sell more big-ass SUV’s.

    Brilliant.

  • avatar
    Terry Parkhurst

    As someone who grew up when the question “What’s a Chrysler?” had a ready answer in one’s mind’s eye, this week is as sad as it gets. Last I read, 11,000 jobs are being lost and, most likely, the people losing those jobs won’t get picked up by the new plants being put into America by Toyota and other Japan-based companies. Much has been made about Senator Biden’s gaff in describing Senator Obama. Maybe the more important gaff was when he went to the line of a soon-to-be-shuttered Durango plant in Delaware and declared that the jobs were secure. That’s not to make light of his bid for the White House; just to demonstrate that there are now factors at work that average working people can’t expect politicians, even career politicians, to override.

    The really big news methinks, is a just breaking – at noon Pacific Standard Time – story about a potential merger (of sorts) between the Chrysler division and The General to build a sport utility the size of a Suburban, “which Chrysler doesn’t have” according to http://www.msn.com. No one asks the question at Chrysler, “Do we need to build a Suburban-sized rig in today’s world to survive?”

    It pains me to say it, but maybe what it will take, to get Ford, GM and the Chrysler division of DaimlerChrysler to think outside the proverbial box, is for one of them to go out of existence. Of course, maybe we can forgive them for thinking there’s money to be made with huge, herking SUVs, when Audi introduces that monstrosity it has.

    As the exercise lady, Susan Powder, used to say, “Stop the madness!”

  • avatar
    NickR

    GM loaning DCX the GMT900 platform for a new vehicle.

    Ok, let me string this together. GM has a 117 day supply of trucks laying around. (Bad). The sales of the gas swilling, unsightly Durango and the mystery vehicle Aspen (it’s a mystery why they built it) are so poor that they are closing the plant. (Bad).

    So, the solution is to use the GMT900 platform to create another enormous SUV? THAT’S the panacea for their problems?

    Of all the things I’ve heard out of Detroit lately, that is far and away the most ridiculous.

    With any luck it will hit the market round about the time there’s a war in Iran and oil heads north of $80/barrel again.

    If Chrysler wants to introduce a gas sucking car at exactly the wrong time, can I ask that they please start making the 71 HemiCuda again?

  • avatar
    starlightmica

    Aspice
    Chargibu
    Durangelade
    Ramvalanche
    Caliblazer
    Impass

  • avatar
    Jay Shoemaker

    Why did you have to ruin a perfectly nice picture of the Mercedes CL by including Dr. Z in the same shot?

  • avatar
    AlanW

    Don’t the 2.5 have analysts who can help them with trends in their industry? It seems like they want to keep using the same SUV formula that they have been riding on for the past decade or so. If sales are slipping, just rebadge more of them? How does that make sense for EITHER party?

    There’s no need to debate the usefulness of an SUV (hunting with a rocket launcher, HILARIOUS nice one Glenn) because consumers buy cars based on trends/fashion whatever you want to call it. Late 80s-90s was the minivan craze and that died out due to falling out of fashion. SUVs have had a 10+ year popularity run, it was only a matter of time before they became unfashionable. The trend that is emerging is small Euro/Asian style gas sippers, and it looks like the 2.5 are going to miss that boat.

    GM buying Chrysler is not a solution. GM and Chrysler badge engineering a full sized SUV is not a solution. What they need to do is make GREAT vehicles to compete with the European and Japanese transplants based on what the general public want to buy. Not vehicles that are “good enough” or “almost as good”. They have to be better. Much better than the competition.

  • avatar
    jdv

    “NickR–thanks for the info. This is a HUGE problem for Chrysler. Thousands of cars in snow covered lots, rotting..good luck to those who buy one!”

    That’s a good laugh.
    Snow, without salt, really isn’t a big deal

    I’m guessing your from a warm climate. :-)

  • avatar
    Dave M.

    GM isn’t buying Chryco…it’s a GM900 platform discussion. I’m vexed as to how Chrysler wants this platform over the superior RIS Ford platform….Lord knows the Ford chassis could use a better looking shell over it…..

    My friend LOVES the Chrysler Aspen…as in started salivating when he saw it at the auto show…..whatever…..

  • avatar
    jthorner

    I recently had the unfortunate need to sit in the second row of a brand new Dodge Caravan for a short 5 minute ride. I’m glad it wasn’t any longer as the seating position is horrible. I’m not talking about the way back third row, but the center row. I’m average heigh at just under 5’10” and it felt like my legs were up under my armpits. Meanwhile the “head” rest was punching me between the sholder blades. Those seats are useless for anyone over 10 years old.

    How can Chrysler be the king of minivans with such horrible ergonomics? Even GM makes more comfortable middle row seating while the Japanese manage seating a real person could take a long trip in.

    My point is that if Chrysler can’t even get their minivans right then there isn’t a chance they will do any vehicle well.

    Only a sucker would buy the complete disaster which is the modern Chrysler/Dodge/Jeep business. This one is going down for the count. Perhaps the name will live on as a label slapped on Asian imports just as Magnavox, Zenith and other once storied American brands are.

    My money is on GM as the only one of the former big 3 with a chance of surviving as a car maker in the US market. Ford should just give up on cars in the US and be a truck company. They already have given up designing cars in and for the US, so why not just call it quits and let Mazda be their US car brand?

  • avatar
    jerseydevil

    hondaboy55:
    February 16th, 2007 at 4:29 pm
    Another giant Stupid Useless Vehicle

    Bravo hondaboy

    Bye DCX

  • avatar
    John Williams

    NickR:

    So, the solution is to use the GMT900 platform to create another enormous SUV? THAT’S the panacea for their problems?

    The Big 2.5 still think they can make people buy these cars. Their dwindling market share says otherwise.

    As for one of the Big 2.5 falling from grace, it’ll probably take another 10 to 25 years for that to happen. I doubt this site will be around for that long.

  • avatar
    vento97

    The industry will adapt and change, slowly and not until they are at the brink (GM has already started with better product) but it will happen.

    I’m sure the dinosaurs had that same Big 2.5 MBA-corporate mindset right before the meteor strike…

  • avatar
    vento97

    “why buy the cow when you can get the milk for free”.

    Or in the words of Frank Drebin (Police Squad):

    “Looks like the cows are coming home to roost…”

  • avatar
    vento97

    Continue the Jeep legacy, one or two chryslers, a few dodges, a few trucks… thats all…

    Between GM & Chrysler, that will result in four times the inventory sitting on dealer’s lots that they will have to move with generous incentives. The drawback to this is the decline in resale values as a result…

  • avatar

    I was pulling into my driveway tonight, behind the wheel of my wife’s new Jeep Liberty, when FoxNews broadcast the story that GM and DCX are in talks about GM buying Chrysler/Dodge/Jeep lock, stock, and bushings.

    I have truly descended into the seventh ring of Hell.

    Please…somebody…ANYbody…TELL me this won’t happen. Please.

    I love the Jeep brand. I’m looking forward Really Soon Now to buying my first new Wrangler Rubicon. My wife wants to trade in her Liberty for a Wrangler Unlimited. I once worked for an in-house ad agency for a chain of dealerships that were about 80% DCX. To sell Jeep and its sister-brands to GM would be the worst fate imaginable.

    Jeep hit a Grand Slam with the new 2- and 4-door Wranglers. The Patriot looks like another winner. Dodge has (for my money) the best pickups on the market, and our local dealers can’t keep the sedans in stock. Chrysler may be a brand in search of a raison d’être, but that’s no reason to sell out to the Evil Empire. What possible reason could GM have for buying Chrysler? They’ve got too many brands/models now. How would adding more help?

    Of course, Robert, if they DO merge, you’ll have one less Death/Suicide watch to write. And probably fewer to post, before the inevitable final chapter.

    In the words of Slim Pickens in Blazing Saddles, “I am depressed.”

  • avatar
    oboylepr

    captaindigital:

    I think you get a ‘get out of the seventh ring of hell’ free card! It looks like talks about a new mega SUV for DCX only. That in itself is bad enough. Heavens knows, a large SUV is just what Chrysler needs right! like it needs a gunshot to the head. Hopefully Jeep is safe for now.

  • avatar
    Seth

    Check out these threads: Entertaining read
    http://www.gminsidenews.com/forums/showthread.php?t=45044
    http://www.gminsidenews.com/forums/showthread.php?t=44905

  • avatar
    ZoomZoom

    Ugh, the automotive industry is brain-damaged.

    How…what the f….idiots…aaaaarrrggghhhh, my brain hurts!!!!

  • avatar
    joeveto3

    The only way the purchase may possibly make sense to me…

    GM buys Chrysler and sells off the parts of what it doesn’t need, thereby raising cash it does need. GM keeps, first and foremost, the rear drive platform upon which the 300 and others are based. GM also keeps the minivans. Even though they aren’t altogether that popular these days, there’s still a market, and Chrysler owns it.

    GM also keeps Jeep. It’s a money maker. The rest goes the way of the dinosaur. The trucks? Gone. GM doesn’t need them. And they don’t need the competition. Viper? It’s sold off or killed. The Sebring and platform mates? Who cares? They are crap. PT Cruiser? It’s a good seller but at huge discounts. And GM has the HHR.

    So basically I see Chrysler dying an ugly death at the hands of GM. Bye Bye Ram. Bye Bye Challenger. Bye Bye 300 etc.

    Hello less competition. Hello rear drive Grand Prix’s and Impalas. Hello cash infusion. Jeep lives on.

    The above is the ONLY way I see this thing making sense.

    What about the rest of you?

  • avatar
    fahrvergnugen11

    So basically I see Chrysler dying an ugly death at the hands of GM. Bye Bye Ram. Bye Bye Challenger. Bye Bye 300 etc.

    That splashing sound you hear will be thousands of MOPAR owners jumping off the highest bridges across the country…

    And even if this transaction does materialize, it will only temporarily delay the inevitable race to bankrupcy between the remaining Big Two – because all of the old problems (union contracts, pensions, existing B-School MBA management, etc) will still be in place with the same decision-making idiots that got them into this predicament in the first place…

  • avatar
    blowfish

    carguy:
    February 16th, 2007 at 11:01 am

    Daimler Benz should have learned from the BMW-Rover fiasco and stayed away from international acquisitions. A very rash move from an otherwise very conservative company.

    Is hard when you’re from another culture, u always think about yourself and ignore their culture.
    Growing up in HK, a British colony, the Brits had a way of bringing out the best in everybody, something Daimler need to look at it seriously.
    Some were saying few yrs ago Chry was making $$ while daimler wasn’t, Daim didn’t complain.
    Is like the Jewish joke.
    ” The bank manager called up Marvin said ‘ Your account is over drawn by a hundred.’ Marvin replied ‘ Last month I had 300 in the account did I called you that I had loaned you money?’

  • avatar
    Qusus

    This was a very good article by Farago but some of these reader comments are way off the mark. Seriously, while we may all be knowledgeable car enthusiasts this doesn’t make us business-experts. In fact, it’s the former that can make us worse of the latter.

    For example, what’s with the all ranting against these “B-School MBA types?” I don’t have a spreadsheet of Chrysler executives and what school they went to (and I am sure, neither do you) but major corporations like Chrysler can hire from a pool of the best and brightest execs. Perhaps they are bogged down by the bureaucracy inside the their own corporation, but no one without direct knowledge of Chrysler’s hiring pool can blame Chrysler demise on the know-nothing “MBA types.”

    Every time there’s a death-watch people always start recommending what cars the big 2.5 should start making in order to save themselves. While some of it seems reasonable, a lot of it is mostly “they should make (insert name of family sedan) and make it a RWD with a V8 option! ” While an Impala or Sebring based off a RWD platform may sound enticing to all of us, these cars would simply not sell in enough volume to be close to profitable. Again, while we are knowledgeable car enthusiasts, we do not reflect the wants or needs of the thousands upon thousands that go out and buy 4cyl FWD family cars and if a major car company ever catered to the enthusiasts crowd they would go out of business at a lot faster pace than of the 2. 5 are currently going at now.

    Lastly, while it’s fun simply to rant against the failing American car companies and point out the things that they’re doing wrong some of these criticisms have gotten exaggerated. The automobile industry is one of the most competitive industries in business. And it is possible that there are simply too many competitors in the business and that a few will inevitably be eliminated. This does not mean that the people running them are morons, it does not mean they are filled with “B-School MBA types”, it does not mean their works are slack-jawed hicks, and it does not mean they make terrible cars. In fact, the decline of GM/Ford/Chrysler arguably has nothing to do with any of their decisions over the past few years.

    Every year one professional baseball team wins the World Series. This does not mean that the other 29 baseball teams were incompetently run, or that they had worser baseball players. Simply, there can only be one winner at the end, and thus even good teams must be eliminated. The automobile industry is a lot like this. Please keep this in mind.

  • avatar
    SANDS97

    How Bob Eaton ever sold off the Chrysler Corporation to those arrogant Germans in the first place is beyond me.
    Chrysler should have bought Nissan back in 1998 when they had the chance and today they would have been an unbeatable team. Nissan engineering is sensational and would have been a great boost to Chrysler and Chrysler styling would have been good for Nissan.
    Well that is history now and the idea of GM buying is also beyong belief – if they do that will be the last nail in the coffin for Chrysler. GM has no idea what to do themselves let alone fix another car company.
    They have never faced up tp reality once in the last 40 years and if they had had Toyota would not be about to overtake them forever. GM is so overbloated with little idea and the rubbish they car making in Korea is killing their image in Australia and will lead to Holden’s death in the future.
    I hope that Chrysler can become independant again with backing from the right people. If it has to be sold to anyone I hope that it’s to either Hyundai, Peugeot or Honda.
    Mercedes days a limited themselves as both Lexus and Infiniti will finally kill they outright with their far supirior products.

    LONG LIVE CHRYSLER/ DODGE/ JEEP’

  • avatar
    windswords

    # Joe Chiaramonte:
    February 16th, 2007 at 4:35 pm


    God forbid they should be talking about working together on a B-Class fuel-efficient shared platform. No, it’s gotta be a way to sell more big-ass SUV’s.

    Brilliant.

    ================
    Actually they are. The Wall Street Journal said Chrysler is also is talking with GM Daewoo in Korea about jointly developing small cars. Daewoo supplies compact cars and SUVs to a variety of companies and brands, including Chevrolet, Opel and Suzuki.

    Dear Daimler-Benz,

    Could we please have Chrysler back now, so it can be the company it used to be with the people that made them profitable in the 90’s – Lutz, Gale, Pawley, Caistang, Stallkamp, et. al. (you can keep Eaton and stick him where the sun don’t shine). You know, the ones that built interesting products that people wanted to own and even became fans of, the company that was the most efficient and profitable US producer, the company that could react quicker to market changes than either of it’s domestic rivals. In other words sir, the company that existed before you came in an F***ed it up!

    Sincerely,
    Mopar fans and the American (and Canadian) consumer

  • avatar
    windswords

    • Terry Parkhurst:
    February 16th, 2007 at 4:39 pm

    Much has been made about Senator Biden’s gaff in describing Senator Obama. Maybe the more important gaff was when he went to the line of a soon-to-be-shuttered Durango plant in Delaware and declared that the jobs were secure. That’s not to make light of his bid for the White House; just to demonstrate that there are now factors at work that average working people can’t expect politicians, even career politicians, to override.

    ============

    Go ahead and make light of it. I lived in Delaware 20 minutes from that factory. I think I know Biden pretty well. Trust me, he is a joke. Try googling (sp?) Biden’s name and 7-11 or Dunkin’ Donuts; you find more interesting things he has said about minorities, but the media wll give him a pass. I don’t think I would be for Obama either but I have no doubt that man has more character and integrity in his left pinky than Joe does in his whole empty suit.

  • avatar

    Reports of GM-Chrysler rumor were leaked for only one purpose my friends – to set the UAW on its elbows prior to DCX demanding the same concessions both Ford and GM received. The UAW has the most to lose from such a merger or even alliance, and it might well be the last spike that finishes them off.

    Now in terms of the best possible alliance or merger IMHO – I have said it all along… Hyundai and Chrysler. The first needs Chrysler’s trucks/jeeps and the latter needs Hyundai’s increasingly competent small and mid-size cars (Name one Chrysler vehicle that is superior in every measure to any current model Hyunda- – heck even their mini-vans are beating DCX ones in every test and comparison). All trucks/jeeps could be designed and made in NA, and the cars in Asia. Hyundai has reach in almost every country of the world which is something promised Chrysler by the MB merger but has yet to materialize. By all measure and evidence MB is embarrassed by its American partner, not eager to expand its reach. Hyundai could also stand to benefit from a relatively more disciplined corporate culture.

    Although in my heart I would love to see Chrysler go back out on its own, this isn’t sustainable in an increasingly global auto industry. And the Bible (and even nature) teaches that only out of death does new life come. The question is what must this death look like, and do the leaders of DCX truly appreciate the cost?

    For the record – T and H have already written off the 2.5 as their chief rivals – It is Hyundai they fear the most (and the Chinese in the long term).

    No, there will be no GM and Chrysler marriage – this is all smoke and mirrors staged for the upcoming union demands, in which DCX needs to emasculate or merely bruise the UAW.

    Now in context the sad thing is that Dodge Chrysler Jeep Freightliner etc are all truly considerable brands – to see any of them go away would mark a new era certainly. This is no mere patriotism nor sentiment either. There are many reasons to hope they survive. Icons are only as worthy as the substance behind them. Chryler is far more than bones to be picked; there is a lot of meat there. It takes only visionary and inspired leadership to raise it to any semblance of its former success. Maybe one day they will make vehicles people are proud to own, salesmen are proud to sell, and the company is proud to stand behind. RF has said this all along – it is all about product! Product! PRODUCT!

    Let’s all hope whoever owns Chrysler in the near future can deliver.

  • avatar
    wlsellwood

    CarNut:

    News from Portland, OR – DCX recently announced a big layoff at their Freightliner plant, 800 of 1,700 workers, with additional commentary that the plant will stop producing Freightliner-brand trucks, and move to a much lower-volume brand of trucks, with some military production.

    The implication: few, if any, of those jobs will be returning to the Portland plant.

    Broader implication: These are turbulent times for the producers of “petroleum combustion units.” Basic economic theory dictates that the more competitive companies will gain market share more rapidly at times like this, and so it goes.

    Longer-term speculation: Americans don’t do the zen management thing as well as the Japanese, but we may be headed into a period of creative destruction, so it may not matter that the barons of Grosse Point will never get it. A small car with an electric motor and battery pack doesn’t require a GM-sized company to put it together. Getting from here to there, however, requires that the Feds give up on the “too big to fail” rationale and let nature take its course.

  • avatar
    NickR

    Apart from the whole discussion of brands and models staying or going, I have to add this:

    How many people here have been through major mergers? Come to think of it, how many people have been engaged in, let’s say, a huge IT implementation?

    They are almost invariably nightmares, devouring management time, and often money, long before the benefits start to materialize (if ever). To do this and manage to produce new, better cars would be daunting indeed.

    And thanks Qusus for sticking up for us B school MBA types…I grew up in MGAs and Austin Healeys, doesn’t that give me some street cred?

  • avatar

    Thoughts of a General Motors-Chrysler merger bring back memories of another equally viable merger from years past, although you’ll have to be middle aged and into motorcycles to fully appreciate it:

    Norton-Villiers-Triumph

  • avatar
    Glenn

    CarNut, the idea of Hyundai buying up Chrysler is even more unlikely than GM buying Chrysler for one very simple reason. Chrysler purchased 10% of Hyundai some years ago (with Hyundai’s permission) and after a big “scrap” over partners in China, Hyundai management were so incensed with Daimler-Chrysler, that I understand they more or less said “we want to buy our 10% back and damn the cost” – and did so (DCX making a huge profit).

    Hyundai would probably rather merge with virtually ANY other automotive company than Chrysler or Daimler Benz after that.

    Glenn A.

  • avatar
    Glenn

    Honda surely have brains enough to not touch Chrysler with a barge-pole, either.

    Peugeot and Chrysler? Peugeot (Hopefully) aren’t that STUPID either. BUT, if any corporation could probably make it happen, Peugeot (owner of Citroen) MIGHT be the one to do it.

    On the other hand, look how well it went for American Motors when Renault took a majority interest….

    Glenn A

  • avatar
    Terry

    Here is my $.02 for the name of a possible GM-Chrysler company…
    “Dodge-GM Cars” (dodge ’em cars, like at the old amusement parks)

  • avatar
    jthorner

    There are only a couple of semi-rational buyers for Chrysler-Dodge-Jeep.

    1) Peugot – as a way to get back into the huge US market it doesn’t play in.

    2) Fiat – see #1

    3) A Chinese auto maker – To get access to the US market and to gain expertise.

    For any of these the only rational purchase would be of certain assets, not the entire business units. Nobody in their right mind would want the union contracts, franchise network, pensions, healthcare costs …. or most of the factories.

    GM would be absolute idiots to do a deal like this. GM can do a great RWD car platform on it’s own. The Ausies kept the flame alive and that flame can be fanned into a bonfire. GM’s powertrains aren’t perfect, but there is nothing better in the Chrysler parts bin. Chrysler’s minivans have market share, but they still stink and are running on momentum. GM could easily contract their Daewoo subsidiary to make a minivan along with the Aveo. GM China could do that job as well. Perhaps the real reason for killing the current GM minivan line is to be able to shut down that factory and lay off any white collar staff dedicated to minivans … then bring the seqment back from the dead with a captive import.

    The only way DCX will get rid of Chrsyler is to put those units into receiverships and sell off the assets. No idiot will buy the whole thing.

    I have often said that one should study the history of the British motor industry to see a preview of what is happening in the US. That remains true.

  • avatar
    kjc117

    Sell to the Chinese?
    I would keep the Jeep brand whomever they sell to.
    Jeep brand has value and could be Daimler’s “Mini” if develped correctly.

  • avatar
    Glenn

    Keeping the Jeep brand and selling Chrysler would be of no use, since Jeep is the only thing really worth buying, and if you want to make a sale, you need – an interested buyer…

    Isn’t it “interesting” that when Chrysler bought American Motors in 1987, it was essentially only interested in the Jeep division, which American Motors had purchased from Kaiser Industries in 1970? Chrysler always regarded the automotive end of American Motors as merely a thorn in the side, but Renault wanted to sell out the entire operation and it was “bundled” as an all or nothing proposition.

    Isn’t life just weird? I guess what goes around, comes around.

    The mopar lovers are all going to be having strokes if GM buys Chrysler. Soon you may be joining the (very few remaining) AMC fans, Chrysler-Dodge and Plymouth fans….

  • avatar

    No company in its right mind would buy Chrysler. No one.

  • avatar
    Qusus

    Really? No one? Is Chrysler really in that deep right now?

    The suggestions that GM or any other established auto manufacturer would buy Chrysler seems fairly ludicrous, but really what about the Chinese? Don’t they have the cash to do such a thing?

    I remember a year ago the Chinese bought a joint BMW/DaimlerChrysler engine plant and shipped it, literally shipped it, piece by piece over to China so they could get a jump start on engine technology.

    Wouldn’t the Chinese salivate at the prospect at buying entry into the US market along with the modern technology Chrysler currently has?

    These aren’t rhetorical questions, I’m just asking because it seems to make sense to me – though I’m obviously no expert on the matter.

  • avatar

    Qusus:

    The unavoidable barrier to sale: the UAW’s pension and health care obligations and their stranglehold on Chrysler’s decision-making process.

    Lest we forget, UAW Chief Ron Gettelfinger is on Chrysler’s Board.

  • avatar
    mkirk

    Let’s all clarify something here. Detroit is not in trouble because they build large trucks and SUV’s. They are in trouble because they build too many large trucks and SUV’s. The domestic makers are loosing money in this segment because they are having to give them away because supply is more then demand. Simple Economics. But this DOES NOT mean there is no demand and as such, produced in the proper quantities these vehicles are still huge cash cows, even if not quite so huge as a few years ago.

    Now as an automaker why would I abandon this segment and dive into small cars, where there is not much of a profit margin, or if I am to believe some, none at all (Though if Toyota is selling Carolla’s for zero profit I believe that would be dumping). The key here is to match production with demand. Rashly blaming Detroits situation on a lack of small car offerings stupid. One could make a much stronger arguement that Detroits situation stems from the fact that they can’t adjust to changing demand due to the fact that whenever they neet to cut shifts or idle a plant they have to get permission (bribe) the UAW and grease a bunch of Politicians to do it.

    The first Domestic nameplate (weather it be one of the big 3 or a new one) that tells the union to take off and follows the Japanese model of labor relations will win.

  • avatar
    Luther

    Chrysler may be in talks with GM over sharing engines, transmissions, and platforms. I would suspect the 3.6L V6, 6-speed automatics, and GMT900/Lambda. I think this would make sense since Gettelfinger controls 2.5 (2.75?). I think DCX would not have a problem with this and would sell Chrysler off as soon as they could find a buyer. Chrysler would have to at least be moving to black before any buyer would look seriously. It almost seems that Chrysler assets are worth more in pieces than intact with all their liabilities… What a mess. The Jeep brand (which has high global value) is Chrysler’s ace. Maybe sell Chrysler on eBay.

  • avatar
    Luther

    Rashly blaming Detroits situation on a lack of small car offerings stupid.

    Chrysler would go out of business next week if people stopped buying their trucks/SUVs and bought Sebrings/Avenger/Compass instead. Their is just not enough profit in small cars to fund 2.5 liabilites. Period.

    Though if Toyota is selling Carolla’s for zero profit I believe that would be dumping

    Which would “earn” them a 10 year “vacation” to Club Fed if the maggot-classes catch them “dumping”. On a personal note: Porsche can dump on me anytime they want.

    The first Domestic nameplate (weather it be one of the big 3 or a new one) that tells the union to take off and follows the Japanese model of labor relations will win.

    The UAW holds “legal” power so they will stay or take off at their pleasure. See “Club Fed” and “Milk Cow” above. Its a lot like inviting your neighbor over for dinner and then having to pay them a ransom to leave.

  • avatar
    ZoomZoom

    Mergeritis.

    A sickness. Manifiested by companies combining, as if in a reverse-amoeba mode.

    It has been studied. Most mergers do not add value!

    Will somebody please stop the madness?

  • avatar
    vento97

    Qusus:
    For example, what’s with the all ranting against these “B-School MBA types?” I don’t have a spreadsheet of Chrysler executives and what school they went to (and I am sure, neither do you) but major corporations like Chrysler can hire from a pool of the best and brightest execs. Perhaps they are bogged down by the bureaucracy inside the their own corporation, but no one without direct knowledge of Chrysler’s hiring pool can blame Chrysler demise on the know-nothing “MBA types.”

    Coming from an engineering background, I’ve worked (more like battled) with these MBA types for years.

    To answer your question, why do I blame the know-nothing MBA Types for decisions which lead to the Big 2.5’s current predicament? Let me count the ways:

    1) Poor marketing decisions, such as the decision to build more gas-guzzling SUVs at the same time said market started to decline due to high fuel prices.

    2) Bad business decision to concentrate on high (short term) profit SUVs and big trucks, while ceding the sedan and small car market to the Japanese and Europeans.

    3) The Big 2.5’s (more like the Big Two’s) continuation of their “bean-counter engineering” philosophy which has resulted in automotive offerings that are “close, but no cigar” when compared to their Japanese & European competition.

    4) And to top it all off, the people who hire the best and the brightest (including the hiring of engineers) are the MBA types. If you look at the upper management structure of the European and Japanese companies, you will more often than not find that they come from engineering background, usually with a “Dr.” (engineering PhD) in their title. I feel more confident when engineers hire engineers than when MBAs hire engineers. Unless these MBAs have an engineering background, I would wager that while they know what to look for when hiring a financial, business, or marketing person, but haven’t a clue what to look for when hiring an engineer…

    5) And that’s just the tip of the iceberg. TTAC has covered the rest of the reasons in detail for as long as this site existed…

  • avatar
    hondaboy55

    The following story is from Marketwatch.com And as you can see there is definitely plans in works to separate C from DCX. And as many of the biz experts say, its not likely GM will be the buyer. As entertaining as the DCGM formation may be, the overwhelming opinion among the business professionals whom have commented say its not a good move. DaimlerChrysler is set to launch an auction for its Chrysler unit as early as this week by sending information on the struggling division to several potential bidders, according to a published report. The Times of London reported on its Web site Monday that the car company's adviser, J.P. Morgan, will provide interested parties with private information, such as data on current trading, as part of the auction. The value of any deal remains unclear, though analysts at Citigroup suggested investors might be happy with a "clean break" from the division, with no money changing hands but health-care liabilities passing to the new owner… The Wall Street Journal reported that large car companies from Asia, Europe and the U.S. have approached DaimlerChrysler about buying or forging an alliance with Chrysler. Private-equity firms are also thought to be interested in the division, while a spin-off to existing shareholders is another option, the Journal reported… Any sale or spin-off would likely take months, with the value of the division unclear. Lawson suggested that health-care liabilities mean the company is valued anywhere between 2 billion euros and minus 3 billion euros… Analysts at Morgan Stanley, however, valued Chrysler around 5 billion euros ($6.6 billion) after accounting for liabilities. DaimlerChrysler has already announced a sweeping overhaul of the struggling division, with plans to cut 13,000, or around 16%, of its jobs over the next three years and to strip out around $4.5 billion in costs. Since JP Morgan evaluated Chrysler, and will be accepting offers, lets think about who may benefit from owning chrysler. Mitsubishi may think about buying the company just to watch it die, but they really can't afford to do that. They could also have access to the Chrysler dealer network again. Do they need a truck……. not really, nor a minivan. How about Nissan…… nah…. I don't think so….. But they are not doing that well, so put them in it for 20%. I think interested parties may include Suzuki, and more likely Hyundai. Both are growing, could definitely use the dealer network, distribution, and both could use a nice truck foundation to build on. My bet is Hyundai heavy equipment, they have the money, and they know how to bring a quick product to the us market. And they are smart enough I believe to let Chrysler have its own identity. And I'm sure the Chrysler dealership network would be happy to have Hyundai autos in their lots, while C gets better products to market. All this said, its not forgetting C has a nice lineup, and among the tiny 2.45, they have more in the pike. The biggest question is in how they(Morgan) present the package to prospective buyers. As the sum of its parts, or as parts for breakup. Merger, or buyout. I don't see a buyout by a private equity group, the investment on their part, and time required to wait for payout if it came would make these players disinterested. GM, as I said before only has one thing to gain "we are the number one car builder in US and A" for one more year. This option is the most stupid, and has an above 50% possibility of materializing. Yes I think they are that stupid. Besides, its the number one topic on the news as far as the auto biz goes…."Toyota will pass GM some time this year as….." So its on Ricks mind big time. If I were Hyundai, or Suzuki, And I got Chrysler at a garage sale. I would dump management first, bring in new engineers to fix the mechanical problems, improve product. Then close out old factories, continue the buyout, layoff plan. Then as new products are brought to market, close plants with UAW workers, and open new Hyundai plants to build the new Chrysler stuff, and staff the plants free of UAW, thus replacing the old outdated plants, and improving on labor costs, and slowly moving the companies manufacturing facilities to less cost basis production. Getting rid of US based management would improve the brand 1000% as it would if the same were done at GM and Ford. All three of these companies have made it clear their respective managements will not produce a product with any lasting dollar value. And despite what anyone says, when it comes down to it, making an investment of close to $30,000 for a new car is hard to do when you don't see the product value matching the dollar invested. One other player, not as likely and even more an odd accumulation of bizarre talent. Buyout by TTAC posters. While this group may be able to scrape up the cash to plunk down on the deal, management qualification questions abound. On one hand do we see this group putting a Hemi under every hood? Rear wheel drive and a Hemi in the Seabring? A rear drive Hemi Prius Killer from TTACC? One chance in a lifetime for this crown to put it on the table and put their authoritative comments to work in the boardroom…………. But thats just me.

  • avatar
    Qusus

    vento97:

    Your reasons are fair. I agree that the 2.5 have not been the most well managed of companies in a field where even small mistakes are magnified by the breadth and quality of competition and big mistakes are often fatal.

    However, I don’t think any team of executives, no matter how talented, could have possibly saved any of the 2.5 from their current slide. Their decline was inevitable due to the short-sightedness of the decision makers 30-40 years ago.

  • avatar
    jthorner

    No rational company would buy Chrysler lock, stock and barrel. Some buyers might be interested in certain assets of the company … but there is no way anyone in their right mind would want the assets and the liabilities. The pensions, warranty exposure, product liability exposure, environmental exposure (lots of old factory sites), union contracts and such all make the company have a negative rational value.

    The dealer network is no great prize. A new company from China or India would not have a big problem setting up a dealer network large enough to serve any puposes. There is nothing special about the Chrsyler network to make anyone want it.

    Receivership and a picking over of the assets at fire sale prices is the only outcome which makes sense.

    GM and Ford have absolutely nothing to gain by buying Chrysler. Only an idiot would buy the whole company just to get a hand on a mediocre minivan lineup.

  • avatar
    allen5h

    Robert Farago wrote: “No company in its right mind would buy Chrysler. No one.”

    If this is true, then there is a very distinct possibility that Chrysler will close its doors under Mercedes. But what will happen to the UAW liabilities? Will they continue to be funded by Mercedes? The German govt? The American Govt? Or the retired Chrysler UAW simply lose everything?

    But I still think that some Chinese company would be interested, provided that they can buy it real cheap (like for $1 billion or less, or maybe even a cash-back deal from DCX).

  • avatar
    ogswizzo

    does anyone have an idea why chrysler would overstock, (overbuild) minivans? they have over 170 days worth of dodge and chrysler, short and long wheelbase, models out in parking lots in BFE. and they are working overtime, 6 days a week 9 hour shifts for the month of march.
    they reported a loss on minivan overbuild last year. why are they setting themselves up for another loss on purpose

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