By on July 22, 2008

No thanks.  They already have enough.A few weeks back, we told you that some of Chrysler's component manufacturers have been running their plants full bore, even canceling holidays to meet Chrysler's production demands. They've even had to ship parts in cardboard because they didn't have enough of the usual plastic packaging. Now we've learned Chrysler has called a hard stop, throwing suppliers into a tailspin as they halt production lines that were running beyond capacity last week to keep up with orders. Plant managers are scrambling to determine new production levels so they can get lay-offs started as quickly as possible. Is this the beginning of the Chrysler meltdown? We'll keep you up on what's going on as we find out more.

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19 Comments on “Wild Ass Rumor of the Day: Chrysler Meltdown Begins...”


  • avatar
    Detroit-Iron

    What am I missing? Why were they “running beyond capacity last week” in the first place? Was there a run on crapmobiles from a defunct company that I didn’t hear about?

  • avatar
    toxicroach

    I dunno. Stocking up to screw the parts guys out of as much as possible when they file?

  • avatar
    jaje

    Maybe Cerebus is stocking up on inventory so they can still produce cars with non union works through a prolonged strike or some form of bankruptcy. It makes no sense that their sales were in a total tailspin and they were asking for month long plant shutdowns in the summer but have such huge parts demands from their already volume struggling suppliers.

  • avatar
    unleashed

    Are they stocking up on spare (service) parts to keep the dealer networks going under the new ownership when they sell off the brands and their dealers?

  • avatar
    motownr

    It will be interesting to learn from the suppliers why Cerberus is engaging in this “start/stop” strategy. These are clever people and they obviously have a very clear view on the market.

    IMO, the talks of a “meltdown” are far from reality. This is NOT an investment group that views NA as a big part of the eventual sale.

    Chrysler IS Cerberus these days, and the rich parent will NOT let this deal destroy their hard-earned reputation. Cash is plentiful at Cerberus, and falling fuel prices could easily put their finances back on track.

  • avatar
    seoultrain

    If I were a Chrysler supplier, my WTF-meter would be off the scale when they asked for all these parts while Chrysler cars sit on lots. My lawyer would be on my speed-dial.

    Wasn’t Chrysler having trouble paying for these parts? Would a supplier really step up production of parts without having received payment for the last couple months’ deliveries?

  • avatar
    unleashed

    motownr said: “Chrysler IS Cerberus these days, and the rich parent will NOT let this deal destroy their hard-earned reputation.”

    Cerberus will NOT throw good money after bad for that very reason – they must preserve their hard-earned reputation.

  • avatar
    LXbuilder

    Nothing but rumors, thats all anyone seems to have on Chrysler.

  • avatar
    motownr

    @unleashed

    Hard to imagine, but CLLC is a small part of the current Cerberus fund; further investment is not an issue. These are some big players that redefine the concept of ‘deep pockets.’

    Cerberus won’t risk its relationships with its limiteds over a high profile deal like CLLC.

    My guess is that once they weather this storm and get past the product wreckage they inherited from Daimler, things could look decidedly different. Critics–especially those of us focused on the US market–are overlooking the real value of CLLC in the global market. There are some very disruptive ideas coming to fruition in the next few years.

  • avatar
    John Horner

    “Critics–especially those of us focused on the US market–are overlooking the real value of CLLC in the global market. ”

    You have got to be kidding. Just in case you didn’t notice, the global automotive market is by far the most competitive high volume market in the world, and it is hardly like the rest of the world is just begging to get their hands on Chrysler’s products.

    In case you hadn’t noticed, Cerberus has a number of big problem children on it’s hands right now. The Mervyn’s chain they bought from Target is on the edge of bankruptcy and their investment in GMAC is hemorrhaging red ink. Last year Cerberus backed out of it’s commitment to buy United Rentals.

  • avatar
    capeplates

    Maybe they are just creating a false product shortage to validate a price increase – I’m always sceptical re american business practices

  • avatar
    yankinwaoz

    “Critics–especially those of us focused on the US market–are overlooking the real value of CLLC in the global market. ”

    John Horner… I think you have it backwards. It gives an offshore car company (India or China) a quick way to enter to the US market because Chrysler already has a dealer network in place.

  • avatar
    timd38

    Maybe Cerberus was planning to sell cars at the department store chain that they own called Mervyn’s, but they like Chrysler are headed to chapter 11……

  • avatar
    motownr

    @JohnHorner:

    NA is a mature, saturated market that holds value mostly to aspiring entrants. The global market has far more potential.

    Let’s see what the situation looks like 12 months from now. I think we’ll find that CLLC has a few surprises up the sleeve.

  • avatar
    Hank

    This just brings me back to the same question I always have about Chrysler…just how in the world did MB really screw up their product line this horribly? It seems Chery could even have done a better job. Were they purposefully running it into the ground? And what motivation would there have been for that? It seems Daimler couldn’t have done a worse job if they tried.

  • avatar

    The last two surprises from any Chrysler sleeve that I can think of are the LH sedans and the Ram.

    Not gonna do it.

  • avatar
    cleek

    What would Tony Soprano do?

  • avatar
    monkeyboy

    Makes perfect sense! What supplier want’s to put more on the bill “to be paid later,” from a company working with a trustee?

    Chrysler has to make cars to get out of the hole.

    Does eveyone think that these companies just curl up in the fetal position and hope for the best?

    SHeeesh!

  • avatar
    Redbarchetta

    Hank I found this yesterday posted by gforce2002 in another news post and it explains a lot about Chryslers current product problems and the Diamler merger.

    It’s a great read.


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