By on November 9, 2008

We’ve already put Detroit Free Press writer Mark Phelan through the Cassandra-o-meter— and found his logic more than slightly wanting. Today’s column reveals that Phelan’s cluelessness runs deep. Contemplating the collapse of the GM – Chrysler merger, Phelan says “Finding a foreign buyer to provide advanced engineering for sophisticated small vehicles in exchange for access to Chrysler’s U.S. dealer network and expertise in trucks, minivans and big cars is the best option.” Of course, Phelan’s theory assumes that an automaker would want to buy Chrysler. While everyone and their proverbial mother believes that Jeep is some kind of brand babe, other than that, what would be the point? How do we prod thee with a ten-foot pole? Let me count the ways. First, the U.S. automotive market is dead in the water. Second, any automaker stupid enough to assume tens of billions of dollars of ChryCo debt and obligations to a union (whose primary expertise is in wresting said benefits from overpaid execs), not to mention a roster of uncompetitive products and nothing in the propduct pipeline (although I just did), is also hurting in the worldwide auto industry meltdown. Third, if said automaker wants a piece of Chrysler, they’ll wait for the now-inevitable Chapter 11 or 7 and buy the best bits for pennies on the dollar. Phelan’s take? A ChryCo sale (as such) could happen. But that would suck. “Even in that best of all possible worlds, however, Chrysler will be a smaller company than it is today. It will have fewer plants and employees, but it can remain a major contributor to the U.S. economy and an important center of engineering and design expertise for a healthy global company. We can hope Chrysler’s next owners will value it more than the last two did.”

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19 Comments on “Phelan is Insane: “Chrysler Looks for a New Buyer”...”


  • avatar
    OldandSlow

    I doubt that there will be any suitors for the whole enchilada – but I agree with him that the individual brands are even less viable than they are today as stand alone entities.

    Frankly speaking, with so little left in the product pipeline and dodgy products in their current line up, – such as the Sebring, Caliber or Compass – it will take billions upon billions to resurrect Chrysler, Dodge and Jeep.

    Who is going to pour that amount of money on such a maybe proposition?

  • avatar
    davey49

    I think the Dodge brand is strong enough to keep around. Think about Chrysler circa 1998. Neon, LHs, cloud cars, RAMs, Durango, PT Cruiser in development. It was strong 10 years ago, they have a good history, it’s definitely worth rescuing.

  • avatar
    CarShark

    Someone on the Allpar boards said that Fiat executives were seen at the Warren truck plant. So the Dakota also appears to appeal to someone.

  • avatar
    br549

    I sincerely believe that as regards product, the cars are the only non-marketable entities here. I can see some value in the rest of Chrysler’s product if mated with the right customers. My question–coming from someone with a less-than-sophisticated knowledge of big business–is, in the event of a part-out strategy, how are the liabilities allocated? Is there a historical precedent to which we can allude?

  • avatar
    Geo. Levecque

    I too read MP article and like the author here, I don’t see any company in their right mind wanting to buy Chrysler, I also disagree with another poster who said that the “Neon” was a great Car, it was not and never will be, its too be avoided at all costs due to its many design faults, especially the leak of Battery acid on the Transmission parts!

  • avatar
    Pch101

    At the right price and with the right terms, a version of Chrysler without the liabilities could be a good deal. Dodge provides a good entry point for playing in the truck market, Jeep has great niche brand potential and Chrysler could use the previous success of the 300 and what remains of its minivans to craft a focused, limited mainstream car lineup.

    Chrysler’s problem is that it has mostly lousy products, coupled with nasty liabilities. But if they were to purge the lineup of bad stuff and focus on building a few excellent bread-and-better vehicles, combined with an image builder or two such as a convertible, it could work.

    Aspects of Cerberus’ plan made some sense, but it involves too much outsourcing and probably didn’t allow for enough time to make it work. It would take perhaps a decade to turn Chrysler around, and a group with the short timeframes of Cerberus can’t be expected to have the patience to see it through. It could work for Renault-Nissan, but the price would have to be right, and I’d bet that Cerberus wants far too much.

  • avatar
    stevelovescars

    Jeep may have a great history and the small niche of buyers who want real rock-crawling capabiliies may be loyal to Wrangler. However, they also suffer from the typical Chrysler (and GM) issue of too many rebadged models that don’t make sense and/or are uncompetitive. The Commander has been a flop (and a poorly built pig-to-drive flop at that), What is a Compass? I don’t think I’ve seen a single one on the road here in California aside from the rental lot. Hasn’t the Grand Cherokee been around since, what, 1987?

    Granted, I am not and have never been an SUV buyer but their brand only means a couple things to me; off-road capability I don’t need and gas-guzzlers. Yet they have managed to fill their showrooms with products that don’t live up to the first promise and the market is moving away from the second. What am I missing here? Other than the over-used “heritage,” how is Jeep in a better position than Hummer?

  • avatar
    James2

    OK, everyone and their proverbial mother believes that Jeep is some kind of brand babe

    I think we need to reassess “brands” and its importance thereof.

    Hummer, until gas prices went through the roof, was a successful brand. Hyundai was a sullied brand when they built the Excel, but they’ve rehabilitated their image. Lexus was a completely new brand created from scratch. BMW resurrected an old brand in Mini.

    What’s the point I’m trying to make here? I don’t know :-) but I think the lesson is that Jeep (or any brand) isn’t worth the effort. People will buy whatever is available -or not (to use a TTACism).

    Cerberus should put a bullet into Chrysler and end it now. Live and learn.

  • avatar
    davey49

    It doesn’t matter if the Neon was “good” or not. It was a small, low priced car that sold well. It sold better than any current Chrysler product.
    I think it would be OK to sell off Jeep, kill the Chrysler brand and bring back Plymouth.

  • avatar
    davey49

    Grand Cherokee and Liberty are the best selling vehicles in their class in the Northeast, I see tons of them around here. I also see plenty of Commanders and Patriots. Not so many Compass

  • avatar
    br549

    I think we need to reassess “brands” and its importance thereof.

    Enormous, gigantic, gargantuan (I’m running out of adjectives, here) energies and resources are and have been expended to create and sustain brands. They are that important. Just because new ones are successfully created and rehabilitated from time to time does not in any way undermine their importance. Arbuckle’s used to be equated with coffee (like Kleenex is with tissue) 100 years ago. Their executives decided they were well enough established that brand maintenance was not that important. Drunk any Arbuckle’s lately?

  • avatar
    iNeon

    Geo– there is nothing so wrong as making the statement you have. I drive a neon every day. The 175,000 mile, 41mpg neon I’ve owned for 11 years. Since I was 17. The problems have been limited to Head Gasket(warranty work) and power sunroof(warranty,) otherwise- it’s been a terribly solid, efficient, zoomy little fwd coupe with a back seat large enough to fit two lesbians– imagine that!

    I’ll also go so far as to say that there is nothing fundamentally wrong with any of Chrysler’s current offerings that a minor re-dress would not fix.

    Measures are being taken by Cerberus, but they don’t warrant mentioning here because that’d flow so readily against TTAC’s modus-operandi.

    The Chrysler brand is being taken up-market in content– no more LX models, 300 Touring is the new base-model, and includes more standard features. There is no more Sebring LX or Touring– Limiteds all-around. This should address every complaint– more insulation, better trim, larger engine.

    We can’t expect things to change overnight– and with Cerberus being so quiet about everything all we can do is speculate.

    Speculation and the truth are quite different things, and it’s about time youall start acting like you can understand that.

  • avatar
    snabster

    So:

    Chrysler: T&C, a CUV and a sedan
    Dodge: Trucks and a viper
    Jeep: Sold to the Koreans

    You could probably try to sell MOPAR, but I doubt anyone would want it.

    There are a 130K people working there, and I guess maybe you need 30K with that lineup. Very very painful. I’d point out that Obama drove a 300C until his campaign forced him to buy a Escape Hybrid instead.

    Oh, for the days of Corinthian leather….

  • avatar
    OldandSlow

    Chrysler as an upmarket brand?

    Around here it’s a brand to impress your friends in the hood and with the hope that one of them doesn’t spring for a second hand Lexus or Infinity.

  • avatar
    iNeon

    Infinity makes speakers.

  • avatar
    Usta Bee

    I could see Fiat buying out Chrysler. They could offer a 2-for-1 sale…..but a Ram pickup and they’ll throw in the bad a Fiat 500 for free.

  • avatar
    Dangerous Dave

    Usta Bee:
    More like buy a Fiat 500 and get a Ram for free.

  • avatar
    John Williams

    Chrysler as an upmarket brand?

    It was. Up until Plymouth closed shop, and Plymouth product was shunted over to the Chrysler catalog for the sake of retaining volume. Chrysler had to alternate from filling Plymouth’s shoes inadvertently to being an “upmarket” brand. Now it’s more of the former than the latter.

  • avatar
    John Horner

    The Chrysler and Dodge brands are now pretty much completely worthless thanks to years of neglect and abuse. Jeep may have some residual value, but it is small. Thirty years ago almost nobody did what Jeep did … now, most companies are there. Just as Volvo once owned massive mind-share for safety, and lost it as others got into that game, so it is for Jeep. Toyota, for example, could make a cheap and cheerful simple Wrangler clone tomorrow if they felt like it and would easily meet the worldwide demand for that class of vehicle. The classic FJ40 was at least the equal of the comparable Jeep in it’s day, and perhaps better. Tata is also well positioned with the Land Rover brand to make a classic simple off-road 4×4. Jeep is toast.

    Packard, Stutz, Pierce-Arrow and others were once valuable brands as well … until they weren’t.

    Looking forward a bit, Harley-Davidson is likewise in a miserable strategic position. The average Harley buyer gets a year older every year, and eventually stops buying. Today’s young motorcycle enthusiasts buy Japanese or even European super bikes full of technology. Harley today is where Cadillac and Lincoln were a decade or two ago. But, ask any Brand Guru and they will tell you that the Harley Davidson brand is worth a fortune because of all the logo crap it sells. But, brands have to constantly be reinvigorated and beat their competitors in order to avoid fatal decline.

    “in the event of a part-out strategy, how are the liabilities allocated”

    In a parting out strategy, only certain assets of the company are sold to new buyers. Normally the liabilities stay with the original company. Any cash from the asset sales is in theory available to partly pay off the liabilities. Typically the liabilities all stay with the corpse of the old company and some liquidation settlement is made to parcel out the cash from asset sales amongst those with claims. There are a whole set of legal priorities as to who is in line for cash, and a bunch of lawyers would get paid to argue the details in front of the courts. Only an idiot would buy Chrysler lock-stock-and-barrel including the outstanding liabilities. Cerberus, to put it mildly, blew it. Hubris, gets ’em every time.

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