By on January 31, 2009

Ford sits on the “Edge” of disaster. Despite the assurances from its CEO and chief cheerleader to the contrary, Alan Mulally knows that the day of reckoning could soon appear at his doorstep. Without an increase in sales volume, and soon, there will be no way to stop the cash burn. We’re not going to malign anything Mr. Mulally has done so far. In fact, he’s done more right than any other head honcho from Detroit in decades. But it’s time to pull out all the stops and break with tradition of never wishing ill on a competitor. It’s time for Chrysler to die.

Mulally needs to publicly state the obvious: Ford’s survival depends on Chrysler elimination. There’s no other way. Chrysler needs to go away immediately, not sustained in some semblance of suspended animation with token grants of government assistance. Now is not the time to be shy about this startling reality. Alan Mulally has to speak up now. He might also want to mention that Chrysler’s death will give GM a chance at salvation. Perhaps he can get to Rick Wagoner to show some of spine in support of this action, as well.

Let’s review.

Ford has managed to stabilize its market share around 15 percent of the U.S. market. The slide towards ignominy has stopped in its tracks. The only problem: the entire market has shrunk to about 10.5m units. This gives Ford maybe a 1.6m unit per year throughput– if the annual sales rate continues. If sales go lower, well, good things won’t happen. 

Last year, Ford sold 1.9m units, and 2.4m units in 2007. So in just two years (2007 to 2009), Ford will lose about 800k units in sales, roughly three assembly plants’ worth of production.

In the last quarter of 2008, Ford burned cash at the rate of $2.3b per month from automotive operations globally. Europe, Asia-Pacific and Volvo had negative operating income during the quarter, with future losses likely. We’ll assume that there won’t be positive cash generation in the near term there. But the bulk of the burn comes from North America and again, we know which way that’s going.

Ford claims that the cash burn will slow. That’s probably true. But it will still be a burn. To bolster its cash, Ford will soon borrow $10.1b from its credit line. Its cash on hand at the start of February will be on the order of $23b. Assuming it slows the burn to $1.5b per month, Ford has only seven more months before it goes cash critical at its minimum operating cash of $10b. That’s sometime in August this year.

There’s one cure. Kill Chrysler now, don’t wait.

Chrysler sold almost 1.5m units last year, of which one million were trucks (includes SUVs and Jeeps). Its recent sales pace puts it on target for only one million units for 2009, while living on the taxpayer dole. Of this, roughly 175k will be Ram pick up trucks, 160k minivans and roughly 200k Jeeps of all flavors. The rest are the hodgepodge of cars, small trucks and SUVs no one really wants anyways.

With Chrysler out of production, at least 800k of non-unique but easily substituted Chrysler vehicles (everything but minivans and Jeep Wranglers) could be sold by Ford and GM. That’s pick up trucks, fleet cars and SUVs. Plus, each of the remaining Detroit 2 could pick up some or all of the minivan and Jeep business.

Keeping with this line of logic, let’s assume Ford splits the future Chrysler business with GM. That’s an additional 500k unit of sales, of which approximately 60 percent or so are trucks (including minivans). That’s some decent profit business. And with Chrysler gone, the merry-go-round of rampant discounting for fleet and retail business led by this weak sister also grinds to near halt. 

Worst case: the transplants pick-up the lion’s share of the “new” business. There’s no evidence to suggest that Oldsmobile’s death transferred sales to the remaining domestically-owned brands. And there’s another problem…

Kissing Chrysler off today would mean that shuttering Chrysler dealers would offer their entire existing inventory at clearance pricing. That’s something like 400k+ units selling at prices levels never seen before seen (save decades ago). And the ChryCo cast-offs will sell. Imagine new Chrysler 300’s at $10k. Heck, whip out a credit card and drive away.

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

Under this scenario, in a few months, Chrysler’s inventory will be gone. Ford will then add sales, especially in trucks and fleet sales. Maybe 500k or so. Pricing will improve. The cash burn will be eliminated, as its existing plants product more without adding capacity. That’s the win.

Alan Mulally needs to abandon his pro-Chrysler bailout stance and tell the world that it’s time to kill the once-proud American brand.

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45 Comments on “Editorial: Ford Death Watch 44: A Time to Die...”


  • avatar
    MMH

    If Chrysler goes, don’t most of the large parts suppliers at least have to go C11? That combined with the ‘short term pain’ caused by ChryCo’s demose forces Ford and GM down the same path. Mulally can’t publically favor a scenario that would force his own firm into C11. Even if he does behind closed doors.

  • avatar
    Diewaldo

    GM and Ford will go under. I am not so sure about Chrysler tho. At least there seem to be companies interested in them. Any sane person would walk away from former giants like GM and Ford that have nothing to offer apart from a strange company culture that does not promote success but rather failure.

  • avatar
    Dimwit

    As Mencken wrote, “For every complex question there is a simple answer… which is wrong.”

    Chrysler WILL die but it has be a fade with all the components being aquired by other entities otherwise ALL the domestics will go down with the ship.

    Another point: month to month sales are not indicative of the year. Yes, it’s terrible now but this is Jan of a new year. Sales are always crappy and no, it can’t stay there. Things are never as bad as you fear but never as good as you hope.

  • avatar
    shaker

    Maybe “Strip and Flip” Cerebrus wants a little more “green sugar” from Uncle Sam first…

  • avatar
    KatiePuckrik

    Ford should look strongly at selling Volvo.

    The reason is simple. Since most Volvo cars have Ford platform and parts, they can sell Volvo to whomever, with a licensing agreement, like they did with Jaguar (i.e you buy the company, but we’ll sell you the parts to make them, since we already do that). That way Ford can still maintain volume, whilst getting some much needed cash (probably around $5bn, the Chinese have deep pockets).

    With this money, Ford could use it for one or more of the following:

    1. Shut down a few more plants and fund redundancies for the affected staff. This should enable Ford to maintain their current volume, but with fewer staff, hence, become a bit more profitable.

    2. Spend the money to bring more European cars over for Mercury. This one is a little riskier. Because a) there’s no guarantee that the cars will sell and b) in this economic climate, people are looking to SAVE money, not spend more.

    3. Possibly buy MORE of Mazda. The Ford-Mazda alliance was very fruitful and one Ford should have invested in more. Mazda are also looking for more volume, as are Ford. Seems like an easy fit.

    4. Use the money to secure their suppliers and make them independent of their competition (like Toyota and Honda are doing). That way, if GM and/or Chrysler go down, the “dead cat bounce” will fully benefit Ford without none of that “taking suppliers down with them” nastiness.

    Ford, with the correct direction, can survive this and, possibly, come back stronger. Their quality is OK, their products are interesting and they have a CEO who wants to do a good job. The only drawback is Mr Mulally still has management under him who just aren’t “getting it” (you know who you are) and it’s for that reason, why I place Ford’s chances at survival at 50-50.

    It’s a shame, because if I had a choice, I wanted Chrysler to succeed and GM and Ford to fail. I like Chrysler better….

    P.S. Is this a “Ford Death Watch” or a “Chrysler Suicide Watch”? Make your minds up.

  • avatar
    John Horner

    “If Chrysler goes, don’t most of the large parts suppliers at least have to go C11?”

    The industry would be better off if the government money going into Chrysler instead was strategically used to get suppliers through a non-Chrysler transition period.

    Once the dealer mop-up was over, suppliers would end up building just any many parts as if Chrysler were still around, but for fewer customers. In aggregate the parts industry would be better off doing the same volume on fewer unique part numbers.

    “Ford should look strongly at selling Volvo.”

    Uh, they are already clearly doing so!

    http://www.bloomberg.com/apps/news?pid=20601103&sid=aYRK9kcg8VYw&refer=us

    ” Jan. 23 (Bloomberg) — Ford Motor Co., the only U.S. automaker to forgo government loans, will begin seeking buyers for its Volvo luxury brand next month and expects to draw bids from Chinese carmakers, said a person familiar with the plan.

    Sales documents will be sent to prospective buyers in the middle of February, said the person, who declined to be identified because the details aren’t public. Ford is considering a sale of Volvo as part of a “strategic evaluation” of the Gothenburg, Sweden-based unit, spokesman Mark Truby said. He declined to comment on possible buyers. “

  • avatar
    bluecon

    Ford wants to sell Volvo, nobody wants to buy them.

    This is gonna start a trade war if the government keeps throwing money at the domestics.

  • avatar
    GS650G

    I don’t think I could bring myself to buy a chrysler product no matter how cheap, not even brand new.

  • avatar
    CarPerson

    It is noted that a fire sale at Chrysler would disrupt the new car sales for the domestics. I believe this way underestimates the damage this would do to GM and Ford. Neither can tolerate this plunge in sales. Both would likely go to the bankruptcy judge and demand the liquidation not consume all the customers in the the sales channel.

    A better plan would be to halt production and do a soft landing over 5-6 months.

    We’ll just have to suck it up not getting a crack at a $15,000 Sebring.

  • avatar
    CarPerson

    The domestics selling Volvo and Saab is a non-starter.

    These two have already been gutted to the extent there is little more that can be cut, they are little more than outdated assembly plants, they are far from standalone entities, and whoever bought them would do it with stock that could not be sold.

    Best just show them as a footnote on the balance sheet and put and take the few bucks they are in the grand scheme of things. Maybe in a few years things will change and something will come of it. If not, write them off against future profits.

    In summary, there is nothing of real value to sell and you would be paid in funny money.

  • avatar
    picard234

    From this editorial:
    2007 sales- 2.4m units
    2008 sales- 1.9m units
    2009 sales- 1.6m units (projected)

    From the SEC filings:
    2007- lost $2.7b
    2008- lost $14.5b

    So if Ford adds “500k or so” unit sales, bringing them to 2.1m for 2009, they’ll be profitable? I don’t see it. Call me a cynic. I disagree with the whole premise of this editorial.

  • avatar
    Ken Strumpf

    There’s a store in my town with a sign that says “The pain of poor quality lasts far longer than the pleasure of low prices.” Buying a Chrysler for $10K may seem like a pleasure at first but then you actually have to own the thing, with all the pain that entails.

  • avatar
    mel23

    Unless things change for the better pretty quickly, lots of big corps. are going to die. I’ve been listening to earnings announcement conference calls lately, and things are desperate for many companies who had good outlooks a year ago. Oshkosh owns the top brands of several specialty truck fields, e.g. cement mixers, tow trucks, firetrucks, trash trucks, and has a very large defense business. They’re now, or soon will be, in violation of loan covenants. They’re talking to their major lenders about changing those conditions which will of course involve higher interest, etc. which will make it harder to keep going. I hear financial expert types spouting off that GE has negative net worth. Then the next expert says they’re solid. How about Sears? Listening to the conference call of Briggs & Stratton, the question arose of the effect of Sears going under. Nobody laughed; B&S execs had an answer ready. Think what this would do in the way of more layoffs and more mall space going dark, and then the effects on the owners of those stores and the holders of the debt on those stores.

    A few months ago the financial talking heads were comparing this to the 1980 recession. Now it’s 1929 with some commentary a few days ago pointing out ways in which the current situation is worse than 1929. Then we were a low-cost manufacturer. Credit was nothing like today; no credit cards, etc. China might come unglued with workers losing their jobs and returning to their rural home areas where there’s nothing for them. When civil unrest crops up, governments have a way of looking externally for solutions, or at least scape goats.

  • avatar
    mikey610

    I agree with John Horner. Chrysler skated in with GM to the bailout money – but it is easy to see that if Chrysler goes belly-up, it gives GM and Ford a better shot at survival.

    It’s pretty hard to argue that with as small as Chrysler’s market share has become, a CH 7/11 would cause a huge calamity.

  • avatar
    Matt51

    Why kill Chrysler in favor of saving Ford? Ram is just as good as 150 overall – considering the Cummins diesel. The 300 series with four wheel independent suspension is better than anything rwd Ford has. I would vomit over owning a Focus or a PT cruiser, so no difference. Basically, Ford has nothing I want to buy. It has vastly more debt than Chrysler. Let Ford die, lets save Chrysler, as the cost of saving Chrysler will be far less costly to the tax payer.
    My 98 Contour is falling apart at 90,000 miles, ready for the junkyard. My 02 Town Car is more solid, but a real piece of crap compared to a good car like a Hyundai Sonata. Let Ford die, save GM and Chrysler.

  • avatar
    Martin B

    With the new accent on proofreading, I would like to point out that the title is wrong: Chrysler Suicide Watch 44: A Time to Die | The Truth About Cars

    It should of course be Ford Suicide Watch.

    /nitpick

  • avatar
    mtypex

    Agreed on pain of shoddy quality vs. temporal pleasure of low price.

    I lol’d at the ‘at least Chrysler attracts suitors’ argument. Daimler-Benz? Fiat? These are good for Detroit?

  • avatar
    cardeveloper

    Chrysler is not going to make it, and might as well get the pain over with and move on with life.

    Ford is interesting with Mr. Mulally. He has done some outstanding things, but what he still hasn’t accomplished is break down the upper middle management. Few months ago, in one management chimney, they added yet another executive layer. They are at least two to three layers too deep, and they added another layer? Where does that make sense, except you continue the management edification for the sake of management? There are teams of people that create monthly reports and then don’t do anything with the reports. Three years ago, threw out a product development system the entire company knew how to use, to only replace with a totally different system, that did THE EXACT SAME THING. Data entry to create reports that NOBODY EVER LOOKS AT.

  • avatar
    lw

    Ford just needs to start getting cash from Uncle Sugar sometime this summer.

    Very little of the Big 3 debt can be discharged in bankruptcy court. The banking system can’t handle it.

    Nobody of any size can fail at this point because anyone failing means the whole system crashes.

    Obama will relax the debt forgiveness bits, relax the Union wage demands and offer more and more cash all the Big 3 to prevent collapse of some major banks.

    It ends when people are tired of playing the game. Chryco will at some point just shut down. Imagine going to work every day just to collect a welfare check and knowing nothing you do or say will actually sell any cars.

    What if half the Chryco employees just didn’t show up? Would anyone notice?

  • avatar
    jg1708

    In support of his argument that Ford, not Chrysler, should go under, an earlier poster claimed that Rams on par with F-150s, and he is not the first person I have seen make this claim. I have had the opportunity to drive all three of the domestic half-ton trucks (but no recent towing opportunities), and I thought both the Silverado and F-150 were light-years ahead of the Ram when it came to drivability, styling, and all around refinement.

    It seemed to me that the Ram was comparable to a mid-90’s Silverado and a late 90’s F-150. What are other people’s thought on the Ram in relation to its domestic competitors?

  • avatar
    Luther

    Ford is WAY beyond insolvent…Talk of survival is moot unless the taxpayer gets robbed or we get huge hyper-inflation…Both of which will happen.

  • avatar
    hazard

    I made this point about letting Chrysler die for the sake of Ford and GM and how it would actually be a good PR exercise for Obama in a comment for a previous article a few days ago. I think it makes sense.

    As for this little problem:

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

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

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

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

  • avatar
    lw

    Bankruptcy isn’t an option for any of the Big Three…

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

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

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

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

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

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

  • avatar
    hazard

    lw, I don’t think anyone cares about that in particular.

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

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

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

  • avatar
    SherbornSean

    Ken,
    Great perspective.

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

  • avatar

    It seemed to me that the Ram was comparable to a mid-90’s Silverado and a late 90’s F-150. What are other people’s thought on the Ram in relation to its domestic competitors?

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

  • avatar

    SherbornSean :

    Agreed.

  • avatar
    Ken Elias

    lw –

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

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

  • avatar
    Lee

    If Chrysler is to survive, they need to get rid of Nardelli, yesterday. Anyone that has to pay $50m to get a job is no better that one certain ex governor. And Cerberus is just as culpable for accepting said money.

  • avatar
    Matt51

    Larry Moe and Curly stuck in Donner’s Pass thinking if they can only decide which one to kill and cannibilize first, the other two can survive.

  • avatar
    postjosh

    i doubt ford & gm would pickup minivan sales after a chrysler bankruptcy since they don’t make minivans…

  • avatar
    Conslaw

    I agree that Chrysler’s death would be a positive for Ford. I don’t think Ford can politically and publicly advocate it. Among those 500,000 units per year that Ford would want to pick up would be died-in-the-wool Mopar fans. They would go foreign before they would go to the company that advocated Chrysler’s death.

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

  • avatar
    Ken Elias

    postjosh – all of Chryco’s minivans are made in one plant in Windsor, Ontario. That plant will survive after Chrysler in some manner, whether owned by GM or Ford or as a JV.

  • avatar
    PeteMoran

    When you look at the worldwide picture, you can’t arrive at any other conclusion than a very dramatic reduction in capacity.

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

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

  • avatar
    FromBrazil

    Have you guys looked at how the rest of the world keeps the NA manufacturers on their feet? It’s a well-known fact the FiatBrazil has kept FiatEurope alive for many a season. And will be doing so again this year…(this of course does not apply to Chrysler since all their overseas operations are laughable)

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

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

    @hazard

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

  • avatar
    Martin B

    There’s plenty of people around the world who would buy up brand-new American cars for cheap.

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

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

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

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

  • avatar
    zenith

    Spark plugs on American cars are 5/8″, but just about everything else is metric.

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

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

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

  • avatar
    davey49

    Chrysler’s customers would all go to Hyundai

  • avatar
    ihatetrees

    Matt51:
    Larry Moe and Curly stuck in Donner’s Pass thinking if they can only decide which one to kill and cannibilize first, the other two can survive.

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

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

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

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

  • avatar
    Runfromcheney

    SherbornSean :

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

  • avatar
    Kurt.

    I had a ’90’s Cavalier. All the body bolts were SAE, all the engine and drivetrain were metric. Used to drive me nuts to work on that POS.

  • avatar
    Mike66Chryslers

    In my mind, this editorial epitomizes traditional Big-3 thinking: try to steal market share from the other two domestics while ignoring what the imports are doing. Among ardent Mopar supporters, there are probably comparable numbers that swear they’d never buy a GM as would never buy a Ford, so in theory the boost to the other two domestics should be about equal if Chrysler fails.

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

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

  • avatar
    Ken Elias

    Mike66Chryslers –

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

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

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

  • avatar
    Matt51

    ihatetrees,

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

  • avatar
    Mike66Chryslers

    Ken Elias, you have me at a disadvantage as far as knowing the latest numbers. We know that Chrysler’s fleet sales are higher than F or GM. 60% of NON-fleet sales is low, but doesn’t exactly mean that the buying public has ABANDONED Chrysler. Fleet sales have also been in freefall for a couple months now. Didn’t Chrysler recently announce that they’ve gotten their market share back over 10%? That would mean a higher percentage of non-fleet buyers.

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

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

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

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  • Inside Looking Out: No, that’s wrong, that cannot be true. Tesla are bunch of republican idiots from Silicon...
  • JD-Shifty: Pete Seeger, the Smithsonian Collection
  • 28-Cars-Later: I think you’re paranoid.
  • Jeff S: I will not buy a Tesla product either. As much as I don’t like GM and Ford I would trust either of them...
  • Jeff S: I don’t have faith that people will share. Ideally we should share but human nature being the way it is...

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