By on May 11, 2009

Back in the day, I recommended Chapter 11 for GM and Chrysler. With court protection, the American automakers could ditch non-competitive union contracts, pare bloated dealer networks, terminate extraneous products and sell-off non-core brands. In ’05, consumer confidence was strong. All three automakers had plenty of cash and assets. If they had filed then, they could have reinvented themselves and . . . Forget it. I was wrong. These automakers are so poorly run that an earlier bankruptcy would only have prolonged the misery. How could I think otherwise when Chrysler and GM’s idea of a “surgical” bankruptcy is to swing an axe at the patient’s diseased limbs, laugh at their next of kin, storm out of the operating theater, hand the case over to another doctor and repair to Aruba?

Earlier today, GM CEO Fritz Henderson mirrored a previous statement by Chrysler Co-Prez Jim Press. Henderson revealed that GM also had no idea which dealers would get the old heave-ho and which would help the “new” automaker pay back American taxpayers for their [next not previous] multi-billion dollar “investment” in American jobs (or some such thing). Like Press, Henderson assured his store owners that the cuts were definitely on his “to do” list.

GM’s indecisiveness is almost understandable, given that not making decisions is a key part of their corporate culture. But Chrysler is the automaker whose private equity owners told us time and time again that their main advantage was speed (fast decisions, not amphetamines). Chrysler’s been in Chapter 11 for eleven days. And yet . . .

“Unfortunately, there will be dealers who will not go forward,” Press said on a conference call with retailers. “We do not have a finalized plan. We don’t have identification of who. We don’t know when. We don’t know how. We have nothing to announce today other than this is all in flux.”

In fact, it looks like Chrysler won’t be paying some 25 percent of its dealers for warranty work already performed or incentives already earned. Any possibility of either automakers creating some team spirit (a.k.a. “shared sacrifice”) down at the dealer level—to accompany the birth of the new Chrysler and new GM—has been strangled in its crib.

While aggrieved consumers have every reason to savor the fact that GM and Chrysler are doing the same thing to their dealers that their dealers did to them re: warranty claims—waffle, prevaricate and then tell them to FO&D—both GM and Chrysler’s survival depends on its stores. Keeping the franchisees in limbo is madness. These guys have lawyers, and they know how to use them.

As we reported earlier, Chrysler is bouncing checks to customers and recently suspended lemon law payments. We’ve also chronicled the red tape surrounding federally subsidized payments to GM and Chrysler’s beleaguered suppliers. And no one knows who’s gonna build what, when or where. Not to put too fine a point on it, Chrysler is disintegrating into chaos. GM is showing every sign of following suit.

All this before GM and Chrysler’s key suppliers go belly-up, and the real action starts down at the courthouse, when creditors do everything in their power to make sure they get a piece of whatever there is left to get a piece of. And then Chrysler and GM have to deal with integrating (i.e., surrendering) to their new foreign partners (i.e., masters). All while their competitors get leaner and meaner, and the American public learns than bankruptcy means never having to say you’re sorry.

Clearly, Chrysler and GM didn’t prepare for bankruptcy. Equally pellucid: neither automaker is equipped to deal with it now, or in the future, when things will get a whole lot more complicated. Then again, why would they?

Both automakers have the same schlemiels that got them into this mess trying to get them out. GM CEO Fritz Henderson is no less a product of the “GM Way” than ex-GM CEO’s Rick Wagoner, the man whose failure will be the fodder of business school curricula a hundred years hence. Henderson may be trying to make a good job of an impossible situation. But he isn’t.

Meanwhile, Chrysler CEO Bob Nardelli is . . . hey, where IS Chrysler CEO Bob Nardelli? Anyway, putting Nardelli in charge of the recovery would be like hiring the man who ran Home Depot into the ground to lead a major manufacturing company. Oh wait . . .

The blame for this mess—and by that I mean the current and future mess rather than the mess that lead to this mess—falls squarely on the shoulders of the Presidential Task Force on Automobiles (PTFOA). While I was against “bridge loans” to GM and Chrysler and oppose any further subsidy to these zombie automakers, the PTFOA had one chance and one chance only to “save” Detroit: appoint honest-to-God leaders at the top of both companies. They blew it. And now we’re all paying the price. Literally.

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36 Comments on “Editorial: Bailout Watch 527: Bankruptcy Sucks. Some More Than Others...”


  • avatar
    Pch101

    The dealers are a matter of timing. It’s going to be Fiat’s decision as to who to keep and who to boot. Those choices are not going to be either the task force’s nor the existing management’s, or for that matter, even the bankruptcy court’s to make.

    The dealers who are unwanted will lose their contracts in the BK, and that will be the end of them. There is already case law to support the severing of contracts if they facilitate a Chapter 11 reorganization.

    As for warranty work, lemon law claims, etc., that goes back to the priority. As many posters here are inclined to remind us, the secureds come first. Well, there you go — this is what happens when the secureds come first.

    There are three options with this: (a) the parties who are owed the money eat it, (b) the payments get made out of the proceeds raised from liquidating the assets that get sold, which means that the existing creditors effectively pay for it, or (c) the NewCo pays it out of the goodness of their hearts.

    We all know what eating it means. Paying it from the OldCo effectively means taking it out of the secureds, because every dollar that isn’t going to someone else in this deal is going to them. Paying it from the NewCo really means that the taxpayers pay for it.

    Choose your poison. Those who were the fans of the Non-TARP Saviors of The Universe (TM), just remember that every penny that goes to them is ultimately coming from us. Tip generously.

  • avatar
    Sanman111

    You know, sometimes GM and Chrysler seem like this cancer pt I used to see. When he was first diagnosed, he was in denial and moved to another state for over a year. In that time, he had received several other opinions confirming his cancer. When he finally stopped becoming angry at his treating physicians and excepted that he needed the treatment that they had originally suggeted, the cancer had worsened and treatment was no longer an option. When given this news, he again became angry and stated that the doctors were all too negative. After suffering through several months of painful treatment, and multiple hospitalizations, his body grew weaker and the cancer continued to spread. Still, he couldn’t face his looming death. So, rather than enjoy what he had left of his life, he ended up wasting away in a long-term care facility by himself until his recent death.

    Similarly, these two companies make all the right decisions much too late for their own good. In the end, their fate will likely be very similr to that of the man described above. To all those who would suggest that I am one who simply dislikes Detroit and wants to see their end, it is time to realize that hard decisions need to be made and positive thinking and avoidance are not the way to solve problems.

  • avatar

    Pch101

    I agree on the whole non-TARP point—if only because you have ground me down with sheer relentlessness.

    My main point remains: the current “flux” is not good for Chrysler or GM. Their lack of leadership NOW—whether it’s Sergio, Carlos, Fritz or Yo Adrian–makes them weaker by the day. More fractured. More inclined towards total failure. Dissolution. As President Johnson said, “a bad decision is better than no decision.”

    ‘However, if the zombie car companies have to go down your route, postponing dealer and product decisions until after the new broom hits town, then they should just STFU.

    “We are in the midst of evaluating the best possible course of actions for all of GM/Chrysler’s stakeholders. We understand the pain that our dealers are feeling, and assure them that we will do everything we can to maintain their continued support and good will, as we go forwards with our plan to create a new, profitable General Motors/Fiat. I mean, Chrysler.”

  • avatar
    jpcavanaugh

    The reason that the Chrysler C11 is in chaos right now is because it is not really a C11. C11 is about reorganizing a company. “Hey, some bad stuff happened that was not completely our fault, we know how to fix it and we just need some breathing room so that our creditors don’t shut us down before we get this ship heading the right way again.”

    That is not what is happening here. The existing Chrysler is dead. It is not being reorganized, it is being looted. Put another way, Chrysler is not the patient. It is the organ donor.

    The asset transfer is going to take 2 or 3 weeks to get approved, and perhaps longer to actually accomplish. The new company can’t do anything because it doesn’t yet have the assets it needs to go forward (to wherever it is going.) And the Old Chrysler, well, there is no old Chrysler. No cars are being built, no plans are being made, because nothing decided by the present ownership and management is going to matter next month. So, rather than pretend, the company will just lie there, barely breathing, until it is finally put out of its misery.

    GM is in the same spot. It has a little over two weeks before it either files or doesn’t. Whether Bankruptcy is filed or not, the result will be the same as with Chrysler. GM is not going to be reorganized. The current GM will be an organ donor, just like Chrysler. So everyone sits there, waiting for the new ownership/management to take what it can use from GM’s carcass and put together a plan that satisfies the UAW, thus the government that is paying the bills. Until then, expect nothing to happen.

    The C11 we all thought about months ago involved a company making some big, even fundamental changes and coming out not just alive, but healthier at the other end. This is not what is happening here.

  • avatar
    moedaman

    Pch101, where are you going with this non-secured/secured debtors thing? This is second time I’ve seen you post this argument. Obama did say that warranties would be honored during this mess. Why not get on him instead of the people who supported a normal CH11.

  • avatar
    Pch101

    Obama did say that warranties would be honored during this mess. Why not get on him instead of the people who supported a normal CH11.

    What I’m pointing out is that Chrysler cannot make those payments without violating the law, because of the debtor priority. Once bankruptcy is filed, it’s not really the company’s money anymore. They are acting as “debtors in possession (of something that isn’t quite theirs to possess)”, so they can’t just spend money how they feel like it.

    If everyone gets their act together, the government will step up and have the NewCo pay for it when the court approves it. As of now, though, I don’t believe that the court has formalized the NewCo arrangement yet.

    You see the problem? If you want the law to be followed, this stuff can’t happen yet. There is going to be a delay, just because of how the system works. The delays are there to protect the creditors. So the Non-TARP Fan Club should be pleased by the delays, because those delays are there principally to protect their friends.

    I suppose that the alternative could be for the Treasury to make the payments directly through the task force, even if the NewCo arrangement doesn’t yet exist. But that probably wouldn’t please everyone, either.

    My main point remains: the current “flux” is not good for Chrysler or GM

    I agree, but it’s a natural part of the process. Bankruptcy, even when it’s fast, is slow. Assuming that I wanted one, I wouldn’t buy a vehicle from either company until the bankruptcy plan is approved and the structures are in place to start paying the bills.

  • avatar
    Dynamic88

    I agree, the leadership has been bad – nonexistent.

    It’s been that way for decades.

    I won’t even bother with trying to figure out how the PTFOA is responsible for the lack of leadership, but at the same time shouldn’t be selecting new leadership. I read, right here on TTAC, that picking the new leaders is a job for the BOD. But yeah, if they’re going to oust RIR, then by all means replace him with a real leader. Get rid of boot ’em Bob, and replace him with a real leader. I agree, the PTFOA is going to assure future failure by leaving things in the hands of the guys who made the mess to begin with.

    I still say our business schools are failing us as a Nation.

  • avatar
    CliffG

    The original RF point, made lo these many decades ago it seems, was that making decisive decisions at the proper time, i.e. 3 years ago, would have meant re-organized viable companies. But, the path of least resistance has been followed by absolutely EVERYONE. Management, government, bankruptcy judge,all are wandering down that path. But that path is a dead end. They all know it. Seriously, no rational human being can possibly think that Chrysler has any kind of long term future at this point. Sure, the Fed’s printing press can make it look like it can work, but it can’t.

    The old Soviet saying was “We pretend to work, they pretend to pay us.” If we are going to avoid that, someone, somewhere, sometime better grow some balls and and just say “it’s over” and end it.

    I keep hearing that saying “NO” is not an option in so many of our current economic travails, you have to have some kind of ready made solution – that will also spend boatloads of bucks – or you should just shut up. As a parent (2 grown kids) and long time business owner, who the hell thinks that saying “NO” is easy? It is damn hard, and all these so-called solutions are just everyone standing around saying “yes”, because NO is just too hard.

    This year’s current Federal deficit is going to be $1.8 trillion. Some Demopublicans better learn to say NO pretty damn quick. And, hey, why not start with Chrysler, it’s small and easy.

  • avatar
    eyeonthetarget

    At this stage of the game, with looming litigation & the Medusa’s head of poisonous issues demanding “me-first” resolution, I’m not sure any particular individual or personality could untie this Gordian knot.

    Rather, it seems that the slow, laborious bankruptcy process needs to take its course to see what, if anything, is left to salvage under C-11.

    I’m a little surprised that the supplier community in particular hasn’t been a more vocal player regarding its solvency concerns in this drama. True, they’ve had their hand-out for some federal assistance, but the bulk of the press coverage has been centering on the UAW/CAW and dealerships. Not a hint of militancy, tough-talking, controversial do-or-die pronouncements, or anything of the sort. Surely they harbor similar concerns as the rest of the stakeholders, yet their collective voice seems the most muted.

    For example, if all the wiring harness suppliers, all the stamped panel suppliers, and all the interior trim suppliers banded together, both within their particular specialties & as an overall group, their critical mass would certainly make them a more potent force to be reckoned with. After all, even if Chrysler & GM get the green light to move forward without being dissolved first, they’ll need a healthy supplier base to sustain them.

    The fact that the Supplier loan fund seems to be ensnared in red tape is regrettable. Once the two patients are rescucitated, it would be a shame to have to bury them anyway because there was nothing in the I-V bag but hot air, empty promises, unpaid bills, and broken commitments….

  • avatar
    superbadd75

    Meanwhile, Chrysler and GM dealers continue to sell cars with incentives and do warranty work that many will never get paid for. Why? Because they are being prompted to take care of their customers as they always have, and to do what they can to get through this tough time and retain customers for the future.

    When the smoke clears, there will be thousands of dealers with no franchise, and out hundreds of thousands of dollars because they were hung out to dry by the manufacturers for just trying to keep their customers happy. This is getting ugly, and it’s going to get worse. It really makes me feel ashamed to have supported GM, knowing that they’re going to screw over a lot of people in this mess.

    Truthfully I think the dealership I’m at is one of the “dead dealers walking”, and expect to be looking for a place to go before long. It may be my opportunity to get out of a business that’s rapidly growing smaller and will likely see some drastic changes in the next several years.

  • avatar
    gossard267

    You know, given public displeasure over the bail-outs AND the size of the deficit, you would think cutting the auto-bailout would be the world’s easiest PR stunt. Sure, the dollars are relatively small, and you might have some pissed off union folks, but visibility is high. Plus, we are still safely within the time frame wherein ‘It’s not our fault; blame Bush’ would be totally effective.

    As an added bonus, Obama could then further blame evil hedge funds (another unpopular group these days) for sabotaging the whole affair. Oh, and the rumors of tax dollars funding the outsourcing of jobs is just icing on the cake. It would be almost too easy to turn off the spigot!

  • avatar
    Jim Cherry

    I agree with Robert Farago. The replacement of Wagoner with Henderson is like replacing Frick with Frack. He’s a dyed in the wool financial flunky, the very breed that’s brought once mighty GM to its knees. Somebody in the Obama administration needs to read “On a Clear Day You Can See General Motors.” Or at least this: http://www.examiner.com/x-6882-Classic-Autos-Examiner~y2009m4d17-GM-near-bankruptcywhat-happened#comments

  • avatar
    dean

    superbadd: start looking now. Don’t wait for the axe to fall.

    The question is: is this going to be any better than it would have had the government not stepped in with billions of taxpayer dollars? Things look very bad for the car companies formerly known as two of the Big3.

  • avatar
    mel23

    Meanwhile the dealers have to keep the lights on, or not, while customers stay clear. I don’t see this thawing in time for customers to have any interest. Watching my local Dodge dealer, he somehow got rid of 3 of his 8 new trucks last week. Sales or dealer swap; whatever. He’s been bleeding down his inventory for months. Seems to me he’s just getting out any way he can and sees no light at the end of this tunnel.

    Let’s jump ahead 3 months when it’s all settled. Why is anybody going to want a Chrysler product other than as a gift? But even then where would warranty work be done even if it’s paid for by tax money? It would be interesting to know what Marchionne really thinks he’s going to end up with. I suppose he thinks the worst case will be access to the US market for his small stuff. He’ll be competing with Honda, Toyota and whatever Ford has; known quantities with top ranking small cars in fuel economy and reliability.

    I don’t see many rational people wanting to take a fling on Fiat. But losing his entire investment won’t hurt much.

  • avatar
    Pch101

    Here’s a practical suggestion for you GM owners — if you think that you need warranty work or anything else from the dealer or corporation, get it done RIGHT NOW. As in today. Don’t delay.

    Because once BK is filed, it’s going to become a bit of a mess, at least temporarily. If the bondholders put up a fight, it will create delays that could impact you, because money gets tied up until these things are resolved.

  • avatar
    jpcavanaugh

    Pch101:
    What I’m pointing out is that Chrysler cannot make those payments without violating the law, because of the debtor priority.

    Of course Chrysler cannot make payments under their warranties because of bankruptcy law.

    However, the President got on TV and encouraged Mr. & Mrs. America to buy cars from GM and Chrysler and assured them that the warranties would be backed by the US Government.

    What he did NOT do was tell Mr. & Mrs. America to buy cars from GM and Chrysler and, once their warranty claims are declined in bankruptcy court because they are unsecured creditors who will not be paid because there will be no money left to pay them, submit a form in triplicate to the Treasury department, and you should have your car fixed or your money back in about 5 years.

    Personally, I don’t think he should have made the committment. But he did. And personally, I would not have bought a GM or Chrysler car at this stage for this very reason. But I suspect that there are a lot of people who did so based on what our President said to them. I also suspect that they are not feeling very well taken care of right now.

    New Chrysler has no business taking on warranty claims from Old Chrysler. But in this politicized bankruptcy, I suppose that the government would rather “suggest” that they do so in order to avoid the government having to set up a claims process for direct reimbursment. That is, after congress passes a bill giving the government the authority to do so.

  • avatar
    threeer

    I guess looking at buying that used Jeep Wrangler is now perhaps not such a good idea…

  • avatar
    Pch101

    But I suspect that there are a lot of people who did so based on what our President said to them. I also suspect that they are not feeling very well taken care of right now.

    I agree, which is why I expect that the new company will pay these claims once the plan is approved.

    The president was in a tough position. If he hadn’t made the promise, the companies would have really tanked. But now that he did, he can’t keep it timely, at least not for everyone.

    None of the options were satisfactory. I certainly don’t blame the buyers of the cars if they are angry. I do hope that the new company pays for them, even if that really means that I’m the one paying for it.

    But to be fair, a lot of people argued before the fact that bankruptcy wouldn’t or shouldn’t impact sales or service. As it turns out, it did, and it did.

  • avatar
    jpcavanaugh

    threer:
    I guess looking at buying that used Jeep Wrangler is now perhaps not such a good idea…

    Sure – Just buy an 8 yr old one and buy the dealer’s warranty.

    Seriously, the interesting question is this. Bankruptcy makes a big distinction between pre-petition claims and post-petition claims. Clearly, if you drove into your dealer on April 15 with a warranty issue, it is a pre-petition claim, and you have to wait in line with the rest of the unsecured creditors.

    But What if you drive in today? The car was manufactured pre-petition, the warranty was issued to the original purchaser pre-petition, but the warranty claim is post-petition. A post petition expense is a current expense that must be paid on a current basis (at least as I remember my bankruptcy law).

    I would suspect (but would love to hear from toxicroach on this) that any warranty repair made after bankruptcy filing would be a post-petiton claim which would have to be paid as a current expense. The opposing argument would be that the warranty obligation was pre-petition, and any claim arising therefrom would be a pre-petition debt. If this argument rules the day, I see no reason to buy any Chrysler car presently in existence, as you will essentially have no warranty until the government gets around to reimbursing you.

  • avatar
    Verbal

    Lest anyone is laboring under the delusion that Chrysler will be in and out of bankruptcy in 60 days, I hasten to point out that earlier this decade, United Airlines operated under bankruptcy protection for three years. Chapter 11 isn’t a quickie behind the barn.

  • avatar
    Nicholas Weaver

    PCH: Chrysler could easily pay those lemon law claims and similar:

    All it needs is a petition, which nobody would oppose, stating that they want to do it, and the judge would sign instantly.

    Everyone knows that stories like that destroy what little brand equity remains, and that such a petition would prevent it.

    That such a petition never happened, and still hasn’t happened, shows just how incompetent Chrysler mis-management really is.

  • avatar
    Kevin

    Wow, a rare sighting of pellucid in the wild!

  • avatar
    instant rebate

    I would have to say that it is not the Union or its contracts that is the problem with GM or Chrysler. Seems that Ford is getting by with the same UAW contract so your argument that it is the UAW is out the window. Answer……management and bad decisions. One of GM last boners……paying $2 Billion for Fiat to leave and now they use the money to get into Chrysler. Morons in GM managment it would seem.

  • avatar
    SpeedRacerrrrr

    a lot of people argued before the fact that bankruptcy wouldn’t or shouldn’t impact sales or service. As it turns out, it did, and it did.

    Many people used the analogy with airline bankruptcies to support the claim that bankruptcy for the car-makers was the best path. These folks were insistant that the auto-maker’s sales would not suffer too much in backruptcy. In disagreeing with this claim, those of us who knew better were cast as shills for Detroit.

    Things are going to get a lot worse. And here’s the next big new issue nobody is talking about yet: How is Ford, at this point the only privately held and independent major producer of vehicles left in the US, going to be able stand under their debt?

  • avatar
    instant rebate

    Fords will not be able to survive. They are going negative each month.
    The only difference with Fords and GM is the fact that Ford is not global to the point that GM is and with the world economy going flat at this time, GM takes the biggest hit on costs to maintain all of these facilities and lay-offs. UAW contracts are not an issue, Ford has the same as GM’s and they are getting by.

  • avatar
    Mr. Sparky

    PCH101:

    Non-TARP Saviors of The Universe (TM)…

    LOL! Where do I send my licensing fee so that I can use that in future posts?

  • avatar
    Neb

    I have a question that the first paragraph of this editorial brought to mind: when would be the right time for the former big three to declare C11 and restructure?

    My take: GM really should have done it after 2003, when it was clear big trucks were becoming increasingly vulnerable. Ditto Ford. And Chrysler, well, they were doing really will till ze Germans bought ’em (with a deal that at the time was universally haled as genius.) After that, difficult to say.

  • avatar
    agenthex

    One of GM last boners……paying $2 Billion for Fiat to leave and now they use the money to get into Chrysler.

    I didn’t look too hard on this, but I don’t think they’re paying at all. All I’ve seen on this is contributing X billions imaginary money’s worth of “R&D”.

  • avatar
    guyincognito

    @ SpeedRacerrrrr:

    I never thought automakers sales wouldn’t suffer under CH11. However, it still seemed the better option than running out of cash and options. No question, CH11 is going to be really ugly now for both GM and Chrysler. Maybe a few years ago they could have survived it.

    As for Ford, I agree completely. Ford is heading down the same path. They haven’t got enough cash to weather the upcoming supplier implosion or the GM and Chrysler fire sales.

  • avatar
    SpeedRacerrrrr

    @ guyincognito

    The problem is (or was) that sales (and also supply) will suffer enough under bankruptcy that running out of cash and options would have been the result no matter if it had been tried a year or two ago. There are a number of reasons why that’s so, but it really doesn’t matter now.

    The ideal solution would have been to merge the companies several years ago. If we had a real industrial policy in this country, those running that policy would have gently suggested to the leadership at the Detroit companies that it was time to consider such a move. If they would have been unreceptive to it, a more forceful suggestion would have been made. The amount of arm-twisting would have increased until the desired result occurred. This “imposition” of a solution might have been construed by business and the public to be government meddling into private industry affairs, but avoiding that then hasn’t prevented it from happening now, has it?. Only now, in the actual turmoil of bankruptcy, and with the speed that is required to get things done in a public arena tied to the speed with which you can realistically get things done through bankruptcy, I believe we are well and truely f%#ked.

    This kind of application of industrial policy is something that happens in Japan. It’s something I’m familiar with after having spent many years working with the Japanese, and having gone through one of these events with them.

    The difference is, doing it this way, you can keep control of product development, marketing, manufacturing, distribution and sales while the downsizing/merging goes through. You can “manage” public expectations and mitigate against panic. All the stakeholders manage their interests behind the veil of the negotiations that happen pursuant to the creation of the documents governing the merger.

    Think of how seemlessly the Daimler/Chrysler merger happened with respect to the customers and suppliers (relative to how things are going with BK now).

    Of course the DCX merger didn’t have the folks managing industrial policy (tongue-in-cheek) watching over it with our long-term interests in mind, so that merger was cocked in a hat before it even started. But that wasn’t the fault of the process.

    The point is, what could have been an orderly sizing-down, with a resulting stronger domestic-based industry ready to face 21st century competition, will now turn out to be a meltdown, destroying marketshare, the domestic supply base and the careers of many thousands of talented people.

    It’s the difference between nurturing an industry that we want to be successful going into the future, and just not giving a damn until things blow up in our face.

    But then, we couldn’t have an industrial policy in this country, could we? Nah, not here in the land of the free.

  • avatar
    windswords

    “Back in the day, I recommended Chapter 11 for GM and Chrysler.”

    Robert, correct me if I’m wrong, but didn’t you recommend C11 for GM and C7 for Chrysler? I don’t have time to go back and re-read all the various editorials and postings, but you or someone(s) who writes for you said Chrysler should liquidate. I just don’t remember any talk of C11.

  • avatar
    educatordan

    How many think it would have been better to have the Obama administration “force” these companies into bankruptcy? I’m starting to think it would have been better. If any parts of these two rotting corpses are useful let the highest bidder bid for them. Autoblog has announced that GM will entertain offers for the plant that builds the Saturn Sky/Pontiac Solstice. Schedule an auction and let the highest bidder take the building, the tooling, and the intellectual property rights. Let the market decide. If Fiat wants Chrysler’s showrooms let them offer franchise agreements to Chrysler dealers. If they want Chrysler’s factories let them bid for them.

    Honestly it would be cheaper to let the government take over all the pension obligations of the two current companies tell any worker under a set age to “suck it” and negotiate with the new owners. It can’t be any worse for the economy than things are right now.

  • avatar
    Robert Schwartz

    As I have repeatedly written: C11 can not fix stupid. GM and Chrysler are doomed, and the only issue is how much they will cost us.

    P.S. Great editorial RF! Your best yet.

  • avatar
    ihatetrees

    While aggrieved consumers have every reason to savor the fact that GM and Chrysler are doing the same thing to their dealers that their dealers did to them re: warranty claims—waffle, prevaricate and then tell them to FO&D—both GM and Chrysler’s survival depends on its stores. Keeping the franchisees in limbo is madness.

    There doesn’t seem to be a plan in all this. There ARE good domestic dealers out in low density areas – but I doubt there’s much of a plan to identify & keep them going.

    If they’re going to hose dealers left and right, GM might as well use C-11 to completely tear up the current dealer business model (and b**chslap the states’ Car Franchise Law Protection Racket in the process). Separate the sales and service missions to start with – that’s where I’d start.

    threeer:
    I guess looking at buying that used Jeep Wrangler is now perhaps not such a good idea…

    Everything moves at a certain price.

    A well capitalized investor group could start WranglersAndRams dot com, and buy, in 1000 vehicle lots, distressed inventory at $8K (or $5K? or $3K !?!) per NEW vehicle. With 50 percent markup, sales via net only, and a respected 3rd party warranty provider, you’d have a solid business.

  • avatar
    windswords

    CliffG:

    “Seriously, no rational human being can possibly think that Chrysler has any kind of long term future at this point.”

    You may be right, but what I don’t understand is, why do you think Chrysler is DOA but not GM? GM’s last “golden age” if you believe the B&B here was 50-40 years ago, not 15-10 years ago like Chrysler. Even with the new as-we-know-it GM going forward without Pontiac and 1200 or so less dealers (and that’s if they can pull it off), they will still have too many brands and too many dealers. They are still run by beancounters, they still have not gotten out of the denial stage that everyone here talks about. I said along time ago that GM is not viable, no matter what happens to Chrysler or Ford. And Ford is getting closer to that state with every passing month. Now I wonder who is in denial.

    You know I’m beginning to think that Chrysler is like the Portrait of Dorian Grey. All the mistakes, miscues, bad designs, bad business decisions, office politics, faulty engineering, and underestimation of foreign competition by Ford and GM are added to the same by Chrysler and then it’s all dumped into that company so that like the portrait it becomes ugly and detestable
    so that Ford and GM can look good in our eyes. Then if we could just get rid of Chrysler once and for all it will be sunshine and roses for the remaining two. I know there is a psychological term for this somewhere…

  • avatar
    Louche

    The ancient Greeks would pick a Scapegoat when horrible things like a plague befell them.

    They kept him housed and fed for a year, but when the year had passed, he was stoned to death or cast from a cliff taking (it was hoped) all the evil and misfortune with him.

    Scapegoat Chrysler. It’s worth a try.

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