Editorial: Chrysler Zombie Watch 7: Friends of the Undead

Robert Farago
by Robert Farago
editorial chrysler zombie watch 7 friends of the undead

The moment the Chrysler – Fiat hookup was announced, savvy pistonheads nasally ejected their coffee. Chrysler and FIAT? That’s like throwing a drowning man an anvil. Ignoring the brands’ histories of complete crapitude, the mainstream media took the idea seriously. Their complicity/complacency has done wonders for the executives and elected officials in charge of this epic non-starter, but it does nothing to serve the public interest. After all, we’ve got to pay for this turkey. Now that Chrysler is about to axe dealers, permanently shutter plants, fire union workers and ditch a big ass chunk of their pensions and benefits, the MSM is beginning to consider the possibility that the deal sucks. Or, as the ever-faithful Detroit News puts it, “After bankruptcy, Chrysler still faces uncertain future.” Ya think?

After bankruptcy court, the Auburn Hills-based automaker must survive on American and Canadian loans now pegged at $6 billion until vehicles inspired by its new partner, Fiat SpA, begin rolling off North American assembly lines in 2011.

Let’s see . . . It’s 2009. Chrysler lost $4.7 billion this year AND sucked-up $6 billion in kiss-’em-goodbye “bridge loans” and $4 billion in federal zombie maintenance payments. So now they’re going to stretch $6 billion over two years. Riiiiight.

Key actions Chrysler must take to bridge the gap include slimming its dealer network, further reducing its hourly work force, piggybacking on Fiat’s foreign dealer network and global buying power, and hustling some Fiat technology to Chrysler’s U.S. assembly lines.

So Chrysler is going to save money by using Fiat suppliers and Fiat’s going to sell Chrysler’s abroad. Riiiight.

At the same time, car sales can’t take a dramatic plunge from the 10 million vehicles predicted for this year. And gas prices can’t spike, since Chrysler’s product line is tilted heavily toward pickups, sport utility vehicles and minivans.

Notice the word “dramatic.” And says who? David Cole! The head of the Center for Automotive Research, whose chicken little study laid the foundation for this $65 billion—and counting—boondoggle.

“Chrysler has lowered its structural costs, reduced its break-even point and put itself in a position to be very profitable in the midterm with a Fiat alliance,” Cole said.

I guess we’re putting our money where Cole’s mouth is. Again. Meanwhile, The Wall Street Journal has discovered that Chrysler’s propensity for building horrible cars could be a problem on the sales side of things.

Michelle Payan loves the styling and roominess of her 2006 Chrysler 300 sedan, but a defective air conditioner and transmission have turned her against the brand. “I’m not buying another Chrysler,” says Ms. Payan, a 26-year-old insurance-claims adjuster in Phoenix.

In announcing Chrysler LLC’s government-negotiated bankruptcy filing, President Obama expressed the hope that new-car seekers would consider buying American. But new car buyers are less accustomed to seeking advice from the president than from Consumer Reports. In its annual automotive issue last month, Consumer Reports recommended 166 models—not one of them a Chrysler, Dodge or Jeep, the three Chrysler nameplates.

Uh-oh! It looks like we have a perception gap perception gap.

But while Ford and GM are largely battling outdated perceptions of questionable reliability, “at Chrysler it’s a reality,” says George Peterson, president of AutoPacific Inc., which each year surveys about 40,000 car owners. “To survive, Chrysler needs to get its quality at least to the level of Ford and GM.”

This reliance on cross-town qualitative measurement has isolated GM and Chrysler execs from reality, and destroyed their ability to compete. Despite C11, Motown’s media lap dogs continue to enable this suicidal self-delusion. The WSJ article, which starts with a bit of Hai Karate, ends-up on its back, feet wiggling the air. Shame on them all.

The government-directed reorganization plan of Chrysler calls for it to merge with Fiat and start making Fiats in the U.S. In Europe, Fiat has received low rankings in reliability studies, but its performance has been improving.

Meanwhile, Chrysler will continue making trucks and SUVs. Its Jeep Wrangler and Jeep Grand Cherokee, by nearly all accounts, lead the pack in off-road performance, and both sport an iconic design that sets them apart. Similarly distinctive is the mammoth Dodge Ram pickup. But all of those models have suffered reliability problems. Of seven full-size pickups reviewed by Consumer Reports, only one — the Dodge Ram — failed to make the recommended list.

Yet there is hope. The redesigned 2009 Dodge Ram is winning rave reviews for performance and style, and is expected to win endorsements if it proves largely free of defects.

And Chrysler has a history of staging comebacks from product-driven financial quandaries. The quality problems of the Dodge Aspen (and its sister, the Plymouth Volare) contributed to the crisis that led Chrysler to seek a government loan in 1979. After recovering from that brush with bankruptcy, Chrysler entered a nearly two-decade period of winning kudos for its cars, trucks and minivans.

And so the cycle continues . . .

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2 of 35 comments
  • Pch101 Pch101 on May 14, 2009
    A vehicle that will be in production by 2011 should be through final design verification and heavily into durability testing at this point. Changing bumpers, suspension tuning, engine choices, etc can have significant impact on a whole host of other parts. The subtext here is that they've been planning something like this for awhile. Fiat started negotiating with Cerberus a year ago to put together some kind of deal. We here may not know exactly what has been going within Fiat, but it's easy to guess from the facts that we do have that they have been intending to reenter the US for some time now. This is not something that just came up a few weeks ago; this has probably been in the planning stages for years. Fiat desperately wants this deal. It just so happens that the timing has worked out perfectly for them to get what they want at a steep discount.

  • Lokkii Lokkii on May 14, 2009

    Damn! I have to agree with PCH101 again. Fiat has been working towards a return to the states (at least for Alfa Romeo) under various guises for some years now - there have been other dance partners mentioned before Chrysler - among them GM who paid $2B to break off the engagement. I'd tend to believe that Fiat has long ago started the federalization process for upcoming models.

  • Teddyc73 A resounding NO. This has "Democrat" "Socialism" "liberalism" "Progressivism" and "Communism" written all over it.
  • Jeffrey An all electric entry level vehicle is needed and as a second car I'm interested. Though I will wait for it to be manufactured in the states with US components eligible for the EV credit.
  • Bob65688581 Small by American standards, this car is just right for Europe, and probably China, although I don't really know, there. Upscale small cars don't exist in the US because Americans associate size and luxury, so it will have a tough time in the States... but again Europe is used to such cars. Audi has been making "small, upscale" since forever. As usual, Americans will miss an opportunity. I'll buy one, though!Contrary to your text, the EX30 has nothing whatsoever to do with the XC40 or C40, being built on a dedicated chassis.
  • Tassos Chinese owned Vollvo-Geely must have the best PR department of all automakers. A TINY maker with only 0.5-0.8% market share in the US, it is in the news every day.I have lost count how many different models Volvo has, and it is shocking how FEW of each miserable one it sells in the US market.Approximately, it sells as many units (TOTAL) as is the total number of loser models it offers.
  • ToolGuy Seems pretty reasonable to me. (Sorry)