Ask the Best and Brightest: GM and Chrysler: Gone Tomorrow?
Chrysler, the U.S.-funded, Italian-run, formerly bankrupt American automaker is leaking its product plans, ahead of their official unveiling in November. Automotive News [sub] confirms that Sergio Marchionne’s minions have decided to spin off Ram trucks into a separate brand, removing the company’s most profitable product from underneath the Dodge umbrella. For once, AN (or at least its mysterious person of interest) understands the full implications. “The separation of the Ram truck brand will allow Fiat to make Dodge more of a performance car brand, the person said. But the move could also make it easier for Chrysler to spin off its truck business down the road if a continuing slump forced Fiat or U.S. officials to consider such a step.” Did you see that? “U.S. officials.” Pay some attention to the Presidential Task Force behind that curtain! In any case, Chrysler and GM are heading into a perfect storm: continued market share erosion, new product constipation and chaos and, sopra tutti, cash burn.
Never mind that GM IPO FUD, or the back door billions shoveled GM and Chrysler’s way via subsidies, low-cost loans, union health care bailouts, the PBGC Delphi dance and tax breaks. Both automakers’ only real hope of long-term survival is the same as it’s been since last spring: your taxes. What are the odds that Uncle Sam will re-up? Of course, timing is. Everything.
Questions, questions, questions. Does either carmaker have enough cash in the kitty to make it past the mid-term elections without a fresh federal infusion? And if the Democrats get their asses kicked, will the new, fiscally conservative Republicans bailout Motown again (not forgetting that it was George W. Bush who started this whole debacle)?
For those of you who say the Obama’s army never really intended to rescue either automaker, that they were simply subsidizing the companies to facilitate a soft landing, I say bullshit. Washington’s big swinging dicks, led by private equity money men with a similar anatomical affliction, honestly thought they could “fix” Detroit. Any other reading of the situation would be deeply cynical, and you know how I feel about that.
In any case, it’s only a matter of time before Chrysler, and then GM, are parted out. Without a new new new round of bailouts, look for the Big Two to go down by the end of next year. Your take?
More by Robert Farago
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