Tuesday, October 6, 2009

Chrysler Going Down the Tubes: More Bailout Needed?

Rumors, credible rumors, are beginning to circulate in the car industry and the automotive press, that Chrysler may not make it another year primarily due to its falling sales and growing financial losses at partner Fiat.

Chrysler sold a 62,197 cars in September, down 42% from the same month last year. The figure was down from 93,222 in August when traffic to dealers was pushed up by the ”cash for clunkers” program.

Chrysler’s problems may only be beginning and, if so, Fiat, the ”managing partner” among Chrysler’s owners may not be able to keep the American company intact.

.... The daily management of Chrysler is controlled by Fiat which owns 20% of the U.S. company with options which could take that amount to 35%. Fiat has not put any money into Chrysler, so if the American firm becomes a significant operational or management burden there are very few reason for the Italian company, which has sales troubles of its own in Europe, to stay long term. Fiat lost $254 million in the second quarter, so its board may eventually believe that Chrysler is a distraction and one without a future.

.... At this point, the Chrysler product line is still dominated by mid-sized sedans, SUVs from Jeep, minivans, and pick-ups like the Dodge Ram. The company has no real product in the alterative (sic) energy/hybrid segment. Chrysler’s domestic market share in September 2008 was 11.1%, according to Edmunds. Based on sales figures released by the industry today, that share is now closer to 7.5%.

.... Chrysler sales are now running at the rate of 750,000 a year, which includes sales of cars, trucks and vans from all its divisions; Chrysler, Dodge and Jeep. (By contrast, Ford sold over 600,000 F-150 pickup trucks last year). It probably does not have the capital to wait through another year of low US car sales with a market share that is almost certainly to stay below 8%. It does not have models tailored to the current market tastes. Chrysler is going out of business. The company just hasn’t made it official.

Thank goodness, our federal government spent billions, so far, to bail them out, only to fail later on.


Soloman October 6, 2009 at 11:28 PM  

Chrysler has some neat innovative ideas, like the V8 engine in the 300 and in their trucks, that reduces to 4 cylinders when it is running at highway speed, reducing fuel consumption. It also has physically stylish cars like the Charger and Challenger, and its smaller Crossover lines are decently priced.

Their problem is quite simple - they have zero ergonomic comfort as far as the interior of their vehicles goes - very boxy, square, and cheap feeling. Plus there's the issue of quality that they have been fighting for years, as in they don't produce a vehicle that lasts for squat.

Somebody needs to buy Jeep for the sake of the Wrangler, and the rest can go bankrupt or fail as far as I'm concerned.

WoFat October 7, 2009 at 8:40 AM  

Maybe Chrysler should be sold as a kit car.

lady di October 7, 2009 at 10:13 AM  

I agree with Soloman...back when i still had some money to spend..Wrangler was on the top of my list for a new vehicle. That aside,... no more pail outs

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