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.

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Another Obama Scandal Brewing

Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Republicans. What started earlier this week as mainly a rumbling on the Right side of the Blogosphere has gathered some steam today with revelations that among the dealers being shut down are a GOP congressman and closing of competitors to a dealership chain partly owned by former Clinton White House chief of staff Mack McLarty.

The basic issue raised here is this: How do we account for the fact millions of dollars were contributed to GOP candidates by Chrysler who are being closed by the government, but only one has been found so far that is being closed that contributed to the Obama campaign in 2008?

Florida Rep. Vern Buchanan learned from a House colleague that his Venice, Florida, dealership is on the hit list. Buchanan also has a Nissan franchise paired with the Chrysler facility in Venice.

"It's an outrage. It's not about me. I'm going to be fine," said Buchanan, the dealership's majority owner. "You're talking over 100,000 jobs. We're supposed to be in the business of creating jobs, not killing jobs," Buchanan told News 10, a local Florida television station.

Buchanan, who succeeded former Rep. Katharine Harris in 2006, reportedly learned of his dealership's termination from Rep.Candace Miller, R-MI. Buchanan owns a total of 23 dealerships in Florida and North Carolina.

Also fueling the controversy is the fact the RLJ-McCarty-Landers chain of Arkansas and Missouri dealerships aren't being closed, but many of their local competitors are being eliminated. McClarty is the former Clinton senior aide. The "J" is Robert Johnson, founder of the Black Entertainment Television, a heavy Democratic contributor. 

A lawyer representing a group of Chrysler dealers who are on the hit list deposed senior Chrysler executives and later told Reuters that he believes the closings have been forced on the company by the White House.

"It became clear to us that Chrysler does not see the wisdom of terminating 25 percent of its dealers. It really wasn't Chrysler's decision. They are under enormous pressure from the President's automotive task force," said attorney Leonard Bellavia.

As part of Chrysler's bankruptcy agreement with the White House, the company plans to close roughly a quarter of its 3,200 dealerships. Many dealers contend the criteria being used to determine which dealerships survive is not clear and that many of those that are being closed in fact are profitable businesses, despite the current recession while competitors with less sales and worse customer satisfaction ratings are remaining open.

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Rolling Obama Tribute

Jennifer Stone-Anderson of St. Petersburg, Florida, who is described as an "unemployed artist" (is there any other kind?), uses her "free time" to turn her car into a rolling artistic tribute to Obama.  She has painted her car with mutiple graphics, Obama's name and various slogans like "vote for change."  It also contains messages about recycling, health care and other liberal causes.

(A google search of photos of her car will confirm why she is an "unemployed artist.")

Not everyone has been supportive of the Obama car.  "Some people have screamed obscenities at her," according the the reporter who wrote the initial story.  The article is written as if no conservative has ever had a polite conversation of opposition, and no liberal has ever said nasty things about a Republican president.  (How soon we forget.)

Now, here's the interesting part:  Stoned-Anderson has missed several car payments, including payments in December, January and February.  She is now starting to receive calls from Chrysler.  She has ignored them.

Apparently, Chrysler has the paperwork to repossess the car, and it's only a matter of the company finding it at this point.  From the article, it appears that Stoned-Anderson is .... "hiding" ... the car, though it doesn't explicitly say that.

But Stoned-Anderson says she is not worried about the company taking it.  "Barack says he's an eternal optimist," she said.  "We're like minds."

It seems the perfect metaphor for people who voted for Obama.  Democrats expect others to take care of them, pay off their loans and hand them every opportunity.  They shouldn't have to pay taxes, house payments, rent or play by the rules of our unjust capitalist society.

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UAW Bailout

General Motors and Chrysler will pick up the second installment of their federal loans today, even as theTreasury Department begins to review the two automakers' restructuring plans, also to be submitted today. The plans are supposed to outline how they intend to again become viable and repay the government loans.

The stock market has already taken a plunge, betting that this bailout money won't really help.

As I've stated before, the Big Three Bailouts are really bailouts of the Auto Workers Unions more than the companies.  If the companies were allowed to go into bankruptcy, they could REALLY restructure the way they do things and have a chance to succeed.  As it is, it's only a matter of time before they come back with their hands out for more.

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