Talk Back Tuesday: What Will Happen to Chrysler?
To say the automotive industry is experiencing some turbulence right now would be like saying the nation's voters aren't completely aligned regarding the country's future leadership.
All three domestic manufacturers are following the standard "tough market" protocol -- slash workers, slash production, slash forecasts. They're also scrambling to remake a business and product plan based on small, fuel-efficient cars rather than large, gas-swilling trucks.
Finally, they are re-evaluating which brands are worth their time and trouble. Those that don't make the cut are put on the auction block, such as Jaguar and Land Rover. Others are likely to be killed outright, joining Plymouth and Oldsmobile in that big "Dead Brands" junkyard in the sky.
This raises an interesting question -- specifically, what will happen to Chrysler?
As you may have heard, Chrysler Financial will stop offering leases on August 1st. This specific change in policy is more a reflection of economic factors outside of Chrysler's control (the residual value on trucks/SUVs along with the cost of borrowing money) than a reflection on the company's financial health.
Still, let's go ahead and discuss the automotive industry's worst-kept secret: Chrysler's owner, Cerberus Capital Management, is prepping the automaker for re-sale. This latest policy to halt leasing is yet another move to improve Chrysler's balance sheet -- even as it impacts vehicle sales.
While Ford and GM seem committed to long-term solutions in a $4-a-gallon world, Cerberus is looking for short-term turnaround on their investment. I don't blame them -- that's what investment companies do (though as with every other investment group, it greatly annoys me when these guys outright lie and claim to be "in it for the long haul").
When the day comes, I see Jeep being an easy sale. The brand has worldwide appeal, so companies as far away as India or China will have an interest. The recent cuddle-up between Nissan and Dodge (Titan becomes rebadged Ram, new Hornet is really old Versa) suggests an obvious exit plan for the Dodge Brothers.
But whither Chrysler? Everything the brand sells right now is either offered by Dodge as well (300, Aspen, Sebring or Town & Country) or on the short list to be killed (Crossfire, PT Cruiser, Pacifica).
Ironic that it's the premier division, and the one "Chrysler Corporation" was named after all those decades. But I don't see it being around much longer. Do you?
- Posted by
- Karl Brauer July 29, 2008, 6:00 AM
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- Chrysler, Talk Back Tuesday
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- Chrysler, Lease
"Do you?"
Nope, I don't. Its always a shame to see an automaker disappear, even though I don't have a desire to buy from them.
I imagine to many, it will be a bigger shame to see Dodge owned by Nissan.
Since Cerberus isnt doing anything to actually save Chrysler it could disappear although I think that would be a worst case scenario. I just dont understand why they arent working on new product. These guys are attempting a turn around that involves little new product. They simply want to cut jobs and use gas incentives to reverse decline and that's not going to work. Chrysler was ruined by Daimler and as a result they may go under. Other than donate a few parts to the LX platform Daimler did absolutely nothing for Chrysler and that's why they are in the worst shape of the Big 3.
No. Cerberus happens to be heavily invested in the company I work for. They are acually a pretty good group to work with, in our experience. But not for a second did I think they invested in Chrysler for the "long haul". It is only a matter of time before they go all Gordon Gecko and start piecemealing the company out to prospective buyers. An oversimplication but the end result is Chrysler will not survive.
Unfortunately, Chrysler is pretty much on a dead end road. I'm not sure what Cerebus has in mind, but from my chair the Chrysler name doesn't command a premium in the market, so there's no disadvantage to just branding everything Dodge. In fact, I don't even know the marketing direction behind Chrysler.... so they have two incredibly bloated people movers, a joke of a midsize sedan and a large luxury car? Not much cohesion there. At least Dodge has some performance and legacy thing going for it, and decent exterior styling.
They would need a corporate direction, and product to back it up. I don't see either in the near future. And with the state of the US Auto industry, if things don't look good in the near future, the look really bad down the road.
I don't see Chrysler making it. For years they have not made it clear as to what their target market is, and their offerings have not been class-leading in any way, and their future does not look bright, even with the new electric models that are to come out. Ford and GM are faring much better in terms of product offerings and future plans, and as you said Dodge and Jeep definitely have a much brighter future.
I've heard from a very good source that the next-generation Sprinter van will come from Nissan, not Mercedes.
If you recall Nissan has made news recently about offering several new "commercially-oriented" trucks for the American market. You can bet that the next Sprinter is part of that project.
I'm sure Freightliner dealers are delighted at this news, as they sell the same vehicle as the (current) Dodge Sprinter.
For clarification:
The current "Freightliner" Sprinter will remain a Mercedes. The next "Dodge" Sprinter (or whatever they call it) will come from Nissan.
Damn! We need to get that edit feature back!
I cant help but think that when Chrysler does go on the chopping block, that somebody up there on the US Government payroll will be alarmed that thousands of American jobs are about to become Chinese (have to keep up appearances). With that said I hope somebody with a big American (or British?) pocket book will decide that maybe owning Chrysler is a good investment that may pay off later!
Forums members have been talking about the need for Chrysler to turn it around for a while now.. http://townhall-talk.edmunds.com/direct/view/.f100f59
They're dead. Who ever sells the tombstone should get cash up front.
I thought Cerberus' plan, from the beginning, was to break Chrysler in pieces and sell. I think the only way Chrysler survives, is if the Feds step in.
Who's next?
1487 - at least Daimler gave Chrysler some product - Corssfire and 300/Charger/Magnum. Better that Cerebus has done - no new product. I am not saying Daimler was a great success in ownership but they did something. Chrysler may well have been dead by now without them.
An interesting account of the Chrysler/Mercedes relationship here:
RE: Eliminination of the PL/JA/JR platforms, in favor of the new GS (JS/PM/MK)
http://www.allpar.com/forums/index.php?showtopic=103289&st=0
You have to sign into the forums to read it, but it is well worth the trouble.
I hear stories about companies going dead since 80s. Ford supposed to be dead 25 years ago. Chrysler itself was on the deathbed in 80s. Jaguar and LR are basically living deads sucking blood from host companies. Well you can say this about most British companies. Chrysler’s problem at this point is an absence of global presence and global product.
The truth is that America is not a nation state. Americans do not care about where product is designed or made or what will happen with fellow Americans. All they care about is cash, state of stock market and the best product the can buy for the least amount of money. It is a Wal-Mart nation. If you ask Europeans – they will ridicule Asian and American cars. Koreans buy cars only from Korean companies. Same with Japanese – Japanese people and government will not allow major or small Japanese company to fail. How many Japanese car companies are still alive? Toyota, Nissan, Honda, Mazda, Mitsu, Suzuki, Subaru and so on. America is the biggest country in the world obsessed with cars and American car companies are dying like flies on their own turf.
Europeans have been buying cars from American-owned companies in large quantities since forever. Ford Europe is huge, as is GM's Opel/Vauxhall/Chevrolet concern. Both have been there since the 30's.
In Japan Mazda was only saved by Ford's investment, and has been been controlled by Ford for years now. Isuzu, Subaru, and Suzuki all had substantial control and investment from GM.
In Korea GM owns Daewoo, they sell a million vehicles a year worldwide.
In the last 50 years Chysler has introduced only a few good designs: the stylish/fast Road Runner, inventing the highly utilitanian mini-van, and the cab forward/rakish Intrepid. But that about sums up their contribution to the industry.
Otherwise, in my experience, their cars have been medicore weaklings with lackluster dealer support. Beyond a couple of their "archetectural" designs, I won't miss their passing.
The biggest problem the Chrysler make has had for decades is a simple IDENTITY CRISIS. Is it a luxury car brand? (300) Is it an economy car brand? (PT Cruiser) Is it yet another boring mid-size car brand? (Sebring)
It's been trying for far too long to be all things to all people, and hasn't really succeeded in any of them terribly well (the 300 being a rare exception). The name "Chrysler" used to MEAN something, and you immediately knew one when you saw one - love em or hate em, but you couldn't ignore em. But when Plymouth died in 2001, the Chrysler brand became even MORE diluted when it took they rebadged the stripper Voyager minivans as Chryslers, to name one example.
Say what you will about Cadillac (and Lincoln, to a lesser extent), but Cadillac has at least kept true to its being a luxury car maker without watered-down badge engineered also-rans (the Cimarron and 1st gen Escalades being a rare exception). It needs to get a CLUE as to what it really wants to be, and fast.