Only a couple of days after the New New, New Chrysler started building Vipers again, the company has announced that it will restart production at seven of its other North American assembly plants beginning the week of June 29, 2009.
To the relief of customers who demand engines and bodies on their cars, the company also noted that the powertrain and stamping facilities that supply these plants will also resume operations.
Chrysler will shortly thereafter close the plants for for two weeks as part of its previously announced two-week Summer Break (the weeks of July 13 and 20).
Which plants will get their on-switch fingered? Make the jump for the full list.
The Wall Street Journal reports today that with the closing of the Lochmoor Chrysler Jeep dealership on the East Side of Detroit, it is now impossible to purchase a new Chrysler or Jeep vehicle in the city of Detroit.
Lochmoor was one of the 789 dealerships Chrysler dropped recently while in bankruptcy. That dark nugget of information was part of a larger story about the city that was so bleak we can't bring ourselves to retell it here.
Suffice to say, that no national grocery chain operates a store in a city in which 30 percent of residents are on food stamps. And -- gasp! -- there are only four Starbucks outlets within city borders.
Oh, and what becomes of Lochmoor Chrysler Jeep? It becomes a used-car dealer and has agreed to sell the upcoming Mahindra & Mahindra mini pickup trucks.
Now that Chrysler has emerged from bankruptcy, it can finally resume production at the numerous plants it idled weeks ago. And which plant did it decide to fire up first? That would be the Conner Ave. assembly plant that produces the Dodge Viper.
It only employs 115 people, so maybe Chrysler figured it should start small. According to the article in the Wall Street Journal, Chrysler still expects to end production of the high-end sportscar by the end of the year.
International forecasting firm IHS Global Insight has released a detailed report on how it thinks the Chrysler/Fiat alliance will shake out over the new few years.
In case you're wondering where all that stimulus money is going, the General Services Administration (GSA) issued a friendly reminder that it's doing its part to spread the wealth.
"On June 1, 2009, the agency ordered 14,105 fuel efficient vehicles for the Federal fleet using $210 million of funds from the American Recovery and Reinvestment Act (ARRA)," according to the press release.
"This brings the total number of fuel efficient vehicles ordered by GSA using ARRA funds to 17,205 at a cost of $287 million."
The breakdown includes:
2,933 Chrysler vehicles for $53 million; 7,924 Ford vehicles for $129 million; and 6,348 General Motors vehicles for $105 million.
Strangely enough there is no mention which vehicles the agency purchased, only that they will be more efficient that the ones they replace. Reassuring isn't it?
According to a recent survey by automotive consultancy AutoPacific, Americans are highly skeptical that the federal government's involvement with Chrysler and GM will help much. When asked if federal control of Chrysler and GM would result in cars they would want to buy, 66% percent of those surveyed disagreed.
Those responding also disagreed that government interference would help create much cleaner cars and trucks (54%). And not surprisingly, a majority thought that both Chrysler and GM should have been allowed to fail.
Given that Chrysler and GM will be depending on these consumers to pull them out of the muck, the next year could be a tougher one that the two companies expect.
The Supreme Court cleared a path last night for Fiat's takeover of Chrysler and the two companies wasted no time finalizing the deal. The new company, Chrysler Group LLC, will be led by Fiat CEO Sergio Marchionne.
"This is a very significant day, not only for Chrysler and its dedicated employees, who have persevered through a great deal of uncertainty during the past year, but for the global automotive industry as a whole," Marchionne said in a statement. "From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry. We now look forward to establishing a new paradigm for how automotive companies can operate profitably going forward."
Automotive News is also reporting that Jim Press will become deputy CEO, whatever that means.
After granting a temporary stay yesterday to study the matter, the Supreme Court today lifted its hold on the case. The ruling paves the way for Chrysler's sale to Fiat, a deal which could lift Chrysler out of bankruptcy by the end of this week. Good luck guys, you're going to need it.
If you have never driven on a race track, you should. If your skills are weak, track time will make them better. And if you think you're an undiscovered Tony Stewart, well then, get out there and prove it. The list that follows after the jump gives some ideas where you might try your luck both on the road and in the dirt.
In a statement issued by Justice Ruth Bader Ginsburg, the U.S. Supreme Count did go ahead and put the brakes on Chrysler's sale to Fiat on Tuesday afternoon. But as we reported earlier, most experts feel that the Court will not actually block the deal, but is instead taking additional time to consider the case brought by the Indiana pension funds.
Although concern has been raised that an indefinite delay -- albeit one lasting past June 15 (the deadline set by Fiat) -- could jeopardize the sale, Bloomberg quotes the Italian automaker's CEO, Sergio Marchionne, as saying, "We would never walk away. Never."
A group of Indiana pension funds opposed to Chrysler's bankruptcy may ask the U.S. Supreme Court to hear their appeal after a lower court upheld the sale of Chrysler to Fiat today. The additional challenge could keep Chrysler from exiting bankruptcy, which might otherwise happen as early as Monday. Most analysts agree that it's unlikely the Supreme Court will hear the case since any delays could allow Fiat to walk away from the merger.
Chrysler and Fiat have gotten approval from the bankruptcy court to honor warranty and lemon law claims, Automotive News is reporting. This would apply to all Chrysler, Dodge and Jeep vehicles manufactured in the 5 years leading up to the company's bankruptcy filing on April 30.
This is a turnaround from a May report that indicated customers were already having difficulty getting their lemon-law payout checks honored. Subsequently, several states, led by Iowa attorney general, Tom Miller, went to the court to advocate on consumers' behalf.
Until today the Chrysler bankruptcy had been proceeding smoothly. The judge had more or less taken the stance that getting the company out of bankruptcy was its best chance for success. Almost any challenge was dismissed, and the president's desire to see Chrysler out in 30 to 60 days looked feasible.
Well today that process hit a bit of a snag as the Court of Appeals for the Second Circuit held up the sale of Chrysler's assets to Fiat until an appeal by several Indiana state pension funds was heard. The funds, which represent various state employees, are arguing that the bankruptcy judge is unfairly favoring unsecured creditors over their secured positions. They also claim that the federal government can't give Chrysler TARP funds because it's not a financial institution.
Compared to last year, May's sales numbers were miserable. Let's face it, when a 19% drop somehow looks good, there's still a problem.
We've come to expect such misery these days, but as AutoObserver points out, there are a few glimmers of hope in May's sales numbers.
- The Seasonally Adjusted Annual Rate (SAAR) is at its highest point of the year at 9.9 million.
- Most sales numbers beat analyst's expectations.
- The stock market is up and car sales typically rise with the markets. Consumer confidence is also up.
Hard to tell if this trend will continue at this point. It could be a result of bargain hunting or a little pent up demand. Either way, it's the kind of news we need at this point given how deep taxpayers are now entrenched in the business.
Of all the information that has come out of the Chrysler bankruptcy proceedings, a comment by Alfredo Altavillia, Fiat's head or business development takes the cake as the most memorable.
During questioning by bankruptcy judge Arthur Gonzales, Mr. Altavillia said that Chrysler's turnaround won't be much different that Fiat's own turnaround just a few years ago, citing the planned introduction of Fiat's manufacturing system and product development process.
Beyond the top brass, Chrysler staff will remain mostly American.
"We don't intend to ship hundreds of Italians who would get lost in the Wal-Mart," Mr Altavilla said.
It was a surprise to Wall Street, and just about everybody else, when the Conference Board released its Consumer Confidence Index report for May this morning. Now registering 54.9, the index saw its biggest one month increase in six years and highest level since September.
The report sent the market soaring nearly 200 points, but more importantly it also contained news that the number of consumers expecting to buy a car in the next six months rose to its highest level since April 2008. The report also cautioned that home prices continue to decline and unemployment remains high.
That said, might the GM and Chrysler bailouts get done in time to take advantage of an uptick in the economy. Or are they just going to limp along while stronger competitor take advantage?
Here's your chance to score that Jeep Grand Cherokee SRT8 you've been dying to see in your garage. Terminated Chrysler dealers are clearing out their remaining inventory and very often taking a bath in the process.
Chances are you're not going to find any SRT8s laying around, but Ram trucks, minivans and Wranglers should be available. Don't bother insulting the dealers with ridiculous low-ball offers though, they're not under that much pressure.
Chrysler announced today that C. Robert Kidder will takeover as Chairman once its merger with Fiat is wrapped up. Kidder takes over from Bob Nardelli who will return to Cerberus Capital to work as an advisor.
Kidder currently serves on the boards of Morgan Stanley, Schering-Plough and Microvi Biotech Inc. He previously served as CEO of Duracell International and Borden Chemical Inc. and is currently CEO of 3Stone Advisors LLC, an investment firm that specializes in clean-tech companies.
Are you sensing a pattern here?
If not, here's a hint. Chrysler will once again have a top executive with little to no experience in the automotive industry. It appears as though even Chrysler was aware of how this might look so it added a line to his bio that mentions Kidder's work with a "major OEM client in the automotive industry" during a stint at McKinsey.
Have you ever driven a dinosaur? That's how I felt behind the wheel of the 2009 Chrysler 300C SRT8.
Not only is the automaker threatened with extinction, but it's a foregone conclusion that gas-guzzling, high-performance engines like the 425-horsepower HEMI in the 300C SRT8 are going the way of the T-Rex. Or at least they'll cease to exist in two-ton sedans.
But if our test car (sticker price $48,520) is already a rolling relic, it's one decked with tech that Chrysler's more cash-stable competitors could benefit from copying.
It's not a marriage of convenience, and according to AutoObserver, it's not a marriage that will last either. We're talking about the Fiat/Chrysler merger and history says it's doomed.
Richard Feast, a long time industry observer, lays out a litany of failed mergers that have transpired over the last several decades and they don't bode well for the latest attempt.
Although he does give Fiat CEO Sergio Marchionne credit for turning around the struggling Italian automaker, Feast says the Marchionne is attempting to achieve even greater success by bringing together several mediocre brands under one roof.
As Chrysler's "quick-rinse" bankruptcy progresses, all sorts of nagging little issues are bound to pop out of the woodwork. For instance, what do you think might happen if Chrysler bought your vehicle back under your state's lemon law and you try to go deposit your payout check?
For several buyers in California, the answer is that check's going to bounce, the Los Angeles Times reported today.
Financial claims made before the automaker sought Chapter 11 protection on April 30 can only be paid out with approval of the bankruptcy judge, and says the Times, "Chrysler has not asked for permission to make payments on lemon law complaints."
So what recourse do you have? File a proof of claim with the bankruptcy court and join the long line of unsecured creditors hoping to collect.
As expected, the 789 rejected Chrysler, Dodge and Jeep dealerships are not going down without putting up some kind of fight.
Automotive News is reporting that the national dealer group has filed a motion in U.S. Bankruptcy Court asking that all legal protections (read: state franchise laws) the dealers would have outside of bankruptcy court be honored here.
A judge will hear the case on June 4, just 5 days before Chrysler announce it would end operations at the affected dealers. Notably, says AN, Chrysler would not buy back the remaining vehicle inventory and parts at the rejected dealerships, but would merely steer those owners toward surviving dealers that might wish to purchase it.
General Motors hasn't made the list of 1,124 rejected dealers public, but the Huffington Post is keeping track and you can find the working list here. Meanwhile, someone at the New York Times went to the trouble of creating an interactive map for all 789 doomed Chrysler dealers.
In addition, Max Fraad Wolff, a writer for the Huffington Post, has written a dark but compelling column on the GM-Chrysler situation. He refuses to lay the blame solely on the automakers, the union, the large banks, the bondholders (aka "the speculators) or the Obama administration and its automotive taskforce.
Snippet: Chrysler bondholders were offered 29 cents on the dollar with greater offers being made to the UAW employee trust despite its being a lesser creditor in standard Chapter 11 proceedings. Thus, this group had nothing to lose but Obama tongue-lashing if they refused the deal. They did refuse and the tongue-lashing came full of statements about those unwilling to make sacrifice. The political game is to blame another party -- perhaps with good reason -- for the ultimate bankruptcy. Public relations theater has gotten all the attention. We should be looking at the destruction of a region, an industry and the shocking lack of industrial policy.
Snippet: We so completely lack an industrial policy that we are presently working to spend money to maintain our car market while decimating US domestic car producers. Perhaps the goal is to be the first developed country with neither significant American car production nor, public transit?
Whether you agree or not, Wolff's column is well worth the 5 minutes it takes to read.
General Motors edged another step closer to bankruptcy in a late Thursday filing with the U.S. Securities and Exchange Commission. In the report, the company formally acknowledged bankruptcy is a likely outcome if cannot resettle its debt and renegotiate its terms with the United Auto Workers by June 1.
You can download the full report below as a PDF, but of course it's a dense tome (439 pages). On page 7, though, GM says that relief "may include (i) seeking bankruptcy court approval for most or substantially all of our assets pursuant to Section 363(b) of the U.S. Bankruptcy Code to a new operating company, and a subsequent liquidation of the remaining assets in the bankruptcy case (a '363(b) sale')."
This is exactly the scenario playing out currently with Chrysler and Fiat. Only in this instance, there's no obvious buyer waiting to scoop up "Good GM" -- other than an entity backed by the U.S. government, says Automotive News. And so the agony goes on.
Chrysler has released a 40-page document with names and addresses of the 789 dealers who will lose their franchise agreements by June 9. If you want to know who those dealers are, download the pdf file below.
"Subject to Court approval, 2,392 Chrysler, Jeep or Dodge dealers will continue with the new company in a global alliance with Fiat once the sale is complete," Chrysler announced in a press release.
Automotive News is reporting that each dealer on the list will get a UPS letter today and will have 23 days for a "court review" of its case.
Chrysler says it will honor warranty and incentive payments for as long as the rejected dealers remain in business. These 789 dealers represent 14 percent of the Chrysler's sales volume, the company said.
Soon enough you'll really begin to see the results of the dire situation for both GM and Chrysler. All the major news outlets are reporting this morning that both companies are expecting to cut up to 1,000 dealerships each by Friday. Reuters, though, reports that GM could drop as many as 2,000 dealers this week
For GM, this is part of the planned 2,600 dealers to be cut by the end of 2010. At the end of 2008, it had 6,246 dealers, Automotive News reports.
Cutting 1,000 Chrysler dealerships would consume nearly a third of a network that numbers 3,189. Then again, there's obvious and legitimate concern that Chrysler might soon not have much product to put on dealer lots anyway as it wastes away in bankruptcy court.
After yesterday's pace car clunker fest, we're proud to present some of the 500's more prestigious pace cars. These cars actually did their production namesakes some good, or at least looked great trying.
This year it's the 2010 Chevrolet Camaro SS, a solid, almost inevitable choice. Such decisions haven't always been so clear cut. During much of the 70s and 80s, the choices were slim. But they had to slap stickers on something, so you had some dodgy representatives like the Oldsmobile Calias and Cadillac Eldorado.
So what do you think? Which car deserves the title "Worst Indy Pace Car Ever"?
Chrysler can't catch a break these days and it needs one if it's going to stay alive past the summer. Automotive News is reporting that some Chrysler dealers are now getting together to hire a law firm to protect their franchises. Most of them are afraid that the "new" Chrysler that emerges from bankruptcy will pick the dealers it wants and leave the rest hanging.
In a related story, Alex Taylor III from Fortune magazine highlighted additional problems facing Chrysler. One is product development or lack thereof. One engineer told Taylor that you can't just stop and a program and start again where you left off as crucial knowledge gets lost along the way. He figures this will cause current programs to take one-and-a-half times longer than they would have otherwise.
Another basic problem? Paint. It can't just sit in the pipes when the plant is shutdown. "Paint should be removed and stored after 21 days at a cost of $2 million," a Chrysler engineer told Taylor. "After 69 days, paint would need to be replaced at a cost of $15 million."
As we feared, nothing about this bankruptcy is going to be quick and efficient.
Another chapter has ended in the Chrysler bankruptcy saga. Remember the evil hedge funds that were holding out to get the money they were rightfully owed?
Well, they've turned over a new leaf and agreed to the government's offer. Of course, they gave no reasoning why they suddenly found its reasonable to accept roughly 30 cents for every dollar they were owed. Maybe it has something to do with a little arm twisting by the White House? Or maybe not.
More news from the Chrysler bankruptcy proceedings. In an affidavit filed with the court, James J. Arrigo, co-chair of Chrysler National Dealership Council, calls the current environment "one of the most dire situations I've ever seen in the car business."
He added: "Nearly every potential buy that walks in my dealership has either raised the issue of Chrysler's viability or asked sales staff if Chrysler will 'be around.' The Chrysler dealership network is extremely fragile and on the verge of collapse."
With news that Chrysler will most likely shutter its Sterling Heights, Michigan assembly plant as part of its bankruptcy proceedings, the Chrysler Sebring and Dodge Avenger appeared headed for extinction.
According to Chrysler spokesman Rick Deneau, however, there are still plans in place to build both models after the plant closes in 2010.
"We definitely have plans for these vehicles beyond December 2010," Deneau told Inside Line. "That's about all I can tell you, but it's pretty definitive."
Here they are, your new Chryslers. Well, maybe they'll still be badged as Alfas or Fiats, nobody really knows at this point. What we do know is that these four vehicles and the Fiat 500 will represent the bulk of Fiat's contribution to Chrysler's lineup.
They include the Alfa Romeo MiTo (bottom right), an upcoming replacement for the Alfa 147 (top left) that will be renamed Milano, the Fiat Grande Punto (top right) and a version of the Fiat Panda utility vehicle (bottom left).
Bankruptcy documents submitted in court yesterday don't bode well for vehicles like the Dodge Viper and even the Jeep Wrangler. Problems trying to offload the Viper business have been discussed for months now, but the new documents also point out the difficulty of trying to sell Jeep as a separate brand. One consultant estimates it would take as much as $1B to restart a product as a stand alone brand.
The whole Chrysler situation is getting stickier by the day. Now a bankruptcy lawyer who represents some of the investment firms that didn't agree to the bailout plan says that Steven Rattner, head of the Presidential Task Force on Autos, told him that the full force of the White House would be used against those who didn't agree to the bailout.
Thomas Lauria, Global Practice Head of the Financial Restructuring and Insolvency Group at White & Case, first told the story to Detroit radio station WJR-AM. At the time, he didn't single out Rattner by name, but in a subsequent interview with ABC News he revealed additional details.
A White House press secretary denied the accusation.
Remember last week when President Obama said that the Chrysler bankruptcy would be "fast and efficient"?
So much for that idea. The Detroit Free Press is reporting that the proceedings have already been delayed by the bankruptcy judge. Turns out Chrysler was supposed to submit its plan to the court on Friday but only managed to get it in last night.
The holdout investors, otherwise known as the evil hedge funds, called BS and the judge agreed. The investors also asked that the judge keep their identities secret as those that were already identified have received death threats.
Last week it was Chrysler, this week Fiat is attempting to buy Opel, GM's German subsidiary. The goal is the formation of a European supergroup similar in scope to Volkswagen.
According to a report in the Financial Times, Fiat CEO Sergio Marchionne aims to split Fiat's car operations from the conglomerate's other businesses and combine it with Opel, Saab and its newly acquired stake in Chrysler. "From an engineering and industrial point of view, this is a marriage made in heaven," Marchionne told the FT.
History shows that such mergers rarely end up creating much value, but Marchionne is hoping that the depressed state of the industry opens a few door in his drive to remake Fiat into a global powerhouse.
The April sales numbers are in and although the market hasn't exactly turned a corner just yet, there are signs that the slump may be leveling off a bit.
The overall sales rate, menacingly referred to as SAAR (Seasonally Adjusted Annualized Rate), was down to 9.5 million from 9.8 million last month, but still not as bad as February when it was as low as 9.1 million.
General Motors was down compared to last year's April sales numbers, but up 14% compared to March. It market share was also up. Ford also fell compared to last April but was up 8.3% compared to March. Toyota had a tough month with sales down 42% compared to last April.
For a complete analysis of all the numbers, check out AutoObserver's take on this month's sales numbers.
So now that Chrysler is on the way to a shotgun wedding with Fiat, what will the new company be called?
FiatChrysler? ChryslerFiat? Fiatler?
It sounds like a secondary decision, but when Chrysler hooked up with Daimler, the issue simmered for a long time before Chrysler agreed to let Daimler go first. Doesn't seem like Chrsyler will have much of a say this time around.
Chrysler's odd three-headed management system is about to get a little more streamlined. After today's bankruptcy announcement, Chrysler's current Chairman and CEO Bob Nardelli announced that he would leave the company and return to Cerberus Capital Management as an advisor.
Tom LaSorda, the long time Chrysler manufacturing executive and the company's current Vice Chairman and President, also announced today that he will retire once the Fiat deal has been completed.
Jim Press, the former Toyota executive who also holds the title of Vice Chaiman and President says he has no immediate plans to leave the company.
Then again, it won't be long before Fiat is calling the shots, so Press may not get to stick around even if he wants to.
It's now official. President Obama announced this morning that Chrysler has entered into bankruptcy proceedings.
His remarks revealed little in the way of new information, but Obama did go out of his way to call out the private equity groups that stood in the way of a reorganization out of bankruptcy. "I don't stand with them," he said.
Obama went on to say that the bankruptcy "will be quick and efficient," a promise that will be tough to deliver. He also suggested that Americans who are in the market for a new car should "buy American."
Also worthy of note, GMAC (formerly known as the General Motors Acceptance Corporation) will take over the retail financing of Chrysler vehicles.
After talks with creditors collapsed last night, a Chrysler bankruptcy appears all but certain by the end of the day. Although much of Chrysler's debt had been renegotiated, several private investment firms still hadn't agreed to a deal.
Most reports say that the government is hoping for what is being called a "surgical" or "quick rinse" bankruptcy. There's only one problem with that idea: there's no such thing.
At least that's the opinion of the prominent Michigan law firm of Plunkett Cooney. It held a conference call two weeks ago to discuss GM's possible bankruptcy. Among other things, it said the government made up the term "quick rinse" as it's not a term bankruptcy courts have ever used.
It also cited several recent examples of large companies that went into bankruptcy court and none of them could be considered "quick" or "surgical". The closest thing to it was Mrs. Fields cookies which declared bankruptcy last August. It took 7 months to resolve that one.
Bloomberg is reporting that President Obama will announce Chapter 11 bankruptcy for Chrysler tomorrow morning. The move is designed to facilitate a merger with Fiat which would own 20% of the new company while the UAW would own 55%.
Update: The Washington Post is now reporting that Chrysler CEO Bob Nardelli will be replaced by Fiat management as part of the bankruptcy plan currently being developed by the Obama administration. Fiat would eventually own 35% of the new company while the U.S. government would 8% and the Canadian government 2%. Cerbereus Capital would no longer have a stake.
Think you had a rough Monday? Daimler's was worse.
It started the day by giving up completely on Chrysler. Daimler held on to 19.9 percent of Chrysler in hopes of salvaging its disastrous merger. Well, that didn't work out too well, so Daimler agreed to give up its remaining shares to Cerberus. Daimler also forgave $700M in loans it made to Chrysler and agreed to contribute $400M to Chrysler's pension plans over the next two years. Ouch.
Later in the day, Daimler announced that it had lost $1.86 billion in the first quarter of 2009. Daimler had already written off its stake in Chrysler, so those losses aren't even the result of the earlier agreement.
So there you have it, the Daimler merger with Chrysler is officially a disaster from start to finish. Nice idea, Juergen Schrempp, hope you're enjoying retirement.
It wasn't all bad news, though, as the half-Canadian/half-Italian CEO noted that if the deal does happen, Fiat would likely build its iconic Cinquecento hatchback in a North American plant along with the Alfa Romeo 149 sedan.
More importantly, Marchionne said that Chrysler could build its own small car on the Cinquecento's platform. "Chrysler needs its own Cinquecento, meaning a model that is the remaking of Chrysler," he said.
So what do you think, could Chrysler build an iconic small car for the U.S. market?
The Chrysler/Fiat hookup just got a little more complicated. Fiat CEO Sergio Marchionne told a Canandian newspaper that without additional concessions from both the Canadian Auto Workers (CAW) and the United Auto Workers (UAW) there will be no deal between Chrysler and Fiat.
According to Marchionne, without those concessions the deal won't make financial sense for Fiat. Many in Europe think it's already a flawed merger that will fail to add much value to Fiat no matter how the unions renegotiate.
The Obama administration gave Chrysler until the end of April to make a deal with Fiat. So in other words, if the unions don't budge, Chrysler is toast.
#NYIAS Does that whole Chrysler/Fiat merger seem unlikely to you? You're not alone, my friend -- and Chrysler knows it.
In order to instill a little confidence that Chrysler is working hard to make it happen, Vice Chairman Jim Press drove a Fiat 500 onto the show floor. Isn't it cute?
He then used the first 10 minutes of his speech to tell everyone how promising the merger looks. "This would be a great marriage with no overlap in our product portfolios," Press said.
He said it with conviction, but not many in attendance seemed to believe it. At least not yet. -- Ed Hellwig, Lead Senior Editor
Remember Chrysler's ENVI lineup of electric vehicles? They seemed a little farfetched when they were first introduced, but Chrysler has been cranking away trying to make them a reality. The company is one step closer today as it officially announced a battery contract with supplier A123 Systems.
According to the release, "Chrysler LLC and A123Systems have signed an agreement stating that A123Systems will supply energy storage systems for Chrysler's first-generation ENVI Range-extended Electric Vehicles and battery only Electric Vehicles. A123Systems is an American battery supplier with plans for a Michigan-based production facility.
Note that A123 "plans" to have a Michigan-based plant that will produce the advanced Nanophosphate Lithium ion prismatic battery cells for Chrysler's ENVI vehicles. Like much of Chrysler's future, this whole ENVI thing is a big "if" pending the company's bailout by the federal government.
In yesterday's press conference on the state of the domestic auto industry, President Obama gave Chrysler 30 days to finalize a deal with Fiat. With that in mind, Sergio Marchionne, Fiat's CEO, wasted no time and immediately flew to Detroit.
Chrysler released a statement late yesterday saying that it had "a framework agreement" in place with Fiat, so clearly there are still plenty of details left to iron out. With bankruptcy looming, we don't see how Chrysler will come out of the talks without a deal in place.
Well, that's a relief. If there's one thing that could plunge GM deeper into muck it would be government control. Then again, it seems as though Obama and friends are already at the helm. They already pushed CEO Rick Wagoner aside, and today President Obama announced the appointment of Ed Montgomery as Director of Recovery for Auto Workers and Communities. Who knows what kind of power he'll have.
Others items of note in the President's speech this morning:
- Warranties by GM and Chrysler will be backed by the federal government. - Government fleet purchases of automobiles will be accelerated. - The IRS will mount a campaign to inform consumers of a possible tax break when buying a new car. - The President will consider using recovery funds to pay for a "cash for clunkers" program that offers cash to consumers who trade in an older car for a new, more efficient model.
Yes, a small glimmer of optimism from the Chrysler camp.
In an interview with AutoObserver, Chrysler CEO Jim Press said that the media should focus on month-to-month sales numbers instead of year-over-year stats. "In February, every day we exceeded our internal targets (of 6,000 vehicles sold a day)," he said.
Press also noted that a little extra government funding and a complete deal with Fiat would help considerably. "If we get funded, we're viable and can continue to invest in future," Press said. "If we get the relationship with Fiat, we'll go from viable to being in really good shape."
Sure, Chrysler's sales numbers are in the tank and it's counting on a hookup with Fiat to get it through the year, but does that mean the SRT group is headed for the chopping block? Not so says Chrysler.
In a post on its Red Letter Dodge site, Product Planning Chief Steve Bartoli said SRT is not in any danger. "SRT is sticking around and we have to make final calls on the lineup. We are big fans of SRT (and) what is does for us and our customers," Bartoli wrote.
He also mentioned that Chrysler is working on a D segment sedan. "We will look at many styling options," said Bartoli.
The 2009 Geneva Auto Show occupied most of our time this week, so when the February sales numbers came out on Tuesday we overlooked the bad news.
And bad it was, with almost all major automakers reporting double-digit drops in year-over-year sales. And it wasn't just the domestics either, as Honda, Nissan and Toyota all crashed by more than 37%.
Clearly, it's going to take more than just bailout money to get the auto industry going. Without foot traffic, no car company will be able to sustain its current operations. Any suggestions?
We've got some serious number crunchers around here at the Edmunds corporate megaplex. So serious, in fact, that they don't even have to wait until the end of the month to call the sales numbers.
And their predictions for February? Not surprising, yet still slightly shocking.
How about Chrysler down 53.1% year over year? And Ford? Down 47.5%, GM off 46.2%.
A Big Three problem? Not really.
Try Toyota down 38.9% while Nissan is expected to drop 32.9%. Even Honda could be off 32.1%.
Then again, these are only predictions. It could be worse.
In addition to the amatuerish photoshop manipulations of the upcoming Chrysler 300 and Jeep Grand Cherokee, Chrysler LLC also included the above proposed product plan with its submission to the U.S. Treasury yesterday.
The biggest take-away from the document is how heavily Chrysler anticipates relying on Fiat products to fill out its future lineup. There are at least six new products the company plans to base off of Fiat underpinnings, from a small hatchback to a mid-size sedan and a compact SUV. In fact, the only products designed by what we traditionally think of as Chrysler are full-size pickup trucks and SUVs, full-size sedans and MPVs.
Here's another classic from Chrysler's plan for profitability -- the "new" 2011 Chrysler 300C. Trust us, the real thing is a sharp-looking sedan. This is a bad photochop.
The new 2011 Jeep Grand Cherokee? Well, sort of. This is a computer rendering that Chrysler supplied in its viability plan to the federal government. Granted, Chrysler is in no position to play games, but it knew full well that this report was going public, so take this picture with a grain of salt.
Chrysler LLC submitted its viability plan to the U.S. Treasury Department today, as stipulated by the Federal loan agreement.
In it, Chrysler mentioned that it will be cutting a few model lines, adding an electric car and oh, yeah, that it would like an additional $2 billion. That would bring its total loan request to $9 billion. The company has already received $4 billion. Chrysler says it didn't anticipate how bad the U.S. car market would be when it asked for $7 billion on December 2 of last year. Chrysler said in a statement that it would begin paying back the loans "with a premium" in 2012.
No surprise, Chrysler said it believes its viability plan would be "enhanced" by its proposed alliance with Fiat, since it would give the company access to fuel-efficient vehicles and distribution channels in growth markets. We'll see how the idea of more government money going to a company owned by a private equity firm, a German company and, potentially, an Italian company will go over in the current political climate.
What about cars and trucks? Well, Chrysler has reiterated what we already knew. Specifically, 2010 will see the introduction of a new Jeep Grand Cherokee, Dodge Charger, Dodge Durango and Chrysler 300. To bolster its case for its own fuel economy improvements, Chrysler notes that it will begin selling a two-mode hybrid version of the Ram, also in 2010. Again, no surprise. The statement also makes mention of an electric-drive vehicle, which is surely the Lotus-based Dodge Circuit. Chrysler goes on to state that "in the following years" the company will introduce extended-range electric vehicles.
The Fiat 500C, a open-top version of its 500 coupe was revealed over the weekend prior to its world premiere at the 2009 Geneva Auto Show. Instead of full convertible roof, it uses a retractable softtop that simply slides rearward on the main roof rails. The design maintains the car's rigidity, not to mention what little cargo room there is in back.
Although the whole Chrysler bankruptcy issue still looms large over Fiat's return to the U.S., a report in Automotive News quoted a person familiar with Fiat's plans who said the company could start shipping 500 coupes to the U.S. by early next year. The Polish-built cars would be sold at select Chrysler dealers in small numbers.
With new plans for profitability due today, all eyes are on General Motors and Chrysler. Both companies spent much of the weekend bargaining with the UAW in hopes of winning additional concessions that would help further reduce labor costs.
One potential stumbling block that neither company will have to contend with is a so called "car czar". President Obama changed his mind and will instead appoint a Presidential Task Force on Autos to oversee the restructurings.
According to a report in the Detroit News, White House Press Secretary Robert Gibbs said that the Obama Administration wants "a strong, vibrant auto industry as the basis for our manufacturing in this country is extremely important. We have to ensure that the cars of tomorrow are built here by Americans, for Americanism" Gibbs said.
Nothing like a little Americanism to get the economy back on track.
Remember that $4 billion loan Chrysler received last month? Yeah, well apparently it wasn't quite enough. It was less than two weeks ago that Chrysler co-CEO Jim Press begged his dealers to buy more cars and trucks in February. He called it a "Hail Mary" according to Automotive News.
The prayer went unanswered as Chrysler only received 70% of the orders it needed. With that in mind, Press was at it again yesterday, telling dealers, "You have two choices; you can either help us or burn us all down," according to Automotive News.
He later drove home the point for those who might not have been swayed. "If you decide not to do that, we've got a good memory of who helped this company make it," Press said. Subtle isn't he?
In an interview with the Detroit Free Press, Fiat CEO, Sergio Marchionne said that Chrysler must meet the terms of federal loans and, "stand up on its own two legs."
"If it doesn't, we won't play," Marchionne added.
That could present something of a problem for the deal considering that some on Capitol Hill are wondering aloud why federal money should go to Chrysler, which would be 35 percent owned by the Italian automaker. The U.S. Treasury has already lent Chrysler $4 billion and the company is asking for an additional $3 billion.
Adding further discontent is the speculation that Fiat will eventually own up to 55 percent of Chrysler. The additional 20 percent stake would cost Fiat $25 million as outlined in the two companies' proposed deal. That, Marchionne told the Free Press is not a given, saying that that scenario is "a long way off."
Marchionne reassured that there would be "no seepage of liquidity" between Chrysler and Fiat and said, "Fiat will not take any cash out of Chrysler not on the basis of the deal that we structured today, and certainly not until all taxpayer funds have been repaid."
In contrast to Chrysler President Jim Press' comments earlier in the week, Marchionne doesn't see any other options for ailing U.S. automaker, "I haven't seen a lineup of people at the door trying to take us out of this deal." Press acknowledged that Fiat was the only entity Chrysler was currently talking to about an alliance, but said that "we have other options."
If the deal is successful, Marchionne said, the Fiat 500 and one Alfa-Romeo could be on sale in Chrysler dealerships in about a year. Those would have to be imported from Europe, while the alliance worked to reconcile building other Fiat Group and Fiat-based Chrysler models at North American production facilities.
Everyone's trying to figure out exactly what Fiat stands to gain from a no-money-down, one-third acquistion of Chrysler, other than loan money backed by U.S. taxpayers. A story in today's Inside Line news suggests Fiat might be very interested in Chrysler's Toluca, Mexico plant, which currently builds the Chrysler PT Cruiser and Dodge Journey.
The PT will be going out of production in summer 2009, freeing up production capacity that could be used to build small Fiats for markets throughout the western hemisphere.
Fiat already has a major presence in Brazil, but it's not much of a player in Mexico. And undoubtedly it would like to be. We'd bet that buyers in Mexico are apt to be much more receptive to subcompact Fiat 500s, Pandas and Grande Puntos than, say, U.S. consumers. In addition, meeting crash and emission standards is also likely to be a much simpler proposition in Mexico than the U.S.
Only a week after the two companies announced their intentions to enter into an alliance, word is leaking out about the specific products that will be coming to the U.S., should the Chrysler-Fiat tie-up be approved.
Automotive News is reporting that the companies will bring seven new vehicles to the U.S. market, four wearing badges from a division of Chrysler and three as Fiats or Alfa-Romeos. Those vehicles would be built in North American Chrysler plants and sold through Chrysler, Dodge and Jeep dealers, according to the trade journal's anonymous source. There's no indication when the final plan will be in place, but teams from both automakers are apparently shooting for an April 30 deadline.
Not unexpectedly, Fiat will produce the 500 retro dumpling for sale in North America in Chrysler's Toluca, Mexico plant where the Dodge Journey and Chrysler PT Cruiser are built.
But Chrysler clearly needs more than just a mini-car to revive its weak passenger-car lineup. In fact, save for the next generation 300C and Dodge Charger, there won't be much in the future Chrysler car lineup that won't be a Fiat at heart. Join us after the jump for the full slightly speculative round-up.
In the coming days you will be hearing much -- possibly too much -- about the Fiat Group's lineup of cars. The alliance between Chrysler and Fiat Group should open the American market to a flood of new small cars, both branded as Chryslers and Dodges but also, one would hope, Fiats, Alfa-Romeos and a couple of others.
We'll spare you the dissertation on the global implications of the Punto -- at least for now. No, now is the time where we provide our wish list of Fiat Group products. What follows is based on no particular market reality nor any other form of reality, other than the one projected from our heads.
First a note: The Fiat Group includes Ferrari and Maserati in its holdings. Those brands already have a presence in the American market. You can safely assume the cars from those two rate high on our wish list under any circumstances.
Join us, will you, after the jump for a few more we'd like to see on our highways.
As we (and Automotive News) speculated yesterday, Chrysler has worked out a strategic alliance with Fiat, the company announced this morning.
Some details of the deal are yet to be determined but the broad outline is as expected: Fiat will give Chrysler access to its small-car platforms and power trains in exchange for a 35 percent equity stake in Chrysler. The small- and mid-size car segments have been an area of particular weakness for the Auburn Hills-based car maker. What this means for product-sharing arrangements with Nissan, which for example was to provide the platform for the Hornet small-car, is not clear.
In addition to the equity stake in the company, Fiat gets the U.S. presence and distribution it needs for a long-desired return to the U.S. market for Alfa-Romeo as well as Fiat-brand vehicles like the 500. Chrysler will apparently be able to take advantage of the Fiat's distribution network outside of the U.S., including growth markets as well as Europe, where Chrysler has never had a significant stake.
Not surprisingly, Chrysler believes that the tie-up is consistent with the terms of the federal loan agreements. In its statement announcing the tie-up the company stated: "The proposed alliance would be consistent with the terms and conditions of the U.S. Treasury financing to Chrysler. Per the U.S. Treasury loan agreement, each constituent will be asked to contribute to Chrysler's restructuring effort including: lenders, employees, the UAW, dealers, suppliers and Chrysler Financial. Such steps would greatly contribute to Chrysler's long term viability plan. Completion of the alliance is subject to due diligence and regulatory approvals, including the U.S. Treasury."
There's no news yet as to possible management changes at the companies.
A report in Automotive News says that Chrysler is looking at a possible strategic partnership with Fiat. Unlike Ford and General Motors, Chrysler doesn't have a substantial European presence nor does it have much experience building the smaller cars popular in Europe.
The report speculates Fiat would give Chrysler access to its small car platforms, engines and transmissions. In return, Fiat may get cash or an equity stake in Chrysler. Fiat could also use the partnership to jump start its long-planned re-entry into the U.S. market. Fiat CEO Sergio Marchionne has said he would like to see the Fiat 500 minicar in the States if it could be built locally. Alfa Romeo has also been looking into reestablishing an American presence.
Ricardo Montalban, the Mexican-born actor who played the suave, white-suited Mr. Roarke on the '70s television program Fantasy Island, died today at the age of 88.
While he might have been driven around in a silly doorless, roofless car with a Fiat Jolly-like striped canopy on the program, the late actor is better recognized for his appreciation of "soft Corinthian leather." That line, which has become something of an emblem of silly car marketing, came from a television commercial for the 1975 Chrysler Cordoba, a car name Montalban pronounced with such style that we haven't been able to think of that name without hearing his voice in our heads -- every single time.
Representatives from both General Motors and Chrysler have told trade journal Automotive News that neither company will have any official presence at the Tokyo Motor Show, even if there is a Tokyo Motor Show.
"If you're going to the Tokyo Motor Show to raise the corporate flag or just to it for corporate presence, I think those days are gone," GM's Asia Pacific President Rick Brown told the trade journal. "It's not a good business decision."
A written statement from Chrysler Japan said that the company would pull out of the show "in order to secure limited resources."
And Ford? According to Japan's Yomiuri newspaper, Ford missed last year's deadline to register for the show.
Right or wrong the news media is convinced that Chrysler's parent Cerberus Capital Management is looking for someone on which to unload the failing automaker.
The most recent rumor, started by Reuters news service, is that Magna International, the giant Canadian supplier, is sniffing around the troubled Auburn Hills auto company, again. Magna acknowledged it was interested in purchasing some or all of Chrysler back when Daimler put it up for sale.
The impetus for the new rumor is Magna's recent hire of Wolfgang Bernhard, former product guru of the "Chryzler" side of DaimlerChrysler, as a consultant. He is most famous for his Terminator-style leather-wrapped appearance astride the Viper-engined Dodge Tomahawk concept motorcycle from the 2003 Detroit auto show. Bernhard has been playing around the periphery of the Chrysler drama from the beginning. He was hired by Cerberus before it took control of Chrysler and was expected to play a role in managing the newly divorced company. Didn't happen.
For its part, Chrysler, in the person of Chrysler President Tom LaSorda, denies that it is in discussions with Magna to sell its assets or even particular brands, models or production facilities. "We will not separate the brands from the company," said LaSorda. Further, LaSorda noted that the sale of assets would be complicated by stipulations of the federal loan program. "The loan agreement would never allow us to do that without going through the car czar."
Apparently Chrysler would happily sell the PT Cruiser off to someone though, according to LaSorda. Anyone? Bueller?...Bueller?...Bueller?
Stay tuned. We're still a long way from done with stories like this.
During the Chrysler press conference, Vice Chairman and President of Chrysler Jim Press said this, "The market will continue how it ended last year. We don't see much growth."
Press then went on to say that Chrysler Corp. will introduce 24 new products in the next 48 months, including eight in the next year.
In other news, during the Chrysler dog-and-pony, a particularly snarky journalist was overheard saying, "That HD monitor is not doing these Chrysler execs any favors." As soon as we finished LOLing we expressed our dissatisfaction with his inappropriate behavior. -- Scott Oldham, Inside Line Editor in Chief
Chrysler introduced five vehicles at its press conference. Which one do you think the assembled media decided might matter? -- Scott Oldham, Inside Line Editor in Chief
Today's first real surprise at the 2009 Detroit Auto Show drove onto the Chrysler stand, a midsize rear-wheel-drive electric sedan concept called the 200C EV, a rolling ambassador for the automaker's new Uconnect system.
Built on a modified version of the LX platform, the 200C EV's wheelbase is 4 inches shorter than the Chrysler 300's and the same as the Dodge Challenger's.
Frank Klegon, Chrysler's executive VP of product development says the 200C EV concept is good for 268 horsepower in its current state and is a "palette for powertrains."
Like the other ENVI range-extended electric vehicles, the 200C EV has a 400-mile total range, and a 40-mile all-electric range with zero fuel consumption.
Chrysler hasn't announced whether it plans to build the 200C, but Klegon says the usage of the modified platform creates production possibilities. -- Kelly Toepke, News Editor
You may have already seen the sales totals for December, and 2008 as a whole. If not, here's a summary: not good. For a more detailed look, check out the industry wide 2008 sales analysis over at AutoObserver.
We assembled something a little different though. Instead of assessing the big picture, we looked at the sales numbers for individual models. Which new models flopped, which old models recovered, that sort of thing. Some of the results we expected, others were a little more eye opening. See for yourself after the jump.
So it's not going to be a banner year for the home team at the 2009 Detroit Auto Show. Chrysler, Ford and General Motors are about as beat down as major industrial giants can get, but this is a chance for each company to convince the public that there's still some life in the Motor City.
This past year Chrysler, in what was considered a real coup, snatched two big-time auto executives, one from Lexus and the other from GM. Now, less than a year later, they are gone or are about to be gone.
Deborah Meyer had been VP of marketing for Lexus, and came to Chrysler LLC as their new chief marketing officer. Phil Murtaugh was one of the key players at GM in turning their China operations into such a success. He was to do the same for Chrysler, that being to jump-start their China relationship with Chery. Well, the Dodge/Chery deal went up in smoke thanks to the global financial fiasco. Now Murtaugh too is going up in smoke, as he will depart before next year begins. Same with Meyer, as she too "has left the building."
Not a good sign for Chrysler; wonder how long Jim Press, formerly of Toyota, will hang around?
Despite the just announced bailout loan, a Chrysler LLC disassembly is pretty much a given. This is no surprise. In fact, Straightline reported on that possibility recently (Government aid won't save Chysler). Now AutoObserver has more on that possibility.
Chrysler is shutting their doors of all their 30 factories until at least January 19. Ford and GM have also announced extended holiday layoffs. Ford has said that 10 of their assembly plants will be closed an extra week. GM will temporarily close 20 factories across North America and make sweeping cuts to its vehicle production.
Despite the fact that Dodge may not be around (as we currently know it) this time next year, Chrysler LLC has affirmed that there will be a Dodge that the Ram 1500 diesel and hybrid. That's good news. The question is will Dodge still be part of Chrysler LLC? Many auto pundants are saying that, even with a bridge rescue loan, Chrysler won't survive. It just doesn't have the global presence that both GM and Ford have, and the feeling that worldwide support will be necessary to survive these tough times. So, while it's expected that the Dodge truck division will survive, who will own it? Nissan? The next-gen Titan is known to be essentionally a rebadged Ram; so if I were a betting man, that would be my guess.
As to the Ram 1500 diesel, it will be an all-new V-type engine, designed more for fuel economy than for heavy-duty towing. It's ecpected to be about 5.0L in size.
The hybrid version's powertrain will likely come from the recently discontinued Dodge Durango and Chrysler Aspen hybrids, and is expected to arrive before the new diesel.
Late last night the Senate, lead by Republicans, flushed the auto aid package down the toilet. Now it's up to the president-lame duck to act. Will Bush tap into funds slated for the Wall Street mess to help the faltering auto industry? Will some unknown-to-this-point hero step up to the plate and offer aid?
Nobody knows. Bankruptcy lawyers will likely be happy, but other than that group, this will be one holiday season to forget. One more thing: If you think the Senate screwed up here, contact the White House and let them know your feelings--NOW! It's that important.
According to AutoObserver, former Federal Reserve Chairman Paul Volcker has the inside track. While the guy has plenty of experience in this area, I question it simply because of his age, which is 81. Now he may well be in great health, and be up to the stress that's sure to go with this position, but then again maybe not.
Several other names have been mentioned including: Roger Penske, Mitt Romney, Kenneth Feinberg (oversaw 9/11 victims' fund) and, of course, Lee Iacocca. Penske is by far my choice, as he is a car-guy--and a businessman of great success. He clearly understands the situation, and what needs to be done. He's also the choice of Motor Trend's Angus MacKenzie (here).
Chrysler can not be saved, even with the proposed government financial aid. That's what CSM Worldwide forecasters say.
Chrysler "doesn't really have the scale, in most vehicle lines, required to survive in this market," so says Michael Robinet, CSM vice president of global vehicle forecasts.
"We think only unique Chrysler platforms will survive," Robinet said, citing the Jeep Wrangler and minivans. There could be a buyer for Dodge Ram.
CSM officials didn't see bankruptcy as the answer, but it may come to that. The result would be the same: dispersement of its assets, probably to more than one buyer. Congress' move to put Cerberus on the hook if Chrysler fails to live up to conditions of a loan could expedite the automaker's liquidation upon failure to find a buyer.
Wonder where former Chrysler CEO Lee Iacocca has been, regarding this automotive industry mess? Well, he's back--and full of thoughts on the situation (here and here). First off, keep the CEOs.
"Running a multi-billion-dollar automobile company with thousands of employees, retirees, suppliers, dealers and communities counting on you is not for the weak of heart or for the timid or the untried. Especially the untried," said Iacocca.
"You don't change coaches in the middle of a game, especially when things are so volatile. The industry has been brutalized by a totally unpredictable series of events over which it had little control and that is beating it unmercifully into the ground"
"The companies may not be perfect but the guys who are running them now are the only ones with the experience and the in-depth knowledge and understanding of how the car business really works. They're by far the best shot we have for success. I say give them their marching orders and then let them march. They're the right people to get the job done."
This is coming from someone who's been there before, as he had to gain federal aid for Chrysler back in the early 1980s.
Remember the Chrysler-Chery deal? Well it's no more, as both companies have decided to call it quits. If you recall Chery was to supply Chrysler with small cars.
"The economic situation and market environments around the world have changed significantly since the agreement was signed," Mike Manley, Chrysler executive vice president of international sales and marketing, said in a statement. "Moreover, both companies have since gone through major internal changes and evolution, resulting in different business directions and priorities versus a year ago. As a result, many of the original premises the two companies had when entering into the agreement no longer apply."
It's less than half of what the Big Three asked for, and the details are far from being worked out, but appears that members of Congress have come around. The idea here is to get some money to the automakers to at least help them through the next few months, and to buy them some time until the Obama administration takes over--and hopefully can bring some fresh ideas on how to resolve this.
From my perspective, if this forces Domestic Motors to finally eliminate brands--not just models, but brands--then this could be a good thing. I believe that GM and Ford should have no more than two car lines, much like what the major Japanese automakers offer: a mainstream brand and a premium brand.
GM should consist of just Cadillac and Chevrolet. GMC, Saturn and Pontiac should be dropped; maybe keep Buick as a Asia-only brand, and sell Saab and Hummer. The Buick situation really pains me, as I grew up with this brand in the 1950s, and have fond memories of it. However, there is not one Buick past 1959 that interests me. More to the point, there's nothing that Buick offers here that can't be matched be either Caddy or Chevy. Besides, Buick, despite efforts to draw in younger buyers, remains heavily supported by older customers--who tend to die quicker than younger buyers; not exactly a good business model to follow. I don't think turning Pontiac into a "niche" brand will work long term. it might work for a short while, but not long term. As with Buick, I think either Caddy or Chevy can offer niche Pontiac-like vehicles, so I see no need for this brand. Also, if Buick and GMC go by the wayside, would those existing Buick-GMC-Pontiac dealers be able to survive with Pontiac as being a stand-alone niche brand? I doubt it. So in which showroom would Pontiac end up in? Chevy? Caddy? I just don't think it will work.
As to Ford, we all know Mercury needs to go. Their customer base may be even older than that of Buick. As to Lincoln or Volvo? My heart says keep Lincoln, and sell Volvo. My head says keep Volvo and ditch Lincoln.
I think Chrysler can remain with three brands. Jeep is unique, and I think that as a "niche" brand, it can survive in the long term (unlike Pontiac).
Finally, this is a "loan" and not a "bailout." It's also a gamble--and a huge one at that.
You know things are serious when The Detroit Free Press sends a special issue of the newspaper to Congress outlining as to why this aid to the automotive industry is so important (here). The title is "A Message to Washington: Invest in America." Interesting, and a coincidence I'm sure, is that the last name of the editor is "Anger."
Bloomberg is reporting this morning that a pre-arranged bankruptcy may be the only way to go for GM and Chrysler, if they are to get the financial aid needed to survive. This is coming from someone familiar with the on-going internal discussions. If this turns out to be the case, it would be negotiated with workers, creditors and lenders, and could be used to reorganize the sector without liquidation.
Yep, another "D-word," only this time it's "Depression."
"We're on the brink with the U.S. auto manufacturing industry. We're down to months left," Chrysler's vice chairman, Jim Press, said in an interview. "If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it's a huge blow. It could trigger a depression."
As of Wednesday, it still looks like the votes aren't there to get this bailout (or whatever you want to call it) passed. So expect a sales pitch today from the Big Three leaders, as if their lives depended on it, because it just might.
When was the last time that you saw Ford having a better month than either Toyota or Honda, at least in terms of sales loss percentages?
"I've been in the industry nearly 28 years and never have seen anything even remotely close to this," states Mark LaNeve, GM's North American vice president of sales. "It's breathtaking."
It just gets uglier every month, and one has to wonder how much worse will it get? Oh wait... Domestic Motors and Congress have yet to do their second Doe-See-Doe. It could get much worse folks...
Alan Mulally will be driving a Ford Escape hybrid, and GM's Rick Wagoner will be driving a Chevy Malibu hybrid to Washington for Round Two of their epic sales pitch to drum up resources from Congress. No word yet on how Chrysler's Bob Nardelli or the UAW's Ron Gettelfinger will be arriving.
Wendelin Wiedeking, chief executive of Porsche, said it could be only a matter of time before hedge funds took majority control of one of the US car manufacturers that had inflicted damage on themselves with ruinous discounts and hugely subsidised leasing rates. Cerberus, who owns Chrysler, is a hedge fund; so we know what that means...
Wiedeking also stated at Porsche's annual press conference: "We need banks to give credit, not just talk about credit ratings but start real actual lending to companies. These rules are choking us today.
"Stabilisation of the financial system has to take place rather than banks shifting hundreds of billions of euros to the European Central Bank to earn interest. They should be injecting money so healthy companies survive."
Tuesday, December 2 will be D-Day for Detroit, as it could Determine their future, or lack-there-of, of the Detroit automakers.
Will their be enough meat on the plate that Domestic Motors will be serving up to Congress for them to Digest favorably? Will their restructuring plan for the auto industry be enough to convince the lawmakers that the big Detroit Three are indeed worth worth Defending with a financial Deal?
Cerberus Capital Management LP accused Daimler AG of "intentionally and materially" misleading Cerberus before the German automaker sold Chrysler last year. And, of course, Daimler is saying there is no truth to the allegations.
Cerberus, states attorney Peter Henning, is essentially saying that "Daimler gussied Chrysler up to make it look good."
"They made it look better than it was and didn't disclose it, or actually even worse than not disclosing it, made misrepresentations."
Daimler spokesman Han Tjan said Cerberus performed due diligence before the sale and was given all the information it needed to close the deal.
"We reject these allegations as being completely without substance," he said.
It's getting ugly folks, and this during the Thanksgiving holiday no less.
Oh those poor Detroit auto executives; it seems they can't get a break... After enduring a resounding kick in the butt from everyone for using their corporate private jets to fly to Washington in order to plead poverty, now even the governor of Michigan, Jennifer Granholm, has added her two cents:
"There was an opportunity to rehabilitate. I'm not sure that was successful," she told reporters in a morning news conference. Granholm said they should fly in commercial jetliners next time.
That's what IHS Global Insight is saying. It's also looking less likely that any help will be forthcoming before the administration changes.
Of course the question being asked is "what if...?" What if these companies file for Chapter 11? Most feel if that happens, Chapter 7 is sure to follow. Comparisons with the airlines having gone bankrupt are meaningless. Air flights for most people are a one-time deal. Buying a car is another matter. What happens with warranty claims, or anything service-related. Would you buy a car from a company that's filed for Chapter 11? The answer for most customers would be a loud and clear "NO WAY!"
The lights are out at Chrysler. No seriously, while every other manufacturer utilizes special additional lighting, the entire Chrysler stand just gets by with the high-up L.A. Convention Center lighting. I guess it can't afford the power bill. Compare this to Chrysler's next-door neighbors, Audi, whose stand you could probably perform surgery on. Next door to it is Volkswagen, who has an equal amount of lighting power and a white floor to boot -- it's like standing in Aspen on a sunny day.
The below video should give you an idea about the difference. My camera isn't sophisticated enough to change light levels mid-shot, so I could either have Chrysler all dark or Audi looking like the surface of the sun. I chose the former. -- James Riswick, Automotive Editor
Last month Straightline reported that Chrysler would not be using Getrag for their dual-clutch tranny (Chrysler's dual-clutch transmision may be dead). Chrysler's concern (or claim) was that Getrag was underfunded for the project. Now we learn that Getrag's U.S. plant, because of Chrysler's pullout, has filed for Chapter 11 bankruptcy protection--and they're suing Chrysler LLC.
So, in addition to not having a supplier for a dual-clutch automated manual transmission, Chrysler has got a lawsuit to deal with; just what the doctor ordered...
Think a collapse of one or more of the Detroit automakers would be a good thing for Toyota, Nissan or Honda? If you do, you would be wrong. Very wrong. All the automakers are tied into suppliers which service all these brands. It would be a lose-lose situation for all involved.
"We're deeply concerned," said Mike Goss, a spokesman for Toyota Motor Engineering & Manufacturing North America Inc. in Erlanger, Ky. "Seventy-five percent of the vehicles we build in North America are sourced in North America, and many of those suppliers are shared with the Big Three."
The supply industry, which is made up of roughly 6,000 firms in North America, two-thirds of them in the United States, "is an integrated system," said Sean McAlinden, vice president of research at the Center for Automotive Research in Ann Arbor. "It's a house of cards. You knock down enough of the cards in the bottom rows and it all goes down for months," he said. "It's going to cost Toyota and Honda a great deal if this happens," McAlinden said. "They're incredibly worried."
Whether the domestic auto industry gets the government financial help that it has asked for or not, Detroit and the Detroit-based auto industry, will never be the same. The "old" Detroit is dead, and no one knows what the "new" Detroit will be like.
This means: fewer brands, plants and dealers, more flexible work rules, smarter marketing, better products. And even if that were to occur, there's no guaranty for success, as we're entering uncharted waters here.
That's what Daniel Howes of The Detroit News in his latest editorial states (here). It's a worthwhile and thought-provoking read.
No sooner had news that GM and Chrysler had suspended merger talks, that a new story popped up over at Reuters suggesting that Hyundai and Chrysler might now be in discussions. If true, this once again raises the speculation that Chrysler divisions may be sold off separately. It's known that Hyundai is interested in the Jeep division; and possibly some, but maybe not all, other Chrysler divisions.
Amid a devastating third quarter, GM and Chrysler have postponed tie-up talks. Whether they will resume sometime in the future is an open question.
"GM has recently explored the possibility of a strategic acquisition that it believed would generate significant cost reduction synergies and substantially strengthen GM's financial position in the medium and long term, while being neutral or modestly positive to cash flow even in the near term," the Detroit automaker said Friday in a statement outlining fresh cash saving measures. "While the acquisition could potentially have provided significant benefits, the company has concluded that it is more important at the present time to focus on its immediate liquidity challenges and, accordingly, considerations of such a transaction as a near-term priority have been set aside."
What if the Detroit Three automakers were to go buh-buy, or if even one or two take a powder?
Well, it ain't gonna be pretty, that's for sure. A report by the Center for Automotive Research (CAR) details the job losses and economic impact of two scenarios: if all three Detroit automakers cease operations next year; and if Detroit automakers contract by half, likely involving two automakers going out of business. As many as 3 million jobs and hundreds of billions of dollars will be lost from the U.S. economy if General Motors, Ford and Chrysler cease operations, a new report shows.
"Either of these scenarios is possible, and indeed probable, within the next 12 months," the study says.
Further evidence of the GM-Chrysler deal going through, is that Chrysler and Nissan have stopped their discussions. The reason being is that Chrysler would rather do their deal with GM. Neither Cerberus nor Nissan would comment on the situation.
So I guess the big question is can financing for this mega deal be be obtained, as that seems to be the biggest stumbling block at the moment.
While far from being perfect, this may be the best alternative for both GM and Chrysler in the current environment, says a report by Grant Thornton, a restructuring company.
"Chrysler, as we know, it will cease to exist very soon," said Kimberly Rodriguez, principal of Grant Thornton's automotive practice, which issued Thursday a report on the state of Chrysler and an analysis of a combined Chrysler and GM. "At this point, there are very few options available to either company."
Rodriquez believes it's in both companies' best interest to announce a decision that a merger will go forward by Election Day, with specifics to be hammered out later.
"We believe a transaction between GM and Chrysler is likely because it would be the most expedient way to protect cash and jobs at both companies," Rodriquez added. "If one or the other company were to fail, we would face a much bigger calamity - the collapse of the North American supply base and the potential endangerment of all three Detroit automakers and businesses that depend on them."
Patrick Anderson, principal and CEO of Anderson Economic Group, states the auto market can't sustain the Big Three, and that something has to give.
"A merger of some type is likely to occur because the economics now are unsustainable for three Detroit automakers," Anderson said in a conference call to discuss the conclusions of a month-long analysis of the impact of a proposed GM-Chrysler merger. The alternatives are so bad, it almost forces a merger, he said.
Anderson goes on to say that Cerberus Capital Management LP, Chrysler's majority owner, is "not going to sit around and lose money for the next five years. They will consider auction and Chapter 11. ...There is no scenario where GM and Chrysler avoid significant reductions in employment -- none."
The spreading Wall Street financial crisis is beginning to affect what we will see offered here and around the world--and sooner rather than later. No market is going to get by untouched. Even those OPEC and other oil-rich countries will see some sort of negative effect as it pertains to vehicle choices. AutoObserver has an excellent article on how automakers are addressing this situation:
Chrysler CEO Bob Nardelli has announced that 5,000 salaried workers--that's one in four employees-- would be let go beginning next month. The reign of job terror should be over by the end of December. Happy Thanksgiving, Merry Christmas and Happy New Year.
In what is the first of many expected product discontinuations, Chrysler has announced that the just-introduced Chrysler Aspen hybrid and Dodge Durango hybrid will join the ranks of the just-axed. It's a result of the news of the Delaware plant closing, where these models are made.
While not a huge surprise, this plant closing comes a full year ahead of the planned closing of this factory. And again, you can thank the horrid financial and auto market for this.
Latest word is that Cerberus does not want to break up the Chrysler divisions, and sell them off separately. Instead they would prefer to sell Chrysler as one unit.
If so, then that raises more questions as to what might happens for the various divisions. There was a report the other day that Nissan might be interested in the Dodge truck division, and Renault has also expressed interest in Chrysler as well. I'm sure there are others too who may also be interested in various aspects of Chrysler, but not the whole kitandkaboodle.
Michelle Krebs, the Grand Godess of AutoObserver. has really outdone herself here, with a really excellent report on what might happen if this GM-Chrysler deal comes to pass.
Also rather revealing, is the listing of the various Chrysler products and the vehicles that are cross-shopped against them. Good stuff!
You can add one more rumor to the "As the Chrysler Turns" auto industry soap opera: that being that Renault has expressed interest in acquiring the Jeep brand.
This raises more questions than it provides answers: If Jeep goes to Renault, what would that mean for a GM-Chrysler deal? Isn't Jeep one of the primary carrots being offered by Chrysler LLC--to any new buyer, be it GM or anyone else? Without Jeep, would a GM-Chrysler (or ?-Chrysler) deal be less likely to happen? Full story here.Speaking of a GM-Chrysler deal, AutoObserver adds one more "no vote" to this silly idea.GM-Chrysler Deal to Save $10 Billion - From Where?
Could the unthinkable happen? Might GM absorb Chrysler--and completely eliminate Dodge and Chrysler brands? Maybe just hold on to the Jeep brand, and/or possibly the minivans?
That's one scenario that The Detroit News has put forth.
"That would be the likely scenario, if such a thing were to happen," said Aaron Bragman, an analyst at Global Insight. Besides the Jeep brand and Chrysler's minivans, the company has few assets of value to its bigger rival, he said. "For GM, the only reason to absorb Chrysler would be to eliminate a competitor," he said.
A deal like that would be similar to Chrysler's 1987 acquisition of American Motors Corp. It would allow GM to pick up some of Chrysler's 2.7 million in annual sale, while avoiding the bulk of Chrysler's costs.
Latest word from AutoObserver is that the deal between Chrysler LLC and Getreg Transmission on developing a dual-clutch automated manual transmission may be over--and not in a good way. Reportedly Chrysler has instituted a lawsuit against Getreg. Chrysler alleges that Getreg misrepresented themselves in their ability to get the necessary financing for the $455-million joint venture.
No surprise here, as the UAW would fight hard to see that a merger between GM and Chrysler would not occur. If that happens, tons of jobs would be lost, and that's fighting words to UAW president, Ron Gettelfiger.
"I personally would not want to see anything that would result in a consolidation. That would mean the elimination of additional jobs," Gettelfinger said
Aaron Bragman of Global Insight said more likely the Chrysler deal, should it happen, would result in an acquisition and not a merger. There would a huge amount of excess manufacturing capacity, jobs and duplicate operations. More than likely the cuts would come at Chrysler's expense.
"(Gettelfinger's) concern is valid. There is too much overlap in terms of production and excess capacity," Bragman said. "It would not be a good thing for the UAW. The union's not a stakeholder. Obviously, it is an influential part of it, but any conclusion is going to result in job cuts."
This is interesting if for no other reason that Chrysler's CEO, Bob Nardelli, has confirmed that there have been discussions with other parties "interested in exploring future possibilities." He added that no final decision has been made one way or the other. It's unusual that such a comment would be made on a topic like this. I guess, with all the news on this possible merger over the last few days, Nardelli felt something needed to be said.
Also from AO is an interesting interview with Edmunds.com CEO Jeremy Anwyl, on his take of what's going on in the auto market, and what the future holds.
AO: How scared are consumers?
JA: Consumers have abandoned hoping for best and are now doing
the opposite - planning for the worst. That's ominous for car
companies. Anything they offer, no matter how attractive, is a
distraction to consumers because they are worried about an economic
survival. Buying a car is not part of that plan.
...And here's one more from AO: It's on the problem GM is having in unloading Hummer, and why other GM brands are not likely to disappear or to be put up for sale.
Hot on the heels of a possible GM-Chrysler tie-up is a story that Ford might sell Mazda. Desperate times, desperate actions indeed...
"We're looking at a lot of different things with liquidity in mind," said one person close to the situation. "But things are changing week to week, and I don't know if anything is going to happen or not. Nothing is imminent or definitive."
Ford spokesman Mark Truby states the following: "Our relationship with Mazda remains unchanged." No surprise there. Until something is definite, don't expect anything of any substance to come from either party.
Here we go again folks. Another rumor of a possible industry merger between GM and Chrysler. The question is: does this one have legs? With all that's going on in the financial market, does this now make more sense than it did before?
It's well known, or at least suspected, that Cerberus would love to get out of this Chrysler mess. Even so, I cannot for the life of me see what's in it for the General. Redundant models, already a huge problem at GM, would only get worse by including Chrysler models. I suppose the Jeep brand is worth saving, especially since GM is dropping the Trailblazer and its cousins. Beyond that I just don't get it. Maybe their are manufacturing synergies to be gained, or the possible link to both Nissan and Renault have possibilities since Chrysler has a toe in the door there?
UPDATE: It looks like Cerberus is interested in acquiring all of GMAC. Back in 2006 they bought 51 percent of GM's finance arm, and now it looks like they want the whole kit and kubutle. No further word on possible merger mentioned above.
UPDATE 2: Many analysts are skeptical of such a move--but if it does come to pass, expect major job losses, as there would be a huge amount of job duplication which would need to be eliminated.
If you're wondering as to why the image is so tiny, well, it's a postage stamp; and they are tiny, right? I don't think I've done a blog on automotive stamps, so this is likely a first folks (if that means anything).
The state of Idaho is being honored by the US Postal Service by creating a stamp of a 300C owned by Twin Falls, Idaho resident George McKovich. The stamp is part of the Fifties Fins and Chrome stamp series, and will go on sale October 3rd. More than 50 million of the stamps featuring McKovich's car will be up for sale.
"This is your chance to own a rare vehicle," states Twin Falls Postmaster Bill Reese. "It's a great tribute to our community. We are honored that a local car will soon adorn millions of letters nationwide."
Other cars in the series include a 1957 Pontiac Safari, 1957 Lincoln Premiere, 1957 Studebaker Golden Hawk and 1959 Cadillac Eldorado.
For the big six automakers, September 2008 was a month that couldn't have ended soon enough. It was bad, folks. Really bad. First it was the fuel crisis, and then a sucker punch better known as the financial and credit debacle was all it took for it to get Quasimodo-like ugly. In fact this was the first time in more than 15 years that fewer than 1 million units were sold.
CNW Research said in an e-mail report that "during the final 10 days of September, floor traffic (in auto dealerships) fell more than 50 percent versus a year ago -- the worst showing since CNW began keeping track in 1986." CNW Research's Art Spinella said, "Manufacturer incentives aren't pulling in the crowds."
And I suspect it may get worse. Speaking as someone who may very well be forced into the car market because of my recent accident -- I haven't a clue as to what I'm going to do if that comes to pass. The credit situation is so screwed up, I don't know if I will be able to qualify for a car loan; and if I do, what sort of strings are going to be attached to the loan agreement? Will I be able to get the loan amount that I want/need? Will I be forced into buying something I really don't want?
Now just imagine a nation of car buyers who are in similar shoes that I'm wearing. Nope, the future looks pretty grim for carmakers for some time to come.
The Detroit Free Press is reporting that a German magazine stated that Daimler would like to unload the remaining shares of Chrysler LLC that it now owns. When Cerberus took over the automaker, Daimler held on to almost 20% of the company.
It was also reported that Daimler would likely not lose money on this transaction, and that it could be completed within a few weeks. So far there's been no comment from either company on this deal.
Chrysler LLC has pulled a fast one here folks. They've just announced that they will enter the electric car race with three new EVs. And it appears they may be the first to the starting line.
Dodge EV
Quite likely the coolest of the bunch, as this all-electric sports car is based on a Lotus chassis. Yep, you read that right. In doing so Chrysler announced a new partnership with Lotus. The 200-kilowater motor produces 268 horsepower and 480 pound-feet of torque, shooting the lightweight sports car from zero to 60 mph in less than 5 seconds. Chrysler claims its top speed is 120 mph plus. Equipped with an advanced lithium-ion battery, its range is 150-200 miles.
Chrysler Town & Country EV and Jeep Wrangler EV
Both of these are an extended-range electric vehicles.
All of the vehicles are being developed by a relatively new group at Chrysler known as ENVI (for environmental), an in-house organization charged with advancing electric drive and related advanced propulsion technologies. Chrysler has just launched a new Web site here promoting them.
One of these three will go into production in 2010. As to which one that will be? Chrysler is not saying just yet. In any event, it looks like the Tesla sports car and the Chevy Volt will have some competition, either directly or indirectly. Even if they don't compete head-to-head, they certainly will compete for headlines.
As in July, only Nissan of the Big Six automakers, showed a profit. As compared to August of last year, sales for the auto industry are down roughly 15 percent.
One of the surprises here is that, unlike the rest of the industry, several of Nissan's trucks and SUVs had a really good month. Their formerly slow-selling Frontier midsize pickup broke out with 56-percent leap in August, totaling 9,140 sales. The Xterra SUV showed an incredible 77-percent increase with 8,208 units sold. One thing I'm happy to see is that Subaru continues to surprise with a 14 percent gain over last August. The new Forester had a 73 percent increase over last August!Here's AutoObserver's take: Auto Sales Still Dismal in August - But At Least It Wasn't July
This actually could be good news, as originally there had been rumors that Chrysler would ax the Viper. So now we have this news that the Viper could survive--if some other company would be interested in buying it; and of course, if the price is right to both parties. Let's hope that's the case.
In a perfect world, the Viper would remain a Chrysler product. In a slightly less perfect world, it would be bought by an American company (perhaps Shelby?). If push-comes-to-shove, I think most gearheads would prefer to see the Viper continue--even if
it's owned by some huge Mid-East, Indian or other foreign
conglomerate--than to have it go down the tubes.
Trevor Creed is stepping down as Chrysler Vice President of Design as of September one. 38-year-old Ralph Gilles will become the new designer-in chief.
"Trevor has led a distinguished automotive design career," Chrysler Chairman and CEO Robert Nardelli said in a statement. "Creed played a key leadership role in the design of award-winning vehicles," such as the iconic Dodge Viper, the Plymouth Prowler and the retro-styled PT Cruiser.
Gilles joined Chrysler in 1992. He most recently served as vice president of Jeep, truck and advance interior design. Gilles was the lead designer of the new 2009 Dodge Ram pickup. In addition Gilles also led the design effort for the high-belt-designed 2004 Chrysler 300.
AutoObserver is reporting that Chrysler LLC is talking to both Tata and Fiat. Early indications suggest that "parnerships" are being discussed. Items being rumored are that Tata may help build and sell Jeeps; and that Fiat (and Alfa Romeo) are looking for a way to get back in the American market, and Chrysler may be of assistance here.
That does not, however, mean that other subjects are not also on the table, as in Cerberus looking for a way to get out of this Chrysler mess. As you might expect, nobody is talking, which of course helps feed the wild spec
Dodge EV
AutoObserver is reporting that Chrysler LLC is talking to both Tata and Fiat. Early indications suggest that "parnerships" are being discussed. Items being rumored are that Tata may help build and sell Jeeps; and that Fiat (and Alfa Romeo) are looking for a way to get back in the American market, and Chrysler may be of assistance here.