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Sunset for Chrysler?


With the economy simply not able to support three Detroit automakers, claims Detroit News' Alisa Priddle, a GM/Chrysler merger is looking more and more attractive as opposed to one of those players filing for bankruptcy. She claims that even the "best-case scenarios are likely to result in the loss of up to 70,000 jobs including as many as 35,000 blue- and white-collar jobs in Michigan."

Priddle quotes Patrick Anderson, principal and CEO of Anderson Economic Group, who said Wednesday: "A merger of some type is likely to occur because the economics now are unsustainable for three Detroit automakers." He believes that if the companies continue their current job-slashing and cost-cutting, at least one of them (likely Chrysler) will pursue bankruptcy filings or "be sold piecemeal." He also points out that Chrysler owner Cerberus Capital Management is unlikely to hold on to a sinking ship and will quickly examine both auction and chapter 11.

Bankruptcy for any of these manufacturing giants would likely be a very expensive proposition for both the government and an already ailing economy. Regardless of what occurs, the ripple effects of job losses and production adjustments will be felt throughout Wall Street and Main Street, from parts suppliers to dealers, and assembly line worker to CEO.--Colin Mathews
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Comments (10)
  1. The end is near. Whatever happens to Chrysler in the next days, weeks, it will no longer be an independent player. The disappearance of Chrysler really started 10 years ago, with the "merger of equals" With Daimler-Benz. When the culture of a company allows it to give itself up in any fashion, the will to fight ends. With the arrival of the White Knight, Cerebrus, all seemed saved. There was a sense that maybe, just maybe, Chrysler would again become a strong player, independent and successful. Cerebrus had plans: patiently, it would rebuild the American car maker. There were plans to build partnerships with other companies, hoping for the same success as Fiat, there were plans to become a competitor in the global car market. After all, unlike GM and Ford, Chrysler is dependent on the US market alone. It sold its European division to Peugeot in 1980 to then turn around and buy AMC in 1987, and during the Daimler-Chrysler years, it divested from Mitsubishi. Many pundits questioned the Cerebrus plans, expecting it to turn the division around for cash, not a long term investment as initially explained. But Cerebrus, helped by the financial crisis, will loose money and is desperate to curtail its loses. In the end, Cerebrus is responsible for the present situation. So what is to become of Chrysler.
    A GM purchase is almost certain death, since GM only wants the cash and possibly the Jeep division. For GM the downside of the cash is the baggage: more employees, dealers and brands than it could ever use. There is no other advantage than the cash. Ford is selling its divisions and is probably not ready to take such a big step, which would be a diversion from it's efforts to get back on its feet.
    Then there are the companies with interest in expanding or getting into the US market. Nissan and Renault have looked for a partner and Chrysler could help that expansion. Fiat, which like Nissan has an agreement with Chrysler, could also use a base to come back to the market. Toyota and Honda have always approached organic expansion and may not be willing or even interested in swallowing Chrysler. The other Japanese makers are just too small, except for Suzuki. The Chinese and Indian players are probably interested in the brands, to help them expand internationally. Private Chinese companies probably don't have the cash and state owned companies would be too slow to help Cerebrus complete a quick sale. SAIC most likely accelerated the MG-Rover death demise. Tata is the only large player in India with the cash and the will. It already has too many projects to be diverted (the Nano cars, the Jaguar-Land Rover purchase, it's Tata brand), but may be interested.
    So Chrysler will no longer be a company, but instead either a footnote in the 21st century automotive history books, or a just a brand (with Jeep and possibly Dodge) part of some brave company willing to take one more stab at success.
     
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  2. Duessenburg, Studebaker, ...Chrysler RIP
     
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  3. Duesenberg was the Rolls AND the Ferrari of its time.
    Chrysler was reduced to NO decent products except for the JEEP and the MINIVANS.
    Only SEVEN of its 27 models are worth keeping by its Buyer, GM or whoever.
    And they include the RAM, for which I really do not care, the minivans, which GM NEEDS, and the Jeeps, which will become very LOW volume niche vehicles as they should, to replace the fatally wounded and idiotic Hummers.
    More than 30,000 Chrysler workers will have to lose their jobs, and maybe 100,000 more in the SUPPLIERS that make the parts Chrysler used.
    It is the price of FAILURE. They should NOT have been bailed out in 1980. They have been in a semi-come ever since.
    Government should stay the hell out of business, and if the Importers do not play fair, it should take THEM to the World Courts (Trade courts) instead of squandering our HARD EARNED $ to these losers.
     
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  4. hey ED;
    Almost every other government recognizes the improtance of a healthy auto manufacturer, and in some way supports them. Japanese auto makers benefit greatly from government support, which has gone to the extent of manipulating its yen to keep its industry happy. Chinese auto makers are the same. Why deny American automakers a level playing field? I say lets start playing by hte ame rules every other counrty uses...protect what's yours.
     
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  5. "jc
    October 31st, 2008 - 12:52 pm
    hey ED;
    Almost every other government recognizes the improtance of a healthy auto manufacturer, and in some way supports them. Japanese auto makers benefit greatly from government support, which has gone to the extent of manipulating its yen to keep its industry happy."
    Is this why the Japanese Economy has been in a COMA since 1990, and the Nikkei Stock Index recently was at a 26 year LOW?
    I am well aware that most governments are run by ECON ILLITERATE, shameless LIARS and DEMAGOGUES.
    That does NOT make their support to the automakers, especially MATURE, NOT INFANT, Makers, Right.
    " Chinese auto makers are the same."
    The Chinese Auto industry is still in its infancy.
    " Why deny American automakers a level playing field? "
    UTTER GARBAGE, and everybody KNOWS IT!!!!
    There is only ONE company making TVS in the U S, ZENITH. DO YOU OWN A ZENITH TV? THEN STOP Babbl;ing about buying YOUR CRAPPY POS CARS.
    The US auto industry has been losing HOME GAMES to the Imports, and NOT just the Japanese but BIGGER losses to the EURO LUXURY makers (Caddilac and lincoln used to own 90% of The LKuxury Segment, now they own less than 17%!!!)
    And they ALWAYS blamed EVERYBODY ELSE for the losses. EVEN THE US CONSUMER!
    BE A MAN! ADMIT YOUR UTTER FAILURE! PRODUCE A SUPERIOR PRODUCT, and after 5 years that its superiority is PPOVEN beyond a doubt, I may buy a (USED< of course, and NOT from a DEALER) copy!
     
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  6. Why don't I hear more from the candidates about standing up to other countries that manipulate their currencies?
     
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  7. Because it is utterly unimportant. it is just one more imaginary EXCUSE taken straight out of the AUTOMAKERS TALKING POINTS.
    Only CHINA has a currency that is UNDERvalued wrt the us $. But china has imported ZERO cars in the US the last 60 years, and you can't use this excuse!
     
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  8. NOT SO FAST! It's Friday and all of a sudden everything has changed. The Bush administration has indicated that they won't finance this scatter-brain fiasco. As a die-heart Chrysler supporter, I can only hope that sanity will return and this fleecing of Chrysler and the American auto industry will be put to bed. This idea stinks to high heaven and smells of a hustle of the first magnitude. Ceberus, like any investor, assumes risks with an investment, they cannot be permitted to throw thousand of workers out by the unions (or will they be bought off?), they cannot be allowed to sacrifice an American institution of competition in industry for a quick buck, and the American people should stand up against this sham. I still hold out hope that I'll be driving new Chrysler products for years to come and that Ceberus gets a buyer that makes it possible. If not, I'll keep my Pacifica running and savor the memories of a time when things were simpler and no one knew what a toy-o-ta was or cared. Old age has its blessings after all!
     
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  9. Seeing an American Icon go away and fail is very sad to me. Whether it was bad management the drove this company into the ground or the fact that globalization is destroying the manufacturing sector in this nation and the developed nations in favor of the low cost producer countries, Chrysler is on its way out as a whole or atleast in bits and pieces. I'm thinking GM is not interested and should not buy Chrysler as a whole. GM should get JEEP to support its own crossover and 4x4 platforms and use JEEP to augment GMC and/or HUMMER. I think if GM doesn't bother to pick up Dodge or decideds to sell it off that Nissan should pick up Dodge. Nissan already has a deal with Dodge to make the next Nissan 4x4 Pickup based on the new RAM pickup and the sale of Chrysler could be Nissan's chance to pick up a ready platform for their pickup truck, not to mention a solid (but maybe dated) rear-drive platform (dodge charger). I'm thinking VW will pick Chrysler because they are interested in their Minivan platform and indeed Chrysler has started to make a minivan for VW based on the Caravan/town&country platform. So there you have it: GM gets JEEP with a small core team and one factory or two; VW gets Chrysler with the similar engineering core team and a factory to make the car and Nissan will get Dodge for their next pickup.
     
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  10. With the possible exception of the minivans - which Honda and Toyota have now surpassed - and the Jeep Wrangler, Chrysler doesn't make a single product that I can see another manufacturer being interested in. Their design is substandard overall (with the Caliber representing the worst possible in small car design), and absolutely no auto company needs additional production capacity.
    I can see GM buying the Jeep *brand* and continuing niche production of the Wrangler. The rest of that "merger" makes no sense at all. Chrysler's time is past.
     
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