The news isn't good, if you're following GM and Chrysler spin towards some inevitable fate. GM is likely headed for a date in bankruptcy court--and Chrysler is looking at liquidation, according to today's headlines.
General Motors is preparing for bankruptcy while it also tries to negotiate its way around a pre-packaged filing. In the past week, it's become clearer that Chapter 11 is more likely. The good news is, GM probably can make it out of a reorganization. There's reasonable assurance a business can be made of Chevrolet and Cadillac, possibly with Buick and GMC still attached. Out of the picture as of last word and most likely scenarios? HUMMER, Saab, Holden, probably Vauxhall too, and Saturn and Opel.
It's the last two that are bedeviling the deal between Fiat and Chrysler, I think. More than the impossibility of getting a takeover accomplished on paper by the end of next week, it simply doesn't make sense for Fiat to strap on a bloated, teetering entity like the current Chrysler. Fiat probably knows this know--if they didn't know it from the start of talks. Opel, packaged with Saturn, makes a much more attractive option for the Italian car company.
So what does make sense in this end of days for two of the Big Three? It's simple. Fiat takes on Opel and Saturn--as the latest news from Europe suggests may happen--and GM takes on what's best from Chrysler, with Ford possibly buying some assets.
A few months ago I made a case for splitting up Chrysler's assets between Ford and GM. My plan would save some jobs at some factories and some engineering, design and manufacturing expertise. Between the Jeep and Dodge brands, a handful of model lines from the Wrangler to the minivans and possibly the Viper, there's a magnitude of market share waiting to be acquired and integrated by one of the domestic car companies--not to mention a highly integrated headquarters and design center in Auburn Hills, Michigan.
Ford doesn't need the distraction of a total takeover. It's busy cutting costs and converting debt and moving solidly into an image of environmental awareness and quality. GM needs the market share and some of the products--probably not the distraction, but the market share would help. Marrying most of Chrysler off to GM would package a lot of the problems together, but also would save some tarnished assets from destruction.
So what about Opel and Saturn and Fiat? While Fiat dithers with Chrysler and the April 30 deadline looms, it should take this moment to walk away. Why take on a huge financial and legal mess with too many factories and too many vehicle lines and too many dealers? The real opportunity for Fiat is in taking over Opel, with Saturn by extension. Merge Opel and Fiat products a few years down the road, regain some status in Europe--and keep the products in the pipeline to feed your new right-sized U.S. distribution network, Saturn.
Saturn LogoEnlarge Photo
Saturn makes the most sense for Fiat, and of all, it's the GM brand on the block that's worth saving. You can't replicate new showrooms, pricing power and loyal shoppers who care less about the cars and more about the experience. The footprint's a lot smaller than Chrysler's--and for a change, Fiat could sell cars under a brand name that's gone a long way to pleasing customers and making them feel good about their new car. If you ever ventured into a Fiat showrooms in the late 1970s, you know why they're not here today.
Car shoppers should know that, no matter what, their warranties are going to be honored. Deal hounds should see now as the perfect moment to get a once-in-a-generation deal on a new vehicle.
The titles and egos involved in this game know it's a titanic effort to save two sinking ships. It's winnable. Send Opel to Fiat instead and keep Chrysler at home. It will save jobs, save time and effort, and in the end, it will save some dignity for an industry that's lost almost all face with American car shoppers.