The American Spectator

The Nation's Pulse

Chrysler Corpse

By Eric Peters on 7.24.08 @ 12:07AM

(Page 2 of 2)

The entire product portfolio needs revamping -- but that will require a huge investment of capital and perhaps several years of rebuilding - during which time the company probably will continue to lose money hand over fist, with no guarantee that things will ever turn around. Cerberus could decide not to give it a go -- which would be a completely rational decision given the bleak state of the U.S. auto industry in general and of Chrysler in particular.

Chrysler almost died once before -- circa 1979 -- when the federal government stepped in and gave the company some $1.5 billion in loans to help it restructure from Cordobas to K-cars. Under Lee Iacocca, Chrysler recovered. But it made a fatal error in the late 1990s when it "merged" with (in reality, was bought out by) German automaker Daimler AG. At the time, it seemed like a great deal -- to people who were clueless about the auto industry, anyhow. Benz sucked the company dry, tossing it a few bones in the form of shared platforms/parts that let Chrysler build and sell cars like the 300 (based on the Benz E-Class) and Crossfire (based on the Benz SLK) while it drank deep all the profits its Chrysler arm was earning through Jeep and elsewhere. This cash went straight to the Fatherland; it was not used to invest in new passenger cars for Chrysler.

Once it was through feeding, Daimler burped heavily, backed away from the table -- and left the remains of Chrysler for the rats.

In May, Chrysler sales fell 25 percent; even Jeep -- the one bright spot (sort of) in Chrysler's portfolio -- is down an alarming 16 percent.

This is much worse than the losses being taken by either GM or Ford. And noted, GM and Ford both have new/updated models and so can be reasonably expected to cope with the changing market conditions and a world of $4 per gallon fuel.

Chrysler does not - and won't, for the foreseeable future. The only new model in the pipeline is another spectacular gas hog, the Dodge Challenger. This reborn muscle car - and its 13 mpg Hemi V-8 - is apt to sell as well as its ancestors did circa 1974, during the last energy crisis.

So the question is, how long will Cerberus allow the bleeding to continue? Brett Smith of the Center for Automotive Research in Michigan says, "six months."

That's how long Chrysler has to find someone -- anyone -- willing to take on the herculean task of rebuilding what's left of America's third-largest automaker.

The clock is ticking...

Letter to the Editor

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Trade, Energy