Things are bad at GM — sales down almost 20 percent — and open
talk about the possible amputation of under-performing/overlapping
brands such as Pontiac, GMC and maybe Saturn and Buick, too.
But the diagnosis is much worse for Chrysler Corp. Some analysts
believe that unless a transfusion of money and other resources can
be found via a buyout or partnership with a healthy automaker such
as Nissan/Renault (or even the Chinese), Cerberus — the private
company that currently owns the sickly husk of Chrysler Corp —
will cut its losses and dump the whole shebang.
Time frame? A year, at the most. Maybe less than six months.
Unlike GM and Ford, which are still publicly traded
corporations, Chrysler is little more than an asset (a liability,
actually) held by Cerberus — which can decide tomorrow night if it
wants to that it’s time to cut bait. And given the awful condition
of Chrysler — and worse, its equally awful prospects — that
decision may come sooner rather than later.
Ford and GM, though they have problems, also have their bright
spots. Both have reasonably successful overseas operations, for
one. Chrysler does not. GM and Ford also have reasonably diverse
product portfolios with at least a few successful cars. Chrysler
has an aging, not-right-for-the-times lineup that includes
overweight gas guzzlers like the 300 series sedan, decrepit
'90s-era holdovers such as the PT Cruiser, and rental car specials
like the Sebring. It invested heavily in badge-engineered failures
like the Jeep Compass and Patriot — and massive gas hog SUVs like
the Commander and Aspen that are as popular right now as Hummers
are for GM.
But GM at least has a few decent small cars like the Chevy
Cobalt and Saturn Astra — and also some excellent mid-sized models
like the Chevy Malibu and Saturn Aura.
Chrysler doesn’t even have the Neon anymore.
For some inexplicable reason, Chrysler did not invest in a
replacement for this once big-selling economy compact. So it has
absolutely nothing right now in the way of a 30 mpg or better small
car — at a time when such cars are as hot-selling as V-8 SUVs were
five years back.
It has already announced the cancellation of several models,
including the slow-selling Pacifica/Magnum wagons, some versions of
the PT Cruiser, the Crossfire coupe, and very possibly, the
recently launched Aspen SUV.
What does that leave?
There’s the Town & Country minivan — but traditional
minivans are being supplanted in the market by the new breed of
crossovers, those wagon-like vehicles that look sort of like SUVs
but ride and handle like cars. People increasingly prefer them over
minivans because they have at least some style and personality yet
are equally good at carting kids around.
GM recently introduced a whole family of new mid-large
crossovers — the Buick Enclave, Saturn Outlook and GMC Acadia.
Ford has the Taurus X and Edge and the new Flex.
Chrysler does not have even one comparable crossover.
TO PUT A FINER POINT on it, Chrysler doesn’t have a single
big-selling model in its entire inventory of passenger cars. The
only profitable asset the company still has is its Jeep brand (a
small miracle, that, given the Patriot/Compass/Commander albatross
hanging around its neck).
That’s it.
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…
