The Nation's Pulse

Chrysler Corpse

Though some are giving it six months to live.

By 7.24.08

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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...

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About the Author

Eric Peters is an automotive columnist and author of Automotive Atrocities: The Cars You Love to Hate (Motor Books International) and a new book, Road Hogs.