In early July, following the very first month after Chrysler LLC emerged from bankruptcy, the Associated Press, in an unbylined report about changes in the company's board, saved this little nugget for the last of its eight paragraphs:
Chrysler's poor June performance also casts doubt on whether the U.S. government's $7 billion allocation will be enough to get the automaker through the U.S. sales slump, which is projected to last into next year.
Those doubts are growing. In a report on Chrysler's just-announced management shakeup, AP auto writers Tom Krisher and Dee-Ann Durbin began their report by ringing the alarm (bolds are mine):
With sales down sharply and pressure to start generating cash before government loans run out, Chrysler CEO Sergio Marchionne shook up his executive team Monday, replacing two of his brand managers after just four months and splitting Dodge into car and truck units.
Story Continues Below Ad ↓The changes show Marchionne's penchant for moving quickly and demanding performance, industry analysts say. But it's also a sign that all is not well inside the company's sprawling headquarters complex in the Detroit suburb of Auburn Hills.
I mention the AP reports because they support what might otherwise be dismissed as hyperbole coming from a blog for auto buffs. But even if AP hadn't taken notice, there are plenty of other reasons not to dismiss what follows out of hand, not the least of which include Chrysler's continued string of steep sales declines, its apparently politicized and possibly reverse discrimination-driven decisions about which dealers it would keep after emerging from bankruptcy, and the financial health of Fiat, its supposed savior.
Kevin DiOssi at Mopar Muscle Magazine's blog (HT Doug Ross) elaborates (bolds are mine):
Rumors, credible rumors, are beginning to circulate in the car industry and the automotive press, that Chrysler may not make it another year primarily due to its falling sales and growing financial losses at partner Fiat.
Chrysler sold a 62,197 cars in September, down 42% from the same month last year. The figure was down from 93,222 in August when traffic to dealers was pushed up by the ”cash for clunkers” program.
Chrysler’s problems may only be beginning and, if so, Fiat, the ”managing partner” among Chrysler’s owners may not be able to keep the American company intact.
.... The daily management of Chrysler is controlled by Fiat which owns 20% of the U.S. company with options which could take that amount to 35%. Fiat has not put any money into Chrysler, so if the American firm becomes a significant operational or management burden there are very few reason for the Italian company, which has sales troubles of its own in Europe, to stay long term. Fiat lost $254 million in the second quarter, so its board may eventually believe that Chrysler is a distraction and one without a future.
.... At this point, the Chrysler product line is still dominated by mid-sized sedans, SUVs from Jeep, minivans, and pick-ups like the Dodge Ram. The company has no real product in the alterative (sic) energy/hybrid segment. Chrysler’s domestic market share in September 2008 was 11.1%, according to Edmunds. Based on sales figures released by the industry today, that share is now closer to 7.5%.
.... Chrysler sales are now running at the rate of 750,000 a year. It probably does not have the capital to wait through another year of low US car sales with a market share that is almost certainly to stay below 8%. It does not have models tailored to the current market tastes. Chrysler is going out of business. The company just hasn’t made it official.
To be crystal clear, the final two sentences represent DiOssi's opinion, not mine.
As far as I can tell, AP has thus far been virtually alone in even recognizing the existence of immediate survival issues at Chrysler. That media neglect can't last, can it?
Given that the U.S. government holds a 9.85% stake in Chrysler and has $7-8 billion out in post-bankruptcy loans (the more recent AP report says the total lent is "roughly $8 billion"), you would think that the company might release the kind of detailed quarterly financial statements an SEC-regulated publicly held company ordinarily would, so we could see for ourselves how bad things are. Though you have to believe that the company is already reporting the gory details to the Treasury Department, I doubt that the American will ever get to see them.
Cross-posted at BizzyBlog.com.
—Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters
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Comments Policy
Communism sucks
October 6, 2009 - 09:28 ET by ThoreauI have to tell you that I don't know one person since the bailout that will buy a GM/Chrysler. Not one. Thoughts go from "the free money is gone" to "I want to watch them burn to the ground and then piss on the ashes".
This is what happens- it's what has to happen- when you steal from one person, and then go back to that person and ask them to give you more money. This is classical communism.
I personally hope anyone that took a handout is erased from the planet. But I'm going to do more than that. I'm going to never buy from them for the rest of their soon to be short ass lives. Problem solved.
I'm in the same camp
October 6, 2009 - 14:14 ET by YahooWatcherI don't know anyone who even considers GM or Chrysler when buying a new car. Many I know are buying Ford's for the first time or sticking with tried and true Honda and Toyota.
The ignorance of the Obama administration is astounding when it comes to car inventory and availability as it pertains to cash-for-clunkers a few months ago. Here's this program (entitlement, giveaway, whatever you want to call it) at a time when US makers' inventories are low and when US makers don't have the fuel efficient vehicles to compete with the foreign makers. The Bamster could have much easily taken the $3 or $4 billion wasted on C4C, put it in a cargo container,and sent it straight to Japan.
Don't Tax Me, Bro.
Apple is hovering around
October 6, 2009 - 09:35 ET by nolotrippenApple is hovering around 10% of the PC market and has been much lower in recent years and any company would KILL to have the Apple brand (and its cash on hand). So, it can be done.
Of course, Apple has the advantage that it's not run by the Obamament and people don't feel like they are buying a Trabant instead of a Focus.
Apple is hovering around
October 6, 2009 - 09:47 ET by Dan The Man 2Apple is hovering around 10% of the PC market
Which is pretty big considering almost all "PC" types are made by a plethora of manufacturers and sold under many brand names. So Apple is most likely the last and biggest manufacturer of its own computers. It has closely guarded its patents and such for many years and taht is their secret to success.
That said I dont like the Apples as much, however they did it right with teh iPhone, but has been surpassed by their cumbersome marketing and research departments.
Disclosure I own 3 iphones.
Know how to keep a Troll in suspense? Ill tell ya in the morning.
iphones
October 6, 2009 - 09:57 ET by BlondeYes, the iPhone is one reason for Apple's success...but they've always tried to ride the front of the wave, as innovators.
That, and their products work pretty flawlessly. They must treat their customers pretty well, because generally Mac users are "recommenders", which speaks well of Apple as a company. That a company is able to use it's customers as a "sales force" so to speak, is the best indicator of success.
Who of you would recommend your automobile to a friend or co-wrker who was in market for a car? If you look at the auto industry, try the same criteria on. Would I recommend my t-bird? Yeah, probably. My Nissan XTerra....oh yeah, THAT's a great vehicle.
Chrysler? Nope...from a customer standpoint, there are "assassins" out there (dissatisfied customers tell twenty people, on the average, how crummy a customer's product is....did I mention Comcast sux?).
Bye bye Chrysler.
I hope he fails, too.
Apple is an
October 6, 2009 - 10:29 ET by TenebrousApple is an innovator.
iTunes showed that they can single-handedly revolutionize the music industry (Apple via iTunes sells more music in the U.S. than any other retailer). The iPod showed that they could take over an existing market segment by creating something that was easy to use. The iPhone showed that they could do it again.
If you look at the kind of computers Apple has made, they care a lot about style (other companies only recently have started to care). They also care a lot about how everything works together for a seamless user experience (other companies? Hardly). I could go on. Apple has its fans for very good reasons.
Chrysler is no innovator. Chrysler doesn't care about the user experience. Chrysler has no real fans to speak of.
Saying that the two companies have 10% of the market is a statistic, but a meaningless one. Their corporate DNAs are completely different and they produce different results (Apple: billions in the bank; Chrysler: scrounging for money from the freakin' government).
Good riddance to Chrysler. My next car will be a Ford.
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Random-jumbled-thoughts.blogspot.com
Blonde and Tenebrous, Apple
October 6, 2009 - 18:31 ET by Dan The Man 2Blonde and Tenebrous, Apple is not as much an inovator and is more of a zealous protector of their property. An Apple works fairly well and has fewer problems because it is a one vendor stop and they have a dictatorship over their product; the virus and malware problems a "PC" has is beacuse a PC is more populous and an easier target coupled with Microsofts lousy softwares.
One problem with Apple is cost, almost everything costs 50% more from hardware to software. And the software selction is more limited, just in recent years has apple relented and let Microsoft products run on their platform. Also recently Apple has strayed away from teh RISC CPU's to Intel products. These changes may change the virus and malware problems and increase them.
I have followed Apple from is infancy in the Apple II (there never was an Apple I) to the Apple of today. All in all its been working for Apple because of the loyal following ... sorta like the Packers fans. Have you ever been to a Packers game ... its always packed.
Know how to keep a Troll in suspense? Ill tell ya in the morning.
Dan, I defer to your expertise
October 6, 2009 - 18:40 ET by Blondeas an Apple expert. I put one together for a little old lady many years ago...never having worked on one, it was a snap, so I was impressed. Having said that, though, you made my point in your last sentence.
Apple users are Apple recommenders....every single Mac user I've ever known has always recommended it to me....every single one. That is a HUGE plus for any company...it effectively turns all of its customers into a sales force. Does that make sense?
So my point remains....unhappy customers equal assassins, happy customers are part of the sales force, and Chrysler (and probably Government Motors) are dead companies walking.
And as far as the Packer fans....I watched the MN/GB game last night....I haven't watched an NFL game in years....it was terrific!
I hope he fails, too.
So what happens to the UAW
October 6, 2009 - 09:36 ET by Dan The Man 2So what happens to the UAW stake in Chrysler and what does Chrysler going under do to those workers? Do the American taxpayer pay those clowns off? I mean even more than we have done? What is the liability?
Know how to keep a Troll in suspense? Ill tell ya in the morning.
But Obama said they'd pay those $7-8B loans back
October 6, 2009 - 09:51 ET by lsudolemiteand the taxpayer would see a return on his investment! Obama wouldn't.....LIE to us, would he??>
Let Them Go
October 6, 2009 - 09:52 ET by slickwillie2001Do you think maybe that now the damn union owns Chrysler, maybe they could go to the workers and suggest maybe they take a 20% cut in pay until the economy revives? Of course not, the greedy UAW fat cats will simply wait for Uncle Obama to bail them out again.
The Obamacare HR3200 bill includes a big bailout for UAW retiree health benefit costs as well, so there's more money that the democratics intend to flush in the UAW's direction.
Let them go bankrupt, and do it for real this time.
What the Fed. Gvmt did with GM & Chrysler was illegal
October 6, 2009 - 10:06 ET by c5thenAnd unconstitutional and those who did it, voted for it, advised for it, etc. should be impeached and or prosecuted and jailed.
There is NO authority for the government to take dollars raised from taxation and give them, lend them, whatever to any private company.
Now it looks like the illegal redistribution of wealth from the middle class to a giant corporation like Chrysler isn't even going to work. This argument was made at the beginning of the whole debacle and it was predicted that it would not stop the inevitable, only delay it.
Throw 'da bums out!!!
no incumbent re-elected, with very few exceptions!
www.loyaltoliberty.com
Another Brain Tank
October 6, 2009 - 10:36 ET by UtherpendThese are the same Brainiac's that are shutting down Saturn, one of their best selling car lines. I wonder how this will compare to Health Care they think they can run better than the private market.
"For a people who are free, and who mean to remain so, a well-organized and armed militia is their best security."
As if we all did not see
October 6, 2009 - 10:51 ET by samhermanmdAs if we all did not see this coming from about a thousand miles away on a foggy day.
I am willing to bet that Old Donkey Ears is holding onto Chrysler just long enough to get the UAW votes in the 2010 election, then he will cite "congressional pressure" and cut the company loose.
Chrysler
October 6, 2009 - 10:59 ET by clhWatch what the unions do and what they seek from BO for a leading indicator of a return to bankruptcy. The "leaders" will protect themselves before worrying about jobs for the members.
The Italians appear to be getting a free look and can skim the assets they want if it blows up.
They will guage whether they can live with the UAW or set up some alternative way to get the production facilities they want (lease abandoned plants and hire non union).
They can look over the dealer network and see if they can use it to move their brands into the US. They probably can find a nice distribution network without taking more than 1/3 of the remaining dealers.
All they need is to keep the body on life support while they rifle the assets and prepare a will that suits them when it's time to cut life support.
GM won't be far behind Chrysler
October 6, 2009 - 11:48 ET by R D Helm-Dave
Guess I'm a conspiracy theorist nutcake...but
October 6, 2009 - 13:54 ET by Army BratI've been saying all along that it is Obamas aim to destroy the US economy in order to bring about his "fundamental change" to America.
He is doing what any good Communist in his position would do. He is destroying our ability to create wealth, to create jobs. He is actively redistributing wealth...your wealth and mine...not his.
Between Cap and Tax, his supposed "Health Care Reform", and the destruction of the US auto industry he's doing a fine job on the economic front. The EPA is fixin' t' kill the hell out of pert near every industry there is with this phony CO2 crap.
He has weakened and continues to weaken our military, our intellignece services, the dollar...there is no end to what he can and is quite willing to destroy in order to "level the playing field".
Radicals abound in his administration. Racist pieces of crap that talk about how "White Men" should step down...how we should be forced to stop eating meat because we're too ignorant and childish to do it on our own. We just don't know what's good for us but the Obamanites do and are attempting to forcefully change the way we think regardless of how we feel about those changes.
Every damned day there is a new slap to my face. A new insult to my intelligence. I am told again and again how I don't know what's good for me and how I'm going to be forced to do "the right thing".
I see urine on my Fathers grave...and I'm pissed as HELL!
islam is a lie and Truth is killing it.
Yep,
October 6, 2009 - 16:53 ET by general companyI agree,
My Gov. thinks I am dangerous, so be careful
"Television is a freak show" Bernie Goldberg
gold went way up
October 6, 2009 - 18:35 ET by jon_torlinGold went up about 25 dollars to 1043 today. (it's still changing) This is also another sign of the economy about to face a very big problem and not just Chrysler going down. I suspected Chrysler would be the first as well and then GM not too far behind.
I've had a mixed pleasure of telling my friends who voted for Obeyme "I told you so, but I wish I had been wrong." This is why I've been saying, like some others on here, this needs to stop NOW and get reversed. I'm talking about everything that's happened in the last 9 months. If it can be stopped, we have a chance of recovering from this in a few years.
If it can't(or won't) be stopped, we'll never recover. The damage would be far too severe and will make the Depression era of the 1930s look like a Golden Age of Heaven on Earth.
-Jon
Army Brat, you are 100% correct. Obama is doing this on purpose
October 6, 2009 - 21:00 ET by R D HelmThe thing that frustrates me is how many conservatives, and that includes many here at NB, still believe that he is actually trying to "improve" things, but just going about it the wrong way.
They could not be more wrong.
Chalk it up to economic illiteracy, 50+ years of government education, or whatever, but my fear is that by the time most people wake up to what Obama and the dims are really doing, it will be too late to repair the damage.
Contrary to what many seem to think, we don't have until 2012 to stop this, either, and I am beginning to think seriously that 2010 will be too late as well.
All Obama really needs to get through congress to complete his coup is ObamaCare and Crap & Tax.
I beleieve he will ultimately get both.
-Dave
Ford 500
October 6, 2009 - 15:42 ET by slickwillie2001I've seen a couple of new Ford Five Hundreds in the last few days, and they sure look nice. Don't know what engines are offered, but they look better than the pictures of the new Taurus that I have seen.