Analyst: Chrysler can't survive UPDATE #2 Chrysler LLC does not have the scale to survive as a standalone automaker, with or without a government loan, CSM Worldwide forecasters said today in laying out the grim road ahead for the remaining "Detroit Two" which also would continue to diminish in importance against the growing presence of foreign automakers in North America.
It would be best for everyone involved if Chrysler were allowed to gracefully wind down and go away in a controlled, staged process, leaving a Detroit Two, said Michael Robinet, CSM vice president of global vehicle forecasts, at an Automotive Press Association event in Detroit.
Assessing General Motors Corp., Ford Motor Co. and Chrysler in terms of scale, efficiency, products consumers want to buy and the ability to make money on those products, "one of those manufacturers doesn't really have the scale, at least in most vehicle lines, that is required to survive in this market," Robinet said in singling out Chrysler.
It wasn't all Chrysler's fault, said CSM CEO Craig Cather, laying much of the blame at the feet of Daimler which owned Chrysler before Cerberus Capital Management LP bought a majority stake. Daimler handicapped Chrysler and its ability to expand internationally, Cather said. Detroit News12/03/08 Unlike Ford and General Motors, Chrysler is a private company. As the Detroit Free Press and others have pointed out, that makes the company less appealing when it comes to a bailout loan:
David Cole, chairman of the Center for Automotive Research, said he believes Chrysler's status as a private company "adds to the complexity" of a loan arrangement.
To combat the concerns, Chrysler Chief Executive Officer Bob Nardelli has said that private-equity owner Cerberus Capital Management will pledge to forgo any profits from a Chrysler sale if the government helps out. Nardelli also told lawmakers during congressional hearings last week that he'll work for $1. No one in Congress has suggested treating Chrysler differently from the other Detroit automakers.
While Cole disagrees with the idea of excluding Chrysler for help, he said he understands the argument against lending it federal money.
Chrysler said Tuesday that sales dropped 47 percent compared with a year ago, the largest drop of all the major automakers. Chrysler would be wise to merge with GM, as we cannot see it surviving much longer.
"I believe that further partnerships would make the U.S. auto industry more viable in the long run," Chrysler CEO Robert Nardelli said in a videotaped presentation to senior Chrysler managers.
"Chrysler is in a different situation from the other two," said Thomas Kochan, a professor of management at the MIT Sloan School of Management. "It doesn't have the resources to invest in research and development for hybrids and other fuel-efficient vehicles, and it's further behind the others. I think Chrysler has to find a merger partner."
Chrysler has formed joint production accords with Nissan Motor Co., Volkswagen AG and other automakers. In recent months, Cerberus discussed a possible merger of Chrysler with General Motors Corp. and the possibility of bringing Chrysler into the Renault-Nissan automotive alliance. But the talks were halted as financial conditions in the industry deteriorated dramatically.10/28/08 With reports that Chrysler may be going away comes news that 1) Consumer reports rates Chrysler cars as having the lowest quality, 2) Consumers have all but stopped buying Chrysler products because they do not want to be stuck with a vehicle with no company there to support it. Faced with this severe drop in revenue, Chrysler's days appear to be numbered.
Meanwhile Chrysler said it will stop making its first gasoline-electric vehicles, which began sales this month, at the end of the year because the plant that builds them is closing.
The hybrid versions of the Dodge Durango and Chrysler Aspen sport-utility vehicles are produced at the Newark, Delaware, factory that Chrysler said last week will shut by Dec. 31. The plant also makes gasoline-only versions of those models. Todd Goyer, a Chrysler spokesman, confirmed the hybrid decision today.
``This vehicle would have done a lot better three or four years ago,'' when demand for SUVs was greater, Jim Hall, principal at 2953 Analytics in Birmingham, Michigan, said of the Chrysler gasoline-electric models.
Chrysler's decision leaves it without plans for any new hybrid models for at least a year. No other major automaker is more dependent on pickup trucks, SUVS and minivans, which have lost sales this year because of high gasoline price. Chrysler already is playing catch-up to competitors such as Toyota Motor Corp., which has sold hybrid models for more than a decade.
Order the flowers and plan the funeral. The end is near for Chrysler.