Chrysler announced last week that another 1,000 salaried people would be terminated from the company in addition to the already announced cuts. Chrysler also announced that they lost $431 Million in the first three months of this year.
Additionally, both GM and Chrysler announced that they would no longer lease vehicles. The reason given is that the residual value isn’t enough to resell the vehicles without losing money.
Folks, this is bad. What’s next?
An article in the American Spectator muses the following:
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.
It goes on later in the article…
… 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.
So there you have it, stuff that the majority of us already know and more. Chrysler is in deep due to the shortsightedness and greediness of managers looking to make a quick buck and make their parachutes gold with platinum pinstripes. And that leaves a lot of people out in the cold.
I’m not talking just about the remaining managers and workers at Chrysler, but of the first, second, and third tier suppliers that need Chrysler’s business to survive.
I personally am not confident in our new management to pull the company out. They’ve already made their millions, and continued cutting is not the answer. The answer is product that people will not only want to buy, but fall all over themselves to purchase. Cutting people that can make that happen is suicide. As the article states in various sections:
Chrysler has an aging, not-right-for-the-times lineup that includes overweight gas guzzlers…
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…
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. [Not True – Chrysler is introducing the Dodge Journey.]
The only profitable asset the company still has is its Jeep brand…
Better make sure that resume is up to date.