well, chrysler’s a done deal. or, not. who knows? despite president obama’s declaration today to toss chrysler into chapter 11 bankruptcy, this drama is far from over.
here’s how it’s going to go down.
obama, reciting a virtually scripted press release, boasted excitement over the “new chrysler” that will form through the forced marriage with italian belle vita fiat, a thorough scalping of its current creditors (um, does that include us?), and a whole heap of coin from our government (us again) and canada’s (eh?). now, i’m sure that through all of this cram-down that they think they have perfectly scoped, chrysler will emerge with a slimmed-down balance sheet, and … well… crickets.
even if chrysler is able to battle out of its financial hell through the scruples of the new york bankruptcy judge, there’s still a giant viability gamble that remains outside of the financials, and is starting off on a broken foot.
first of all, the obvious to the consumer. chrysler’s brand image is in the trash. they’ve pissed away quality and have been building utterly undesirable crap for the last several years and the buying public knows it. as it stands right now, they have absolutely zilch in their product pipeline, so as this “restructuring” slogs on, the product on dealer lots (what will remain of them) will continue to grow increasingly stale. in fact the only forseeable product development light at the end of this train tunnel is likely 2 excruciatingly long years out, and supplied by… well, read on…
fiat… where do we start? admittedly, fiat has vastly improved their products from the last time we saw a new “fix it again tony” on our shores, but as anybody in motown can attest to – impressions last. so you have one stained car company buying another stained car company, and we are to expect… success? get real. consider us underwhelmed.
anyhoo, assume there is a newer generation of buyers who have no recollection of what it’s like to own an italian car in america and have visited europe once or twice to see the funky new cars they have there… and u.s.-made fiats may actually take a market hold. this would be an ideal case, but the first reality is that as i said, this is at least 2 years away, for us to even see so much as a fuel-efficient fiat engine stuffed under the hood of a piece-of-shit dodge caliber. much less, a u.s. crash-standard and epa approved version of any vehicle fiat currently produces in europe. can this great new company stand a chance if it has to coast in limp-home mode on the product front for the next 2 years? doubtful. secondly, the splash fiat or a fiat-ized chrysler is bound to make here is no more than a ripple. sure, fiat could sell a few thousand cinquecientos to do battle with mini, but we’re talking niche numbers here – hardly enough to justify the multi-billion dollar investment(s) being thrown at this merger. add to that the continually eroding market share slide that the current chrysler lineup is suffering, and you’d be damn lucky if the new fiat-chrysler is able to grab a mere 5% of the north american market.
furthermore, even past the product and the financials, let’s look at what’s going to remain of the structure of the company. the uaw in effect will have a controlling stake in the board of “new chrysler”, which is bowls and bowls full of not good as pmd would say. even at the end of the day, post chapter 11, chrysler is still going to be a union company, hampered by the inefficiency and resistance to change that embodies everything a union stands for. additionally, as two confrontational entities collide (italians and unions), you can rest assured that board room meetings will be on a fast-track to self-destruction.
so in the end, we have 4 billion taxpayer dollars already chucked down chrysler’s rathole, and through chapter 11, we’re going to throw another 8 billion at them. jobs will still certainly be shed, and at the end of this whole debacle, we will still have a mess of an undesirable, viable-only-on-paper company that fiat will probably try to liquidate after it’s milked chrysler for its only valuable asset (in fiat’s eyes anyway) – its dealer network.
spin as he might, president obama – perhaps unknowingly – officially christened the beginning of the long, tortuous end. and oh, how it’s going to cost us. sometimes it’s just better to tear the band-aid off in one fell swoop.