Can Chrysler Turn It Around in Bankruptcy?

fezo

Nice idea but if they are looking at five years before production I can't imagine there will be a Chrysler there to produce it.

I hate to say it but if Chrysler survives 2009 I'll be surprised.

mickeyrom

Resembles the upcoming Hyundai coupe based on the 4 door Genesis.

berri

It would make a nice 300 replacement whether hybrid or not.

dtownfb

"I hate to say it but if Chrysler survives 2009 I'll be surprised."

I'll be surprised if they make it pass March 2009. Chrysler is considering extending the plant shut downs.

berri

Scary part is they probably won't be bought out. Rather pieces will be aquired after bankruptcy unless the government forces a merger into GM like they have been doing on Wall Street. Its very sad.

dtownfb

If they force a merger with GM, that will bring down both companies. Chrysler should be sold. GM forced into a true restructuring with government backing (pre-packaged Chap. 11). This way we keep two American companies. Maybe a third can re-surface in a decade when the market is better.

fezo

I officially haven't a clue as to what Chrysler is thinking.... Chrysler rules out sale of individual brands.

But Chrysler had been in discussions last year with Magna and Russian carmaker GAZ about making vehicles in Russia based on the platform behind the Dodge Caliber and Jeep Patriot, LaSorda said.

Swell. It would be a step up from Ladas anyway...

dtownfb

I don't think they know either....

hpmctorque

From today's Detroit Free Press:

"...In return, Fiat, which has been interested in returning to the U.S. market, would have access to Chrysler’s plants and dealer network, according to Automotive News and the Wall Street Journal, both of which cite unnamed sources.

Chrysler declined to comment on the matter.

'Chrysler LLC as a matter of policy … does not confirm or disclose the nature of its private business meetings,' the company said in a statement. 'Beyond those partnerships and alliances already announced, Chrysler has no further announcements to make at this time.'

Industry observers said the move could quickly give Chrysler a small-car lineup at a time when its domestic competitors already have announced plans to introduce new small-car models.

Through a partnership with Fiat, Chrysler could jump into the small-car market, 'without significant capital investment,' said restructuring expert Van Conway, of turnaround firm Conway, MacKenzie and Dunleavy.

That’s crucial for Chrysler, which is operating on a $4 billion loan from the U.S. Treasury, and is seeking another $3 billion in federal loans.

A deal also could give Fiat an equity stake in Chrysler.

Cerberus Capital Management LP, Chrysler’s majority owner, has indicated that it is willing to give up its stake in Chrysler. Cerberus last month said it would be willing to give up its equity in Chrysler in exchange for concessions from stakeholders, including unions and bondholders.

Spokespeople for Fiat and Cerberus did not return requests for comment."

berri

FIAT? Now that quality might fit right in!

stever

Well, it would be kind of fun if Fiat would bring some of their city cars over, like the 500.



It's Simply Irresistible, Like an iPod on Four Wheels

hpmctorque

For the past several years Fiats have been competing with Toyota, Honda, Nissan, Hyundai and others in Italy, Europe and around the world. Is it possible that your perception regarding Fiat quality are outdated?

mickeyrom

Really? What could you tell me about Fiat?

fezo

Well, it's possible, but really this sounds an awful lot like a punch line.

Just what you need - two struggling companies together. My initial reaction is that this is an even worse idea than the GM - Chrysler merger. I'll be very pleased to be proven wrong.

stever

Done deal it sounds like. And the tie-in means that Alfa-Romeo may actually get back here.

New discussion:

Chrysler Allies With Fiat

stever

"Chrysler has been socked by two lawsuits in as many days, prompting at least one expert to wonder if more lawsuits can be expected and force Chrysler into official bankruptcy proceedings."

Chrysler Hit by Lawsuits; Is Bankruptcy A Way to Cope? (AutoObserver)

stever

"If we get funded, we're viable and can continue to invest in future," Press said. "If we get the relationship with Fiat, we'll go from viable to being in really good shape."

Chrysler's Jim Press: "Things Aren't So Bad"

dtownfb

Quick question: How does Chrysler count their sales numbers? Is it vehicles sold by the dealership? Or do they count the number of vehicles Chrysler sold to the dealership?

The reason I'm asking is I know Jim Press had a conference call "strongly urging" the dealers to order more cars.

mickeyrom

I suspect that the dealers have run out of places to park them...nes pas? :shades:

nippononly

He alternates between bending the truth to sound better than it is, and outright lying. Which one is this?

"It's hard to say things are good when sales were only down 25 percent [retail]. That's terrible, but it's less terrible than the industry decline of 40 percent," said the always upbeat Press.

There's nothing to say that the 40% decline in sales is ALL retail, NONE fleet. And it ignores that the declines among the Japanese Big 3 were substantially less than 40%.

Edmunds.com, parent of AutoObserver.com, estimates Chrysler spent about $5,556 per vehicle in incentives in February, an industry and a Chrysler-all-time high,

Does it matter how good or bad sales are if they sell every one at a steep loss? And the tone of the whole thing is belied by the fact that Chrysler just asked for another $5 billion, or was it $6 billion, just to fund operations in 2009.

I don't believe in Chrysler's future.

stever

"With Chrysler and GMAC both floundering, Cerberus has reduced its exposure in its overall portfolio. The two companies combined now represent 7 percent of Cerberus's portfolio, instead of the previous 12 percent.

"They are less exposed than everyone thinks," Mark Epley, who is responsible for the relations with private equity firms at Deutsche Bank, told the Financial Times. "They are diversified. Nothing kills them."

Cerberus' Feinberg: Hanging In With Chrysler and GMAC

"In the weeks leading up to March 31, the day President Obama's auto industry task force gives some direction about whether the government will continue to invest billions to keep General Motors and Chrysler afloat, Chrysler executives have spoken in terms that seem to indicate a festering anxiety at the company's headquarters here.

In some cases, executives have issued threats. Some have deeply contradicted one another. Always-provocative CEO Bob Nardelli has contradicted himself."

Chrysler Rhetoric Gets Contradictory - and Desperate?

nippononly

Sounds to me like Cerberus is readying itself to just shut the thing down and declare it a loss. With only 7% exposure, they can probably afford not to care if it gets any more bailout money.

Did Chrysler production ever begin again after the "temporary" stoppage announced right after New Years?

dtownfb

I agree and yesterday's news doesn't help the situation. Can Fiat and Chrysler merge in only 30 days? Everything I read this was going to take a couple of years.

fezo

That didn't take long - Chrysler, Cerberus reach alliance deal with Italy's Fiat.

dtownfb

I don't think the company will make it but they got the deal done. When are these wonderful Fiat's coming to the states?

stever

Everyone is talking about how short the deadlines are, but when the economy was booming, companies were doing deals over long weekends and announcing them late Sunday night in time for the stock market openings.

And Fiat and Chrysler have been sketching out how they could work together for weeks now.

nippononly

Or maybe not...

Chrysler recasts statement on Fiat alliance

March 30, 2009 - 12:31 pm ET
UPDATED: 3/30/09 5:20 p.m. ET

Chrysler LLC recast its own statement announcing an alliance with Fiat S.p.A., saying the potential partners have a "framework" accord.

The disclosures came in back-to-back releases today after President Barack Obama gave Chrysler 30 days to come up with a plan to team with the Italian automaker and qualify for as much as $6 billion in additional U.S. aid.

Chrysler originally issued a statement saying it, Fiat and majority owner Cerberus Capital Management LP had reached an agreement on an alliance. Some 30 minutes later, Chrysler issued another statement, saying it was just a "framework of an agreement."

Both statements were attributed to Chrysler CEO Bob Nardelli and cited "substantial hurdles to resolve."

http://www.autonews.com/apps/pbcs.dll/article?AID=/20090330/ANA02/903300274/1229- -

Somehow Chrysler and Fiat are supposed to come to a deal in 30 days, but I can't imagine how that's possible, or why the Obama auto team thinks it's possible. At least they only gave them 30 days before the bankruptcy begins. And I'm glad that they had the courage to say out loud that without the Fiat deal Chrysler has no viability at all.

I'm really wondering how viable they are even WITH the Fiat deal.

The odd thing to me is that we haven't heard word one about them shopping the Jeep brand around, and planning to scrap the rest. Cerberus could get a lot of money back on its investment by selling Jeep, I think. And then write the rest off as a loss.

dtownfb

How in depth does the agreement have to be? Chrysler and Fiat have een talking for a month and a half.

My biggest question is how will a Chrysler /Fiat merger work between April 30th and when the first Fiat cars hit the Chrysler dealerships? I understand that it will take fiat 2-3 years to get their small cars into our market. How will they survive that long?

nippononly

Well if that's REALLY how long it would take before any Fiats would make it over here, then I think the only way the government would allow it is if Fiat takes over Chrysler in the near future and assumes its debts and obligations. No way the feds are going to bailout Chrysler for the next three years while they wait to see if Fiat ALSO goes belly up before getting any product in the Chrysler pipeline.

I can't imagine this haphazard plan coming to fruition. Fiat is going deep into the red right now if the news out of the European car industry is to be believed.

hpmctorque

As I've mentioned before, the survivability issue might be resolved if, on a short-term basis, the EPA would permit European spec Fiats and Alfas, or Chrysler and Dodge badged Fiats and Alfas, to come to the U.S. Extraordinary circumstances require extraordinary measures, which, in turn, sometimes require exceptions. Of course, to be fair, GM and Ford should be allowed the same exceptions. The products already exist at Opel, Ford of Europe and Fiat Spa, but the willingness to be flexible doesn't.

nippononly

If the government is going to be involved in suspending rules or other meddling in the market, which I'm not that happy about to begin with, I feel it is imperative that they pick their battles carefully. Of the 3 domestic automakers, Chrysler is the last one I would pick, and as such it wouldn't get any of my help. GM is going to be very difficult to restore and may yet fail, and Ford may be in the same predicament as the other two in 12 short months, so let's not waste any more resources trying to save the very hopeless Chrysler.

lemko

From the Philadelphia Newspaper:

Why Fiat is Viewed as as Good Fit for Chrysler

nippononly

It's easy to understand why Fiat is a good fit for Chrysler, the problem is they don't have any money either

iluvmysephia1

does the Italian Guv-Mint have any cash sitting around? :P

nippononly

Well now you're talking! :-P

I believe they are currently under a lot of pressure to follow Germany's example and bail out their own car industry. They seem to be resisting a lot more than Germany did....

iluvmysephia1

so you're sayin' there's a chance!

nippononly

Yeah, but not a big one, I fear. And Chrysler needs money YESTERDAY. The clock is ticking and in the first week of May they could be out of business.

iluvmysephia1

seems to be wanting to stop GM from going out of business in the worse way. He's only giving Chrysler 30 days to present a viable profitibility plan but allowing GM 60 days. Oh well, bigger problems require more time to meddle through and fix, I spose.

It looks bad for both carmakers. Ford might make it, but, they borrowed some money, too, and sold off assets. Smart move, but they will owe money too eventually. I have read the year 2010 the amounts will have to start getting paid back. lt still looks hairy for all 3 of them, add to these problems the fact that some people(a lot, actually) won't buy from a manufacturer that is struggling and near-bankrupt. Hence Obama's plan to back GM Warranties through thick and thin.

Ford is trying to be smart and trying to gain an edge from American consumers by claiming they don't need a handout and are a solid carmaker to purchase a car from.

kernick

yesterday one of the rating services - believe it was Moody's - lowered Fiat to junk-bond status. This is more support that Fiat is in no shape to support anyone else.

I look at the auto manufacturers and markets similar to a herd of antelope and a grassy feed. The herd is too big and the grass is drying up - some need to die, so the others can thrive. The quicker some die, the better off the others will be.

If the government intervenes and saves Chrysler and then GM, this weakens Ford. Ford (and others) needs more customers to get enough volume to make profits.

iluvmysephia1

it is socialistic idealism that is guiding the current Administration's thinking on this monster of a problem. Trying to save jobs, and going to their aid, like so many countries worldwide normally do.

lemko

What would happen if the government simply did nothing and let all these big banks and manufacturers go under? Realisticly - no Armageddon scenarios or Pollyanna prospects.

dtownfb

What's really bad about this whole situation is Chrysler's parent company, Cerberus, has been very quiet throughout this entire process. They are a hedge fund company that regularly raises money for investments which is why they bought Chrysler. It seems to me if merging with Fiat is a great idea, Cerberus should be able to find investors to support this plan instead of relying on the government. Instead all i read is how they are distancing their assets from Chrysler.

dtownfb

If banks went under.....You would see a ton of small businesses close up since they would not be able to access credit. Unemployment would be approaching 15% by now. Foreclosures would be higher then they are now (additional unemployment) Pensions and retirement plans would be lost instead of reduced. Forget about buying anything with a loan, like a car. FDIC would be bankrupt. Everyone would go to the banks to withdraw money they had, which would cause smaller banks to collapse.

If manufactures go under - the unemployment numbers for the past 3 months would be considered good months.

There were very good reasons for the panicked $700B bailout by Paulson and Bush (at least how it was explained to me by a person with absolutely no political affiliation). They should have put more strings attached and thought it out longer. But it was an emergency bill and hindsight is 20/20. At least with the banks there is a good chance we will get the money back. I don't see GM or Chrysler able to pay back these loans.

stever

"It's easy to think that Chrysler LLC is no longer too big to fail.

The embattled automaker has already cut its U.S. workforce by more than 60% since the start of the decade, leaving it with just under 39,000 employees in America.

To put that into context, that's only five thousand more people than electronics retailer Circuit City had when it went out of business this year -- and few thought the demise of Circuit City would cripple the economy."

Why Chrysler matters (CNN Money)

iluvmysephia1

of course we have discussed that on here before, letting the Big 3 fail. But the current leaders fear that too many related jobs will also be lost. Trickle down economics, or, not. Looking at it practically, letting them fail seems much simpler. Even without bankruptcy and reorganizining them for a stronger, leaner, meaner Company.

Go to another industry and just leave the carbuilding to the Japanese, Germans and Koreans. See how nasty that can sound?

Nationalism can have some strong tentacles to it.

nippononly

I just don't buy it. 2-3 million people eventually unemployed as a result of Chrysler liquidating? MILLION with an M?? Nah.

dtownfb

The realistic issue is the failure of many suppliers. many of them are living on credit and the "promise" of being paid by GM and Chrysler. We would lose jobs. Of course, no one can predict how many we would lose because I honestly believe there are investors sitting on the sideline waiting for Chrysler and GM to declare bankruptcy to buy up some of their assets (divisions) at a reasonable cost.

stever

Chrysler filed Chapter 11 yesterday after much anticipation. Now they are working on getting motions before the bankruptcy court for a "fast, surgical reorganization."

They were fast in working things out with the UAW and the Fiat tie-in, but 30 to 60 days to get a bankruptcy plan approved would be really fast.

Chrysler Bankruptcy: It's Official as Case No. 09-50002 (AutoObserver)

Chrysler Plants Shut Down Until Bankruptcy Over; CEO Nardelli Out (AutoObserver)

Can they do it? And will it last?

dtownfb

Can they do it? And will it last?

Not sure. the debt holders look like they are digging in (at least a few are). Fiat can walk away from this deal anytime.

nippononly

Fiat can walk away from this deal anytime.

That's the biggest problem, IMO.

I love how this is a debtor-in-possession, with the U.S. government the one being in possession (using our taxpayer money), only to turn around once the BK is resolved and hand the whole thing to investors and Fiat, without a penny of return on our money.

They should have liquidated this turkey.