Motor Viper
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Chrysler Post Bail Out: What's Next?
In all likelihood, the Bush Administration will approve of stop gap funding to help Chrysler and General Motors through the next few months. Indeed, with ten billion dollars in loan money to be earmarked, both car companies should be able to make it through the end of February 2009 without needing additional federal funding. By then, the Obama Administration will be in charge and a new Congress seated.
Depending on the terms of the agreement, Chrysler will quickly be faced with determining what sort of direction the company will go in. If a “car czar” is appointed, that person may have broad power including deciding whether a company should be forced into bankruptcy or not. General Motors looks to be in better shape to delay that event from happening, but Chrysler likely will have to make some drastic decisions over the next few months in a bid to ensure its survival.
Some of the changes Chrysler will be making could be government mandated, such as having to lay off office staff, closed down excess production, perhaps even looking for a buyer for the company. Regardless, I see the following scenarios unfolding for Chrysler in 2009:
Models Canceled – Within a few months of their release, Chrysler quickly canceled hybrid versions of its Chrysler Aspen and Dodge Durango sport/utility vehicles. Chrysler said that production would shift to the automaker's large pickup truck, the Dodge Ram, but that isn't likely to occur anytime soon as gas prices remain below two dollars a gallon nationwide. Also, don't expect Chrysler to have the funds to bring a single one of its trio of electric vehicles to market. Some people think that they are vaporware to begin with – I'm inclined to agree.
Projects Dropped – Chrysler had arranged to have Chery Automotive of China build for it a small car, but that project has since been dropped due to Chrysler's financial difficulties. Look for Volkswagen and Chrysler to revisit the Routan project with VW pulling out if Chrysler's future looks especially bleak.
Viper Sold – Chrysler has been shopping the Dodge Viper for several months now with no buyer announced. Expect that an European automaker will purchase the “brand” for a song and move operations overseas.
Jeep Marketed – As a last ditch effort, look for Chrysler to offer Jeep for sale to the highest bidder. Parent Cerberus Capital Management, LP is an equity brokerage company, a business whose sole design is to purchase hard assets (companies), build them up and sell them off. Jeep is the only one of Chrysler's three remaining brands with a marketable book value – look for someone to buy the brand in a bid to gain access to the US market.
Assets Sold – Should things get really bad, look for Chrysler to sell off its remaining assets under the jurisdiction of the bankruptcy courts. Few Chrysler plants are worth that much money and no company wants to inherit the automaker's legacy costs. However, selling off select assets such as their minivan program (Ford or GM would want them), the Dodge Ram (Nissan could be interested), even finding a home for the iconic Dodge Challenger may be possible. As mentioned, Jeep would find a home under the umbrella of some other company.
Chrysler's chances of surviving on their own are between slim and none, but much closer to the latter than the former. If GM is able to come up with a healthy plan going forward, they'll once again make a pitch for Chrysler in exchange for selling GMAC (or a portion thereof) to Cerberus.
If all of this sounds complicated, it is. The US auto industry is in a mess and it'll take some extraordinary action from involved people to fix things over a lengthy period of time.
About the Author
Matthew C. Keegan is a freelance writer who resides in Cary, North Carolina. Matt provides magazine, web content, and article writing services to clients all over the world serving the automotive, human interest, and business communities. Matt's Musings is his personal weblog.
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