The Inquiring Manatee

Chrysler's Bankrupt: What Next?

    

As President Obama properly chastises the greedy hedge-funders who forced Chrysler into Chapter 11 by refusing to reduce the company's debt, car buyers and the automotive world wonder what sort of future the automaker will have in partnership with Italy's Fiat.
     I don't see the late Walter P. Chrysler's creation having much future at all unless it starts building cars that people want to buy. The Dodge Viper is a neat-looking car, but with a limited market. The giant Dodge Durango is an abomination. The Chrysler product lineup is nothing but a few nondescript Jeeps, mommish minivans and gas-guzzling pickup trucks.
     The jury is out on whether small, imported Fiats rebadged as Dodges (there are no more Plymouths) will sell. Chrysler imported little Mitsubishis and called them Dodge Colts, but they weren't much help. Fiat makes some good-looking cars, but I can't believe the hype about this great technology they're supposed to have. Americans remain skeptical about Fiats, which, like the infamous Renault Dauphine and the Peugeot 404, were driven out of this country by public scorn.
     What Los Angeles Times auto writer Dan Neil was saying on NPR-affiliated KPCC-FM in Los Angeles this morning was that no automaker knows what to build because gasoline prices are too volatile. Presumably that means Americans are itching to get back to giant SUVs and will start doing so as soon as they think they can get away with it.
     The answer for Chrysler and other automakers is to increase fuel economy for all types of cars, including SUVs. With decent mileage, Chrysler could build anything; it could even bring back the DeSoto. Getting there means more hybrids or all-electrics, and soon. Carmakers are moving too slowly to get more out of conventional gasoline engines. Look at the ridiculous 23 mpg in the city that the otherwise attractive Mini Cooper S gets; that car should be getting at least 35 mpg. If Fiat can bring in some reasonably sized cars with great gas mileage, Chrysler will be better off. But I haven't heard that they have a lot of these models above Topolino size.
     One reason for Chrysler's bankruptcy is that it was way behind the curve on hybrids; it stuck with Jeeps and pickups way too long. Now, with its heavy debts lifted in bankruptcy, another $8 billion in federal bailout money and alleged technological help from Fiat, Chrysler has a chance to finally get it right for the first time since its peak year of 1957. (Remember those wonderful tailfins?)

What's Good for the Country is Good for General Motors

      

Awwww. The poor little stock market doesn't like the Obama administration dumping Rick Wagoner at GM. It's afraid the big, bad government is being too tough on auto executives.
  But it was a good move. Wagoner had to go if the increasingly reluctant taxpayers are to be convinced to put more bailout money into GM. Wagoner, never much of a convinced reformer, symbolized the foot-dragging U.S. auto industry. Besides, his name sounded too much like Chrysler's big, clunky old Jeep Wagoneer, even though he wasn't really a "car guy" at all; he was a finance guy.
   Unfortunately, so is Wagoner's successor as CEO, president and chief operating officer Fritz Henderson. How much faith can we have in this clone? At least he has a first name that gives him some Daimler Benz cachet. The Germans, who were smart enough to run away from downscale Chrysler, know what they're doing when it comes to running car companies. Which is more than I can say for the Italians. I'm not optimistic about Fiat being the answer for Chrysler.
    Fix it again, Timmy.
    Bankruptcy may be Geithner's best fix. Bankruptcy for GM and Chrysler looks not only inevitable but desirable. The court can get them out from under the absurdly high expenses for retiree health care that the UAW negotiated over decades, badly handicapping the carmakers against the pared-down competition from countries whose governments subsidize health care for all. The retired GM and Chrysler workers can jolly well go on Medicare like the rest of us.
    The bankruptcy court also would preside over a fundamental restructuring that would cut the number of makes and models for GM. The battered company has been saying it wants to concentrate on Chevy, Buick and Cadillac, cutting off Pontiac and Saturn. Bad choices that the court shouldn't approve. Make 'em dump Buick, the car for fat diabetics (no matter what sellout Tiger Woods says) and keep Pontiac and Saturn, putting new money into these promising marques.
    Here's another restructuring suggestion: Make GM change its name to something less generic, something friendlier. General Motors is not a loveable name that inspires loyalty; it's as, well, corporate as United States Steel or the New York Yankees. How about Googlemobile? Botswana? Laurene?
    But, hey, how about that Ford? The conventional wisdom is that Ford, not asking for taxpayer help, is not in trouble. That's false. Ford is benefiting only from a $23 billion line of credit it took out a year ago, before industry prospects withered. Unless sales pick up soon, Ford will be bellying up to the public trough like its Big 3 counterparts.
    After all, where is the intelligence behind asking an $8,000 price premium for the admittedly excellent new Ford Fusion hybrid? Who is going to pay that much for 41 city mpg? How much smarter, then, is Ford than GM or Chrysler? Look how they screwed up the latest Thunderbird.