[ARCHIVED THREAD] - Stick a fork in Chrysler... (Page 1 of 2)
Posted: 10/2/2009 4:06:23 PM EDT
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Chrysler may not make another year
http://blogs.moneycentral.msn.com/topstocks/archive/2009/10/02/chrysler-may-not-make-it-another-year.aspx Posted Oct 02 2009, 09:31 AM by Douglas McIntyre 24/7 Wall St. Rumors, credible rumors, are beginning to circulate in the car industry and the automotive press, that Chrysler may not make it another year primarily due to its falling sales and growing financial losses at partner Fiat. Chrysler sold a 62,197 cars in September, down 42% from the same month last year. The figure was down from 93,222 in August when traffic to dealers was pushed up by the ”cash for clunkers” program. Chrysler’s problems may only be beginning and, if so, Fiat, the ”managing partner” among Chrysler’s owners may not be able to keep the American company intact. Chrysler has operated at a disadvantage to the Japanese for some time. That has been true of all three U.S. car companies. Now that each has restructured, each has more leverage against a lower costs base. That should allow General Motors, Ford (F), and Chrysler to make an operating profit even with domestic light vehicles sales running at a rate of only 10 million a year. But, Chrysler still has disadvatages which start with the age of its fleet and extend to the problem that it no longer has enough market share to cover even a lower cost base. GM has the capital and the daring to offer its cars for a 60-day test drive. There is some financial risk to the action, but GM has enough new models coming to market that the odds of people turning in cars is relatively small. GM had a hard September with sales down 45% to 156,673, but the new promotion ought to improve its share in October and November. Ford has demonstrated the ongoing strength of its new model line. In September, Ford’s sales only dropped 5% to 114,655. That means that Ford is picking up market share rapidly and some of that is probably coming at Chrysler’s expense. The Congressional Oversight Panel has already said taxpayers will not see most of the $81 billion that they put into the American car industry. The $14.3 billion put into Chrysler is more and more likely to be lost completely. The biggest single loser if Chrysler cannot survive is the UAW which owns 55% of the company. The daily management of Chrysler is controlled by Fiat which owns 20% of the U.S. company with options which could take that amount to 35%. Fiat has not put any money into Chrysler, so if the American firm becomes a significant operational or management burden there are very few reason for the Italian company, which has sales troubles of its own in Europe, to stay long term. Fiat lost $254 million in the second quarter, so its board may eventually believe that Chrysler is a distraction and one without a future. Chrysler is not just up against the traditional competition of its two domestic rivals and Toyota (TM), Honda (HMC), and Nissan. South Korean upstart Hyundai is posting sales improvements even as the car market remains weak and in September it posted a sales increase of 27% to 31,511, about half of Chrysler’s sales for the month. Hyundai’s strength is in small fuel-efficient cars, the market where Chrysler needs to find success with its products and those from Fiat. At this point, the Chrysler product line is still dominated by mid-sized sedans, SUVs from Jeep, minivans, and pick-ups like the Dodge Ram. The company has no real product in the alterative energy/hybrid segment. Chrysler’s domestic market share in September 2008 was 11.1%, according to Edmunds. Based on sales figures released by the industry today, that share is now closer to 7.5% Even Chrysler’s traditional rivals are doing well despite a harsh market. Nissan sold 55,393 light vehicles last month, down only 7% from a year ago. Toyota sold 126,015, down12.7% and now has sales which are about double Chrysler’s. Honda’s sales for the month were 77,229 cars and light trucks. The number was down 20%, but it means Honda was still very likely to have picked up share in the American market. Chrysler sales are now running at the rate of 750,000 a year. It probably does not have the capital to wait through another year of low US car sales with a market share that is almost certainly to stay below 8%. It does not have models tailored to the current market tastes. Chrysler is going out of business. The company just hasn’t made it official. Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St. |
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At least Fiat will probably get Jeep out of the deal. Maybe they'll start selling Wranglers with nice European turbo-diesel motors. The party you support has made it practically impossible for anyone to manufacture a diesel engine that can meet emissions regulations for a small car and make a profit selling them, which is why we do not see them in the states. Hell most companies that make big diesel engines are afraid that when tier 4 hits in 2011 they wont even be able to make a diesel engine that meets regulations for anything (on highway trucks, tractors, backhoes, motor graders, generators, etc...) |
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Who's to say that the government won't bail them out again? Well, with the UAW owning 55% of Chrysler I guess it's possible for the Democrats to come to the rescue of their big money donors again This....... Maybe I can get a REALLY sweet deal on a Challenger. 
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Chrysler sold a 62,197 cars in September, down 42% from the same month last year. The figure was down from 93,222 in August when traffic to dealers was pushed up by the ”cash for clunkers” program.
GM had a hard September with sales down 45% to 156,673, but the new promotion ought to improve its share in October and November. Ford has demonstrated the ongoing strength of its new model line. In September, Ford’s sales only dropped 5% to 114,655. That means that Ford is picking up market share rapidly and some of that is probably coming at Chrysler’s expense. Sounds like the Bail Out is working just like I expected - the ill feelings among the average American will dry up their sales faster than the .gov can keep it propped up. Be interesting to see if they get another round of $$$. The way things are going now for Obama, I wonder if the Dems can do it. |
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Quoted:
Chrysler sold a 62,197 cars in September, down 42% from the same month last year. The figure was down from 93,222 in August when traffic to dealers was pushed up by the ”cash for clunkers” program.
GM had a hard September with sales down 45% to 156,673, but the new promotion ought to improve its share in October and November. Ford has demonstrated the ongoing strength of its new model line. In September, Ford’s sales only dropped 5% to 114,655. That means that Ford is picking up market share rapidly and some of that is probably coming at Chrysler’s expense. Sounds like the Bail Out is working just like I expected - the ill feelings among the average American will dry up their sales faster than the .gov can keep it propped up. Be interesting to see if they get another round of $$$. The way things are going now for Obama, I wonder if the Dems can do it. Depends on how bad they get pasted in the elections. I am guessing they will dole out severance payola for the UAW stooges. |
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At least Fiat will probably get Jeep out of the deal. Maybe they'll start selling Wranglers with nice European turbo-diesel motors. Now that would be nice, turbo-diesel Wranglers and Grand Cherokees While diesel would be excellent, Italian car makers are not known for managing serious off road product lines, so forgive me for being skeptical. |
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So do I get my tax dollars back? You aren't going to get any of that money that went out as part of TARP back as a tax payer. That money is primarily going to a perpetual bailout slush fund, and anything else will be spent as it comes in, because hey you have a 'new' revenue source. 
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