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Low sales cripple Chrysler further

New cars sit in a Chrysler lot in Peabody, Mass., on Dec. 4, 2008. Chrysler’s 53 percent drop in December sales was far worse than Ford Motor Co. or General Motors Corp., and analysts doing the math say Chrysler probably won’t survive the year as an independent company, despite $4 billion in government loans and the possibility of more federal aid.

New cars sit in a Chrysler lot in Peabody, Mass., on Dec. 4, 2008. Chrysler’s 53 percent drop in December sales was far worse than Ford Motor Co. or General Motors Corp., and analysts doing the math say Chrysler probably won’t survive the year as an independent company, despite $4 billion in government loans and the possibility of more federal aid.

January 8, 2009

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— Even by the standards of battered automakers, Chrysler is in dire shape.

Its sales in December were down a stunning 53 percent, far worse than Ford or General Motors, and analysts say it probably won’t survive the year as an independent company — despite $4 billion in government loans and the possibility of more.

Things were so bad last year that a single Toyota model, the Camry/Solara midsize car, outsold the entire fleet of Chrysler LLC’s passenger cars.

‘No real possibility’

“There is no real possibility of turning this thing around as an independent company in my opinion,” said Aaron Bragman, an auto analyst with the consulting company IHS Global Insight in Troy, Mich.

U.S. sales of Chrysler, Dodge and Jeep brand vehicles fell 30 percent last year, the worst decline of any major automaker. It lost more market share than any of its peers, down to 11 percent. Analysts say most of Chrysler’s products don’t look, feel or drive as well as the competition’s.

Chrysler plans to introduce an electric car in 2010, but until then, there are few promising models to boost sales. Many analysts predict that by 2010, Chrysler will be acquired by another automaker or sold in pieces by its majority owner, New York private equity firm Cerberus Capital Management.

Chrysler’s chief financial officer has said the company needs $7 billion every 45 days to pay parts suppliers, and analysts question whether the company’s sales are generating enough cash for those payments. Analysts also say an acquisition by General Motors Corp. is still possible.

Nissan Motor Co. could be interested in buying Chrysler’s truck business. Chrysler is already signed up to make pickup trucks for the Japanese company.

Jonathan Macey, a Yale University law professor critical of U.S. automakers’ management, said Chrysler’s sales numbers are “further evidence of an unviable entity.”

When automakers went to Washington late last year, their aim was to get enough money to become viable again. They got only enough help to last through March, when Barack Obama might provide more aid.

Questions over aid

A Treasury Department spokeswoman noted that the agreement for the government’s automaker loans required that the administration designate someone to keep analyzing the companies’ finances and viability.

Macey, author of a book on corporate governance, said it’s too late for Chrysler and GM to solve their problems, including high labor costs and union work rules that hinder competitiveness.

To get the loans, GM and Chrysler had to agree to negotiate concessions from creditors and the United Auto Workers union, but the specifics have yet to be worked out. The government can call in the loans March 31.

Chrysler CEO Robert Nardelli, in a presentation to the Senate Banking Committee last month, said the company could stay alive in the long term with reasonable concessions, a $7 billion bridge loan and $6 billion more out of the $25 billion Congress allocated to develop new fuel-efficient technology.

The Bush administration provided a $4 billion loan. Now, Chrysler is counting on an additional $3 billion in aid for its financing arm, Chrysler Financial.

Comments

igby 5 years, 11 months ago

These Chrysler people are desperado's for sure.Never finance a car or truck through Chrysler Credit or they will call you 5 times each day until you make the payment. My payments due on one day and their calling me that same day, five times per day, even on Sunday or holidays wanting their payment. I use Western Union phone pay and they get their money that same day.Only 12 more months and I'm rid of them forever!I'll never buy a Chrysler product again because of their telephone calls that are so stupid.

Godot 5 years, 11 months ago

Igby, you probably won't have the opportunity to buy another Chrysler product again, unless it is used. These guys are toast, and deservedly so.

Chris Ogle 5 years, 11 months ago

Reality of the slogan " If you can find a better car... buy it." And so we did. Now we get to help "buy the car" without even getting the piece of s***.

Chris Ogle 5 years, 11 months ago

Marion, I am proud to be American, partly because I can purchase the best product. It is really not my duty (as an American) to buy a Chrysler just because they are going broke.

Janet Lowther 5 years, 11 months ago

Sad. I have to admit, Chrysler hasn't made a car I would consider buying in decades, but their larger pickups (3/4 & full ton) are very nice (especially with the Cummins engine) and noticeably heavier duty than their competitors from GM and Ford.Toyota, Nissan &c. don't even bother with trucks in those size classes.For some reason, trucks with a GVWR between about 7,000 and 10,000 pounds seem to be pretty much exclusive to the "Big Three."

Flap Doodle 5 years, 11 months ago

I still bitter at Chrysler for having made my 1977 Dodge Aspen. I'm still bitter at myself for having bought it.

Chris Ogle 5 years, 11 months ago

Marion, Here is my all-encompassing knowledge of autos: I buy the best car based on the most reliable, and affordable car that I can find. Period. In fact, I currently own a Chevy Malibu, not because it has an American name, but because it is a lot a car for the money. The good news, as Americans we have the freedom to disagree.

Kyle Reed 5 years, 11 months ago

The title should read "Years of quality issues and low consumer confidence cripple Chrysler further".

average 5 years, 11 months ago

My current (purchased used) Toyota was built in a UAW plant in California.My previous Dodge was built in a non-UAW plant in Mexico.And, for similar sized cars, the Toyota gets much better gas mileage. I guess I'd rather a thousand of my bucks goes to Japan than a thousand of my dollars go to Chavez, Putin, or the Saudis in increased foreign oil consumption.

gccs14r 5 years, 11 months ago

Funny how Marion has such fondness for German autos, but can't stand Japanese ones. Chrysler hasn't built anything decent since about 1971.

Godot 5 years, 11 months ago

It doesn't matter whether they make good cars, or not; the hedge fund that bought Chrysler took the goody out of the company and ran it into the ground. Call me crazy, but I do not have one iota of pity or sympathy for Cerberus Capital Management.

Godot 5 years, 11 months ago

However, having heard The Big O proclaim that he is now running the world, I have to check the Democrat party and Obama campaign donor list to see if Cerberus Capital made a handsome contribution; if so, no doubt, Chrysler will be "saved."

feeble 5 years, 11 months ago

Some more numbers:http://www.autoobserver.com/2009/01/2008-us-auto-sales-are-worst-since-1992.htmlFor the year, only two Chrysler models posted positive results: the Jeep Patriot compact crossover (38 percent gain) and the Viper supercar (169 percent gain). With enthusiasts anticipating Viper's discontinuance, it was the only Chrysler model to gain in December, as well, discounting the paltry number of Journey midsize crossovers Chrysler sold late in 2008 to provide an outsized 3,822 percent gain compared to this December.Chrysler's total of just more than 1.4 million units sold for the year is the lowest total in the Edmunds.com data archives, which date to 1991. The total places Chrysler well behind its domestic rivals General Motors Corp. (2,980,688 units sold) and Ford (1,988,376), not to mention Toyota Motor Corp. (2,217,662), while topping Honda Motor Co. Ltd. (1,428,765) -- which has long nipped at Chrysler's heels -- by a mere 25,000 sales.The ability to offer consumers viable financing options "continues to be our biggest issue," said Press in a conference call with journalists and analysts.By division for 2008, Chrysler was down 38 percent, Jeep off 30 percent and Dodge was down by 26 percent.

gccs14r 5 years, 11 months ago

Marion conveniently ignored my reminder that he loves German cars, despite being eternally angry with the Japanese for the same war. Maybe he's mad at the Japanese not for fighting the Americans, but for not being able to help the Germans win.

Sigmund 5 years, 11 months ago

Godot (Anonymous) says… "It doesn't matter whether they make good cars, or not; the hedge fund that bought Chrysler took the goody out of the company and ran it into the ground. Call me crazy, but I do not have one iota of pity or sympathy for Cerberus Capital Management."Chrysler is my least favorite of the Big Three Detroit automakers, perhaps because they are privately owned by a bunch of MBA's in suits that might as well be building washer/dryers or widgets. I hope GM stays the hello away from them. Looks like that bailout money from TARP would have been better used to flush down the toilet. Stop bailing out the failures, it is costly and doesn't work.

Sigmund 5 years, 11 months ago

flamingdragon (Anonymous) says… "I dont know if anybody really cares, but people should know this about the auto industry:"BTW, I care and great post.

statesman 5 years, 11 months ago

Ah Marion! Just face it! The United States of America is no longer the industrial superpower it was and most likely will never be again. The American CEO's, coddeled and protected by the fat-cat Republicans, have raped and pillaged this nation's workforce to where there is NOTHING of value built in this country anymore. I'm the proud owner of two Japanese cars and I'll never buy American again. Same with about everything in my house.....all imported, as American engineering and design is inferior to that of Asia and Europe. This country had a great 200 year run, but its over with. Get used to it.

purplesage 5 years, 11 months ago

Worst money pit I ever owned was a Plymouth Grand Voyager (89 model). Took 4 transmissions, 2 Mitsubishi engines, 3 ac compressors, 2 radiators, half a dozen CV shafts, ball joints, steering rack, alternator (also Japanese) tie rod ends, several sets of power window track, etc. etc. to get to 213K when I sold it, for $300. I've had some others and, though there's been significant improvement, it is the same od thing - 250K mile engine in a 100K mile body. I didn't realize how crummy they were until I went back to my preferred brand recently - a Ford.

cheapskate 5 years, 11 months ago

Well hope your luck is better than mine with a Ford minivan. I would not even ride in one after all the problems I had with my 2007 Ford that after 17 tows to the shop Ford bought back because they could not fix it. Sure like my 2008 Town and Country, Not a problem one.

justaverage 5 years, 11 months ago

The entire U.S. economy is being/has been ruined by greedy incompetent managers who are supported by greedy, dishonest, power hungry Democrats and Republicans in all levels of government. That pretty much covers it. I'm outta here for a beer and more ammo!!!

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