Detroit 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.