Ken’s Take: Let’s see …. a union controlled company, run by Italian automakers, cranking out inherently unprofitable clown cars. Does that sound like a formula for success to you? Call me cynical, but I’m betting under on this one.
Great editorial in WSJ today titled “Return of Le Car”. Worth reading. Hear are a few of the highlights.
* * * * *
Last week Pres. Obama said that he hoped you would buy an “American car” — though apparently not one built in a red state in a plant owned by Japanese or German investors. He meant a car built by a company headquartered in Detroit, even if the car itself is assembled in Mexico or Canada. How confusing.
* * * * *
Chrysler would be in deep yogurt in any case amid the market collapse, but its other problem is a decent franchise in Jeeps, muscle cars, minivans and pickups — and nothing to meet Congress’s stiff new “corporate average” fuel economy rules, and nobody to supply the billions to develop such vehicles and (inevitably) bribe customers to drive them off the lots.
Daimler, its previous parent, certainly had no desire to fund such profitless extravagance. The Germans took a lot of guff but they’re the ones laughing now. They sold their majority stake in Chrysler just months after Democrats took over Congress, and just weeks after President Bush began blathering about “oil addiction” and echoing Democratic demands for stringent new fuel-mileage rules (after opposing them for years).
* * * * *
Not since Renault teamed up with AMC to bring you Le Car has an odder pairing been seen — or a less promising one.
Credulous media accounts insist the only challenge now is whether Chrysler can hang on for two years until Fiat begins churning out U.S. versions of its popular European models in U.S. factories. Goodness. Unless gasoline prices go to $5 a gallon,no one can be so foolish as to believe making and selling teensy eurocars in the U.S. is anybody’s route to salvation. Even in Europe… a move to bigger, more powerful cars is underway. Motorists are getting fatter and older — and unwilling to contort themselves to get in and out of a car … which ought to caution against any hope that the pixie car will sell particularly well in the U.S.
* * * * *
Trying to beat Toyota at its own game is a nonstarter. Toyota sets a standard of quality and technology that all must meet — that’s the price of admission. But “what we have that Toyota does not have ?”
Some [Obama auto] task force members acknowledge that the drive for profitability is likely to collide with Mr. Obama’s fuel-efficiency and low-emission goals.”
When will Team Obama explain exactly how Chrysler is supposed to make money building the “green cars” Mr. Obama wants it to build. You already know the answer: You, the taxpayer, have not finished chipping in to keep Fiat-Chrysler alive.
Full article:
http://online.wsj.com/article/SB124157578117190427.html
* * * * *
Want more from the Homa Files?
Click link => The Homa Files Blog
The Homa Files 
May 6, 2009 at 10:36 am |
No matter what anyone says, including our President, Chrylser’s long-term success is definitely not guaranteed. The President is referring to Chrysler as a “New Chrysler” that will be smaller and better equipped to compete in the marketplace. Haven’t we heard this tune before? We’ve had so many “New Chryslers” in the past — late 70’s, 90’s, Daimler merger, Cerberus acquisition, but it’s always been the same result. As we all know, the definition of insanity is doing the same thing over again and expecting a different result. Therefore, this is an insane plan. A top notch german OEM couldn’t turn the company around and a private equity group that brought in an all-star cast couldn’t turn it around either. Are we to expect that Fiat, a company that failed in the US market during the 80s and has no proven history of managing another OEM can succeed where those others failed? On top of that, are we to believe that the Treasury and UAW will do a better job than prior owners? Furthermore, are we to believe that an Italian company (which has NO financial investment in Chrysler) and the Treasury/UAW can co-exist? Obama called bankruptcy “a new lease on life.” First, it’s extremely irresponsible to describe bankruptcy in this light — it is not a good thing, and the President should not use descriptions that encourage people to view it in a good light. Second, he pointed out that Chrysler is one of the great American companies of our time that has put workers’ kids through college, employed thousands, etc. Am I missing something here? How is that different than any other American company that has failed? Also, Chrysler will no longer be an American company!!! Fiat (i.e. an Italian company) has complete management control and it will eventually have a controlling equity stake!! Why don’t we let the taxpayers vote whether they want to keep Chrysler alive? Unfortunately, no one wants to ask Obama the tough questions — instead they’re interested in what has “enchanted” him during this first 100 in office.