Hobbled Chrysler plans to stiff taxpayers for $3.7 billion
Life seems to only be getting rougher for Chrysler.
The smallest of Detroit's Big 3 is going to cost taxpayers $3.7 billion because its pre-bankruptcy government loans aren't going to be paid back. Chrysler is stuck with a tired product line that won't get any fresher at least until next May when the 2011 Jeep Grand Cherokee, shown above when it was unveiled last April, starts production. Chrysler's new Italian leader says it may take Chrysler two years to win back customers, an eternity in the capital-intensive car business.
Chrysler is on track to post the worst sales performance of the 10 largest automakers this year. Sales tumbled 38% during the first 11 months of the year. In November, sales were still down 25% even as Ford and General Motors had largely swung back to even compared to the same month a year ago, Autodata figures show. Not bleak enough? Consider this:
Underscoring its lack of product, Chrysler, Dodge and Jeep have no press conferences scheduled for the all-important Detroit auto show where new models are typically unveiled amid lots of hoopla. There used to be one press conference for each brand before its bankruptcy reorganization earlier this year. It may put a new Italian Lancia on the floor, but that's it. The company rolled out its product plans to the press in early November, so the new management figures that will suffice.
Dealers are stuck selling the same tired models that have gone without updates for years now. A refreshed Dodge Charger is coming, but not a lot else. Even Fiat CEO Sergio Marchionne, with a controlling stake in Chrysler, sounds pessimistic about about a turnaround.
"There is reluctance on the part of the consumer base to come back to the brands," Marchionne said in a news conference last week, as quoted by Reuters. "The problem with this is that there is no immediate solution to rebuilding brand equity. My experience says that it cannot be done in less than 24 months," he said.
While General Motors has started to repay its loans from the federal government, the corporate shell that picked up all of Chrysler's pre-bankruptcy debt, now known as Old Carco L.L.C., said in a filing that it plans to stiff the government on $3.7-billion in loans -- even though other creditors will be paid in full, the Associated Press reported last week. Marchionne has said Chrysler plans to repay for the government for its post-bankruptcy loans.
Chrysler is hard to recognize nowadays from the heyday it enjoyed earlier in this decade. Remember Hemis? It was just two years ago that Chrysler staged its cattle drive through the streets of Detroit to introduce the Ram pickup. (Never mind that the steers started getting amorous with each other). Chrysler was famous for its auto-show antics, whether it was driving an SUV up the steps and into the convention center through a glass wall, blizzarding the press with an avalance of confetti to introduce the now-gone Chrysler Aspen or handing out bongo drums to beat a rhythm to some new introduction.
All that razzmatazz is gone. Now Chrysler, Dodge and Jeep are the walking wounded of the auto industry.