Punditry: The top five Fiats that Chrysler needs now

Fiat's recent offer to link up with Chrysler could be silver lining within the Carpocalypse's clouds of doom.

Under the proposed deal, Chrysler gets its cash-starved mitts on Fiat's la bella machinas. And Fiat grabs a minority stake in Chrysler and dibs on Chrysler's distributors and dealerships.

We would get a heaping helping of la dolce automobili, but which cars would head stateside? Presuming all goes well, here's my list of the five Fiats that would save Chrysler's bacon.

Just how safe is your pickup truck?

Bigger is better, when it comes to crashes. A basic tenet of physics that for years has sold big, burly pickups as the "safer" alternative to mid-size sedans. But, as the Insurance Institute for Highway Safety discovered, many of today's full-size pickups flunk the side impact crash test, a feat those wimpy sedans manage with ease.

So just how safe is yours?

Report: GM-Chrysler merger likely to decimate Chrysler lineup, trigger more layoffs

The fallout from a merger between General Motors and Chrysler LLC will lead to the closure of many as half of Chrysler's factories and the elimination of nearly all Chrysler models, according to a report released by consulting firm Grant Thornton LLP.

The report comes a day after General Motors canceled a $2 billion program to replace its trio of aging full-size SUVs and Chrysler culled its two full-size hybrid SUVs after only three months of production.

Merger and more layoffs seem inevitable
Despite the gloomy forecast, a GM / Chrysler merger seems highly likely at this point. Reuters reports that GM and Chrysler have resolved the major issues in a merger agreement and that the final form of a deal will depend on financing and federal support.

The New York Times reports that the Department of Energy was working to release $5 billion in government-backed low-interest loans to GM so it could complete a deal with Cerberus Capital Management, the majority shareholder of Chrysler LLC. The $5 billion in loans would come directly from a $25 billion pool of funds approved last month by Congress in an effort help Detroit retool as a maker of more fuel-efficient cars.

And while a merger may save the two embattled automakers, it most certainly will not save all their employees.

Speaking with Automotive News, Kimberly Rodriguez, principal of Grant Thornton's automotive practice said that a deal also could result in a loss of 100,000 to 200,000 jobs at the two automakers, their suppliers and other industry shareholders.

According to the report, the majority of job cuts would come as most of Chrysler model lineup is phased out. Chrysler's sedans have failed to outsell their domestic competitors and both the Dodge and Jeep division are heavily invested in SUVs and light trucks.

Massive consolidation of models, factories
Currently, Chrysler operates 14 factories, with two of them scheduled to close at year's end. During the summer, Chrysler has offered its Viper model lineup for sale, along with the Detroit plant where they are made.

In the report, Grant Thornton says that four more factories could close in the aftermath of a merger with GM. Those on the hit list produce the Chrysler Sebring and the Dodge Avenger in Michigan, the Jeep Liberty and Dodge Nitro in Toledo, Ohio, the Dodge Ram in St.Louis, Mo. and Dodge's heavy-duty truck plant in Saltillo, Mexico.

As production of these models wound down, a second wave of layoffs would then hit the third-party suppliers that provide transmissions, windows, dashboard assemblies — all of the primary components unique to each Chrysler, Dodge and Jeep model.

All told, the lost work to these suppliers would put hundreds of companies at risk. Up to 50,000 additional non-Chrysler jobs could be lost if Chrysler were to close the plants Grant Thornton expects.

Timing is critical; contraction is inevitable
If a GM-Chrysler merger is completed, it may take years to phase out all of the models listed in the Grant Thornton report. Some platforms may be eliminated through attrition; left in production until they cease to turn a profit. Some plants could be closed as early as the holiday shutdown and others could take years to close, said Rodriguez.

It is, in your humble author's opinion, a "damned if you do, if you don't" scenario.

Neither GM or Chrysler can survive alone in this market. While Chrysler has more cash on its books, they are in the worst position to capitalize on high gas prices. Worse yet, they lack the resources to improve their CAFE rating without aid. And while GM has a more fuel-efficient lineup, they are burning through their cash on hand at an alarming rate.

If either fails, far more jobs could be lost than those through the merger of these two former titans.

For more punditry on this unholy mess:
NYT: Views on a GM-Chrysler merger

[AN]

As a merger draws near, GM and Chrysler cull the SUV herd

In cattle ranching parlance, culling the herd is a process of selective slaughter. It is a metered and carefully planned elimination of the weak and unfit, done to protect the rest of the herd either from disease or in hard times, from starvation.

General Motors and Chrysler both sharpened their fiscal axes today and took drastic steps to ensure their continued survival. Upon unanimous approval by the board of directors, GM announced it has cancelled Project CXX, a $2 billion program to replace the aging Cadillac Escalade, GMC Yukon and Chevrolet Suburban sport-utility vehicles.

“It would have been very difficult in today’s environment to spend a couple of billion dollars to do a replacement,” said Bob Lutz, GM’s vice chairman and head of product development in a statement.

All three full-size sport utes — which a decade ago were icons of a resurgent GM — are now living on borrowed time. With the recent truck plant closures in Ohio and Wisconsin, the current generation of sport-utes will only be built for as long as sales volume remains self-sustaining.

Sales of sport-utility vehicles have steadily waned since 2004. As the highly profitable market shrank, losses continued to mount at all of the Big Three. And after posting a $18.8 billion loss in the second quarter of 2008, GM is reported to be in the final stages of a merger with embattled Chrysler LLC. While 2008 hasn't been kind to any domestic automaker, GM will likely suffer the worst in the coming months; its passenger cars were often sold as loss-makers and the company staked it's continued success on its line of sport-utes.

Layoffs at GM plants are set to continue, with Janesville, the firm's oldest and most reliant on sport-ute production, set to close by Christmas. If the Chrysler merger goes through, further layoffs are expected.

Chrysler pulls plug on Aspen & Durango hybrids
Earlier this week, Chrysler announced it would close its Newark, Del. plant nearly a year ahead of schedule. As a result, the Dodge Durango and Chrysler Aspen Hybrid sport-utes will be culled before they complete their first full model year.

Production of the two full-size hybrid sport-utes began two months ago, just in time to be scorched in September, the worst month of U.S. auto sales in 15 years.

Speaking with Automotive News, Chrysler spokesman Todd Goyer said the company had no plans to move the Aspen and Durango hybrids elsewhere. "Keeping the plant open for the hybrid versions isn't a sound business decision," he said.

1,000 Chrysler employees will be laid off when the final shift is completed on Dec. 31, 2008.

The Detroit News reports there are no signs that Chrysler will commit to another body-on-frame full-size sport-ute. Ford has already committed to a unibody layout for the next Ford Explorer, following the lead established by Honda with their Pilot sport-ute and Ridgeline pickup truck.

Unibody layouts used stamped steel sections that are welded together to form the structure of an automobile. Commonly used to build passenger cars, unibody designs are typically 10 to 20 percent lighter — and hence, can be more fuel-efficient — than a similarly sized body-on-frame vehicle.

[ NYT, AN, DTN]

Friday, Bloody Friday: Chrysler to cut 25 percent of salaried workforce

Not to oversell the situation, but we may very well be witnessing the end times for Chrysler as an automaker.

One in four salaried workers at Chrysler will be out of a job by year's end, according to a statement released by Chrysler this morning.

The statement did not identify how many jobs the automaker will eliminate but spokesman Michael Palese said the cuts will total 25 percent of the company's salaried workforce.

According its own figures, Chrysler employs nearly 17,300 salaried workers. So today's cuts may total more than 4,300 jobs.
The first round of job cuts will come with voluntary retirement and employee buyout offers, according to the statement. Even still, layoffs are expected to come before the end of the year.

Discretionary spending and operating overhead will also be cut to the bone as Chrysler's owner, Cerberus Capital Management negotiates for a potential sale to General Motors. As reported earlier, Cerberus is also courting Renault for a potential sale of the Jeep division.

A hailstorm of pink slips
Today's news comes a month after Chrysler cut 1,000 salaried jobs and a day after the announcement that it would close its plant in Newark, Del., and cut a full shift from the Toledo, Ohio Jeep plant, trimming 1,825 more jobs in the process.

Since February 2007, Chrysler has eliminated 35,000 jobs. GM is also rumored to announce another round of salaried job cuts by the end of the year.

Speaking with Bloomberg, Dennis Virag, president of Michigan-based Automotive Consulting Group said Chrysler and General Motors have to do all they can to stem the outflow of cash from the organization.

Chrysler CEO Bob Nardelli released a statement attributing the latest job cuts to the fastest contraction ever in auto industry sales. "These are truly unimaginable times for our industry," said Nardelli in the statement. "We continue to be in the most difficult economic period most of us can remember."

Doubts emerge over Renault deal
Meanwhile, Reuters has reported that Renault is downplaying rumors of a potential partnership between Chrysler, Renault and its Japanese partner Nissan. Renault had recently expressed interest in purchasing Chrysler's Jeep division; the reaction by Renault may be a sign that the French automaker is no longer interested in the Jeep lineup.

Speaking with Reuters, UBS analyst Tatsuo Yoshida said Nissan and Renault have little incentive to spend the human and fiscal resources needed to aid the ailing American automaker.

[Chrysler, AN]

Dodge Challenger SRT10 Concept may hint at post-Viper halo car

While the 2010 Chevrolet Camaro has been crowned the official car for this year's SEMA show in Las Vegas, Nevada, a plethora of modified 2009 Dodge Challengers are headed to the gala as well.

Leading the pack is the Dodge's own Challenger SRT10 Concept.

A creation of Chrysler's in-house tuning division, the one-off concept based on the new 2009 Dodge Challenger SRT8 ditches the stock 6.2-liter 425 horsepower V-8 for the 8.4-liter V-10 normally found under the hood of the Viper SRT10 ACR club racer.

With the swap comes 600 horsepower and 560 pound-feet of torque. Consequently, the Challenger SRT10 needs little provocation to convert tire rubber into thunderhead clouds of smoke.

Accompanying the motor swap, the SRT10 Concept has received a thorough suspension and brake overhaul. Bilstein shocks and stiffer springs have been installed at all four corners. The stock 14.2 and 13.9-inch diameter rotors and 4-piston calipers have been replaced as well, likely using calipers and rotors taken from the Dodge Viper SRT10 ACR.

The rest of the tuning package is a retro-modder's visual feast, composed of Tornado Red paint and a healthy dose of carbon-fiber for the shaker hood, front splitter and trunklid. The red-orange paint is reminiscent of the classic Hemi Orange worn by the 1970 HEMI Cuda. The interior features a host of carbon fiber accents, as well as a set of custom sports seats.

All together, it's an impressive presentation. But the bigger question is whether Dodge intends to put a V-10 Challenger into production.

About a month ago, Dodge's parent company Chrysler LLC was angling to sell the Dodge Viper off to a third party. At the time, Autoblog.com posited that aftermarket tuners Saleen and Roush were among those interested in buying the Viper roadster and coupe.

While those talks seem to have cooled, the Viper remains an endangered species.

Currently, there are no production plans for the Viper beyond 2011. If the Viper is not replaced or given a stay of execution, the Challenger SRT10 concept may take over as Dodge's halo car -- and as Dodge's competitor to the 540 horsepower Shelby Mustang GT500KR.

[Chrysler]

Dodge, Ford to offer deep discounts on newest trucks

If you are waiting to replace your 1978 Ford pickup and you've got the cash or credit to close the deal, there are big bargains to be found in big trucks.

It's no secret that pickup trucks have been Detroit's financial bedrock for decades. Even through the 1973 OPEC embargo, the Big Three have relied on the steady cadence of truck sales to keep the coffers full. In an effort to reverse the paralyzing decline in sales last month, both Ford and Chrysler announced new discounts this fall on their newest trucks.

Chrysler LLC will offer a $2000 cash discount on the all-new 2009 Dodge Ram. The incentives seem to be working; the Ram's market share increased last month to nearly 16 percent from a low of 8.6 percent in May. Discounts vary by trim level and market; in Southern California, Dodge currently offers a $5000 incentive on the base model Ram 1500.

According to the Financial Times, Ford will offer a $2,500 incentive for every trade in for a 2009 F-150 pickup.

The new discounts come as a result of launching the two all-new trucks in a very difficult market. The downturn in home construction has pulled the rug out from underneath many contractors and builders, both of whom are core customers for large pickups. Discounts are usually a tool of last resort, used most often to clear dealer lots of outgoing models.

Since it's introduction in 1948, the Ford F-series pickup has become a sales legend. For 31 years, the F-series was Ford's best-selling vehicle; in 2007, sales of the F-series made up 27 percent of the automaker's annual sales volume. But as high oil prices sapped demand during the spring and worried lenders and faltering finances curtailed loans this summer, sales of the F-series have fallen sharply. Sales of the F-series were down 39 percent in September compared to a year ago.

Sales of the Dodge Ram were off by 28 percent for the same period, according to the Financial Times.

CSM Worldwide, a Michigan consultant firm, expects the US truck market to shrink next year and in 2010, bringing annual sales down to about 1.3 million units, about half of 2001’s peak.

Bond, Ollila step down from FoMoCo board
In other Ford news, the Financial Times reports that Sir John Bond and Jorma Ollila have stepped down from Ford Motor Company's board of directors. In a statement, Ford said that Bond, who had previously been head of HSBC, and Ollila, chairman of Nokia and Royal Dutch Shell, “believe they could not devote the additional time and international travel that would be required of them as the company responds to the unprecedented external environment and rapidly changing auto industry”.

Shares of Ford traded lower, down 4.12 percent to close at $2.33 per share.
Dodge is not publicly traded. Dodge is a subsidiary of Chrysler LLC, a privately held company controlled by equity management firm Cerberus Capital Management. The firm maintains a controlling stake in Chrysler's three brands: Chrysler, Jeep and Dodge.

Chrysler unveils 3 EV prototypes, will enter EV market by 2010

A few weeks after this blog set sail, I wrote at length about the difficulties Chrysler would face and the cause for concern that majority owner Cerberus Capital Management would simply dismantle the company and sell it off piecemeal.

While the storm clouds have yet to fully part, today's announcement is precisely the type of good news the market has waited months to hear.

After a brief preview on CNBC yesterday, Chrysler LLC unveiled a trio of electric vehicle prototypes this morning.

* The Dodge EV, an all-electric sports car developed with British automaker Lotus.
* The Chrysler EV, an extended-range electric vehicle based on the Chrysler Town & Country minivan.
* The Jeep EV, an extended-range electric vehicle based on the Jeep Wrangler Unlimited.


Chrysler said it would bring one of the three prototypes to market in 2010 -- precisely when Chevrolet will start selling the Volt plug-in electric sedan.

The Dodge EV sports coupe — based off the Lotus Europa — takes direct aim at the Tesla roadster, relying on a 26 killowatt-hour lithium-ion battery pack to power the car's electric drivetrain. Chrysler claims a driving range of 150 to 200 miles and a 0-60 time under 5 seconds.

The Chrysler EV and Jeep EV both use a drivetrain similar in concept to that of the Volt. Electric power drives the wheels at all speeds. When the on-board battery is depleted, a small gasoline engine drives a generator to simultaneously recharge the battery pack and power the vehicle's electric motor. An AC-to-DC converter is included to allow overnight charging via a 110 or 220-volt power outlet.

Chrysler chose the Town & Country minivan as the benchmark vehicle for developing a front-wheel-drive setup, while the Jeep Wrangler was used to explore use of an electric drivetrain in a body-on-frame SUV.

And lest the idea of an electric-powered trail-blazing SUV sound preposterous, think for a moment of the advantages. Instant torque at zero rpm from an engine that doesn't mind which way it's oriented. No noise for your spotter to shout instructions over.

And the fuel savings are substantial. Chrysler claims that with approximately eight gallons of gasoline, both EVs have a range of 400 miles, including 40 miles of zero fuel-consumption, zero-emissions, all-electric operation.

The end goal of Chrysler's EV program is to build a "plug-n-play" electric-gasoline drivetrain that can be offered across the entire Chrysler range.

To that end, Chrysler has launched a new web site to spread the word on the company's electric and extended range electric vehicle development programs. Seeing as how Chrysler is ostensibly betting the company's future on electric power, we'll be keeping a close eye on future developments.

[Sources: Chrysler LLC, CNBC, AN, AO, MT]

EDITORIAL: Will this be Chrysler's last dance?

Sales figures are in for the first half of the year and suffice to say, 2008 is shaping up to be the worst year for US auto sales in nearly two decades.

Judging by the headlines, Chrysler seems to be most at risk of running aground in the turbulent economic tide. Sales at the Pentastar brand are down 23 percent from a year ago, despite a blitz of sales incentives geared toward consumers spooked by soaring gas prices.

Chrysler's leasing arm has shut down and Chase — one of the nation's largest underwriters of auto loans — has followed suit, refusing to cover loans for Chrysler products. Analysts have responded with muted skepticism, noting that any benefit from fewer loan delinquencies will be offset by slower sales.

So the fundamental question remains. In a market that couldn't be more hostile, is Cerberus Capital Management willing to invest in Chrysler for the long haul? Or are they angling to sell the brand for scrap value?

In many ways, it's an impossible question to answer without having all the facts.
But as one reads between the lines, the outlook grows bleak.

Despite loudly trumpeting gross earnings of $1.1 billion in the first half of 2008, CCM did not disclose their net income for the same period, nor are they obligated to. Daimler AG, which owns the remaining 19.9 percent of Chrysler, provides some insight into the real health of the company.

In their own quarterly report released last month, Daimler noted that Chrysler lost about $500 million in the first quarter of 2008. JPMorgan auto analyst Himanshu Patel estimated that Chrysler will burn through nearly $4 billion by years end.

Adding to the gloomy forecast. Chrysler renewed only $24 billion of its $30 billion credit line for the next 12 months. With reduced access to credit, the company's ability to purchase from suppliers and provide loans to dealers will suffer.

In the absence of good news, silence speaks louder than words. With every day that passes without full disclosure of their assets and liabilities, Chrysler draws closer to the day where their credit will no longer be accepted.

When suppliers demand payment in full for wheels, dashboards, computers and belts, the end will be swift and merciless. With no parts to build cars, dealers will stop placing orders. Within weeks, the money dries up and it's all over.

In the second half of 2008, Chrysler will face an intense and exceptionally brutal fight for its life. Compared to their Japanese competitors (who are still having a rough time of it), the Chrysler, Jeep and Dodge brands are ill equipped to sell on fuel economy.

Their corporate average fuel economy of 28.6 miles-per-gallon is weighed down by an abundance of SUVs, luxury sedans and light trucks. By comparison, Honda's average fuel economy topped the list last year at 33.7 miles per gallon.

Honda's class leading economy is in part buoyed by the success of the 45 mile-per-gallon Civic Hybrid. Chrysler has no direct competitor, nor the funds to build one.

In short, Chrysler needs a miracle in a market never known for charity. Or, for that matter, patience.

[Sources: AP, Cars.com, Chicago Tribune]