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Chrysler is soooooo doomed



January 05, 2009 – Comments (24)

The new Chrysler...HAHAHAHAHA

I really didn't start blogging regularly in CAPS until the end of March / early April.  On April 3rd, I wrote my first piece on the auto sector:  "Auto Industry Analyst: "current market for light vehicles in the U.S. is about as bad as I have seen it in the past decade" (link).  I was bearish in the industry then, but that's not the point of this post.  At the time, I singled out one manufacturer as the worst-of-breed...Chrysler.  Here's what I said about the company:

"The one automaker that is probably in the worst shape right now is Chrysler.  It is absolutely shoveling money at its vehicles in the U.S. right now through higher incentives and it doesn't have any plans for outstanding new products that I am aware of.  New products are the lifeblood of automakers.  Without them, it is difficult to succeed in this market.  Compounding the lack of new products in the pipeline is the fact that the quality of Chrysler's current products is significantly below that of its competitors, especially the Japanese."

I haven't seen any articles out there on this news item yet, but here's the latest evidence that Chrysler is doomed: Chrysler's December sales were down 52 to 53% year-over-year!  OUCH.

If a solid German company like Mercedes-Benz couldn't fix Chrysler, then private equity certainly isn't going to be able to fix it with a mish-mash team lead by the ousted head of Home Depot.  The government's donation to Chrysler was a complete waste.  I would be absolutely shocked if it survives this recession on its own.  I strongly suspect that Chrysler will either be forced to file for bankruptcy or into a merger...if anyone will take it.  Its days as a stand alone entity are numbered.


24 Comments – Post Your Own

#1) On January 05, 2009 at 3:56 PM, kali77 (98.81) wrote:

Couldn't agree more. With some of the rebates-cashback-etc...... You could get a new Jeep Grand Cherokee Limited for around $23,000-25,000 which is about a $42,000-45,000 vehicle. If you can't move them at that price(loss), they are not moving them period. See you later Chrysler.

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#2) On January 05, 2009 at 4:48 PM, matthew209 (< 20) wrote:

All auto companies are losing money at an alarming rate.  Get the facts straight. other than consumer reports which favors the Asian brands, rating companies put Ford and GM at equal if not better quality than the Japanese companies.  Chrysler management deliberatly took 5 products out of the line up starting in November 07, making the sales numbers year over year exagerated to the down side. Future products are being worked on at Chrysler and it would be foolish to think that the entire company is sitting around twiddling thumbs. The Solid German company that you mention lost money for several years before buying Chysler, using it's cash to revamp the Daimler line up.  Speak from knowledge not hearsay from other articles you have read. After all, your customers use you for what one would hope to be credible advice.  .

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#3) On January 05, 2009 at 4:55 PM, Imperial1964 (94.13) wrote:

>50% sales decline?  HS! 

I agree that they're about done.  I plan to go "car shopping" to do some research at Big 3 dealers.

I'm not buying cars right now, nor am I buying automotive stocks.  I'm just a car guy and I want to know.  Plus, I want to drive a Dodge Challenger and see what a $50k Caddy is like.

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#4) On January 05, 2009 at 5:19 PM, JakilaTheHun (99.92) wrote:

I totally agree --- Chrysler is by far the worst of the bunch.  I oppose bailing out GM and F, as well, but I'm offended that the government is even *considering* bailing out Chrysler. 

Chrysler has absolutely nothing of value.  They serve no real purpose any more.  They're owned by a private equity firm that bought them with full knowledge of their issues just last year.  And they've cut something like 80% of their workforce over the past few years anyway.  Why does the government even feel the need to include them in this bailout nonsense? Chrysler is the very definition of a failed company!

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#5) On January 05, 2009 at 5:30 PM, antonio311 (< 20) wrote:

Uneducated is the article writer. Daimler basically purchased Chrysler in 1998 when Chrysler was the most profitable car company on the planet(even more so then Toyota has been recently). Daimler killed Chrysler, by cheapening the brand, and making their quality fall steeply. Also they killed off all new products including the new Neon, that was in the 11th hour of development.

Also Chrysler is improving Quality, interiors, and fuel mileage. Chrysler's new products have 30 % less problems within the 1st 90days of ownership. this translates to less warranty issues over the vehicles lifetime. 

 Also Chrysler will have the 1st fully electric vehicles on the road by 2010. Faster then GM's volt. 

Also Chrysler is the largest employer of  monorities in the industry.  

Don't count Chrysler out just yet. I've had many of their vehicles with over 150 thousand trouble free miles. They are reliable.

Support Chrysler instead of bashing them.

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#6) On January 05, 2009 at 5:41 PM, IwannaBsedated (< 20) wrote:

Chrysler is a great car.  They have those awesome fins and huge grills and Corinthian leather.  What the heckk are yall thinking?  Now where did I put those meds?????

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#7) On January 05, 2009 at 5:58 PM, Milligram46 (< 20) wrote:

First of all, its Dalmer Benz as the parent company, Mercedes Benz is one of their product lines, not the name of the company.

Second, it is basically felt that Dalmer Benz ran Chrysler further into the ground, and broke promise after promise on what they would do with Chrysler, so please lets get our history straight.

Next, Mercdes Benz products have been near the bottom of the pile for quality, when Dalmer Benz made a critical decision that their cars were over-engineered, and they would start to cut corners.  That gave us the pervious generation C and E class vehicles where were the benchmark for utter crap from a quality stand point, and became a sea of cheap plastic.  Look, if you want to give a Dodge Caravan a cheap plastic interior, I kind of expect that, I don't expect that from an E-350.  You can educate yourself here:

So now that we've corrected some errors here with some, errr, facts, lets dive into the prognosis of Chrysler.

Here, you are correct, Chrysler is as a company doomed.  They have nothing for hybrid technology they've done on their own.  They were going to license the two-mode hybrid technology from GM, but killed the model (BMW is still moving forward with their license of the GM two-mode hybrid system - and America can't innovate - humpf).  The Dodge Caliber has all the charm of a plastic cooler, the Jeep brand is being diluted by crap like the Compass, and the Jeep faithful feel betrayed by vehicles like the Liberty.  The 300 is in desperate need of a reskin and update, and nothing is in the pipe.  Their development on powerplants have been Hemi, Hemi, and more Hemi.  If Chrysler engineers could have gotten a 5.7 Liter V8 Hemi under the hood of a Dodge Neon, they would have done it.  On the subject of the Neon, the ground breaking PT Cruiser, based on the ancient Neon chassis still limps along today, lacking any of the mojo it had.

The design decline at Chrysler happened when one man was poached by General Motors, Bob Lutz, who is an auto design and engineering genius.  It was Lutz who was producing the sexy products Chrysler was cranking out in the late 90's through 2001 and it was Lutz who ended abominations from General Motors like the Pontiac Aztek upon his arrival.  One can look at the Chevrolet HHR (oh it will never sell the critics said, and Chevrolet up to six months ago couldn't build them fast enough, and the SS model is a true performance vehicle, who'd a thunk) the cladding-less Avalanche, the Aura, the SKY, the Solstice, the C06 Corvette, and the Malibu along with the G8.

When you look at what Ford has in the pipeline and General Motors, and you look at Chrysler, Chrysler has doomed written all over it.  I risk causing sectarian violence by saying that Dodge Ram quality is still well below Ford, GM and Toyota, and they still have not addressed their transmission issues.

Ironically I am left wondering if the Pacifica was just ahead of its time (hey, the Ford Flex is a hit, I think it is ugly as sin personally) and maybe killing the Neon instead of updating it was a bad idea.

The only thing Chrysler can hope for is gasoline to stay below $2 a gallon, as there is a significant uptick in the sale of fullsize SUVs and trucks at Toyota, Ford, and General Motors.  Meanwhile Prius sales have dropped about 48% in November/December sales data.  Americans apprently have forgotten $4.11 a gallon gasoline on average.

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#8) On January 05, 2009 at 6:05 PM, kdakota630 (29.22) wrote:

I actually have a bit of a soft spot for Chrysler.  I didn't want them (or either of the other two) to get a bailout, but I hope they survive.

A New Yorker was my first non-Ford which was a great car, even if it was an "old guy" car and I was in my early 20s at the time.  From there I bought a gorgeous Dakota (surprised?) which I loved except that it got horrible mileage for a smaller truck.  I sold that for an Intrepid which was a good car and gave me no problems.  From that one I got a Dodge Ram which I also loved despite only owning it for a short time, moving to a Neon.  That was another good car although a little smaller than I'd like.  As I was starting a family I moved from that to a Caravan which is another great vehicle despite it getting hit so damn often, like whoever the f****r was who hit the back end at Christmas time.

The Caravan I've had nearly 5 years and the only major issue I've had (other than idiot-inducing dents) was a leaky oil pan that needed replacing recently which isn't bad in my opinion considering it's a 2000.

All that being said, I have to admit that I'm leaning towards a Toyota minivan next, mainly because you can get them with AWD that the Caravan doesn't offer.

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#9) On January 05, 2009 at 6:11 PM, motleyanimal (38.54) wrote:

Having Robert Nardelli and Cerebus run Chrysler is like hiring Joan Crawford and Michael Jackson to run a day care center.

No good will come from this.

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#10) On January 05, 2009 at 6:31 PM, kdakota630 (29.22) wrote:

LOL, motleyanimal!

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#11) On January 05, 2009 at 6:31 PM, eldemonio (97.82) wrote:

Uneducated is the article writer. - Who the hell let Yoda on the CAPS blog? 

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#12) On January 05, 2009 at 6:44 PM, falang1 (< 20) wrote:

Chrysler is done.  And this is coming from someone who's main customer is Chrysler.  Ram and maybe Caravan will be sold to Nissan (who is dumping the Titan and Quest).  Jeep will be either separate or sold off.  All the rest is gone. 

 These are predictions.  I don't wish this, but if you could short the stock, I would.

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#13) On January 05, 2009 at 6:45 PM, TMFDeej (97.81) wrote:

Hi Matthew.  Thanks for reading.  I am very familiar with the auto industry.  I never criticized the quality of General Motors' or Ford's vehicles.  I only specifically mentioned Chrysler.  Here is a chart from JD Power's 2008 Initial Quality Survey:

Note that Jeep ranked dead last of all brands in initial vehicle quality and the Chrysler and Dodge brands were well below average. 

Also, here's a quote from the 2008 Consumer Reports 2008 Annual Car Reliability Survey (link): 

"Chrysler trails the pack. Though the Dodge Caliber hatchback and Jeep Patriot SUV are above average, almost two-thirds of its products rate below average. The new Chrysler Town & Country and Dodge Grand Caravan minivans earned low scores, as did the Chrysler Sebring V6 and Dodge Avenger sedans and Jeep Liberty SUV. The Sebring convertible had the worst predicted reliability score: 283% worse than average."

If you speak with enough people who own Chrysler products you will find anecdotal evidence that supports the findings of these surveys.

Automakers don't pull the plug on models that are selling well.  If Chrysler's management thought that the products that it has pulled off the market would have done well and that it could have made money by selling them, it would have kept them around.  Saying that its sales are down because Chrysler pulled the plug on dead models is like saying that Ford's sales are only down because it pulled the plug on the Model T.

I hardly think that Nardelli and friends are sitting around twiddling their thumbs, but they are being hampered by lack of funds and a tremendous amount of in-fighting that Chrysler's absurd management-by-committee structure has created.  I challenge you or anyone else to name one significant product that Chrysler is scheduled to introduce in 2009 or 2010 that will sell well. 


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#14) On January 05, 2009 at 7:06 PM, TMFDeej (97.81) wrote:

I am well aware that Daimler is the parent company of Mercedes-Benz.  The quality of Mercedes' vehicles is a million times better than the quality of Chrysler's products.  The "merger of equals" failed because the cultures of the two companies were too different.

You're right that the loss of Lutz to GM, who I respect tremendously, was a huge blow for Chrysler.

As far as what Mercedes is doing right now, it is ranked near the top of the industry standard initial quality study.  I also have an '07 ML350 that I absolutely love, though it is going back at lease-end for something less expensive.  Hey if everyone else is cutting back, I might as well too :).


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#15) On January 05, 2009 at 7:48 PM, TDRH (97.42) wrote:

"Having Robert Nardelli and Cerebus run Chrysler is like hiring Joan Crawford and Michael Jackson to run a day care center."

Well said!    I think "Cerebrus"  is run by idiots- they need a new name like "boneheads are us".    Why would you hire a man who could not produce satisfactory numbers at a hardware store during the housing boom?  

Are these people just born into these positions?   Is it a question of nepotism?   

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#16) On January 05, 2009 at 9:01 PM, Milligram46 (< 20) wrote:

TMFDeej, interesting chart from JD Powers on the 2008 initial quality data.


1)  More auto makers are "below average" than "above average."

2)  All three core Ford brands are above average, while their foreign brands of Volvo and Mazda (their stake up for sale) are below average.  What is really interesting is the Fusion and the Focus share a lot of parts with their Mazda cousin, and the small Volvo shares parts with the Mazda 3 also.

3)  Cadillac, Chevrolet, Pontiac, and Buck are all above average now.  Cadillac and Buick have been above average for a long time, Pontiac has been toward the bottom of the pile with a few exceptions on a single model basis (the Grand Prix has been a darling in the quality department since 2004).

4)  Nissan has improved a lot, but still below average, but darn close to "average."

5)  Acura has slid to below average, I'm really surprised by that.

6)  Mini at second from the bottom?  BMW below average?  HELL HAS FROZEN OVER!

7)  Scion continues to be in the toilet on inital quality.

8)  The only car company I see where ALL brands are near parity is Hyundai/Kia, with the Hyundai just above average and the Kia just below average.

9)  Toyota is starting to take on a quality picture similar to other car companies.  Their luxury brand on top, the mainstream brand in the middle, the entry level brand at the bottom.

10) Chrysler is doomed ;-)

11) The data supports the reality that American quality is every bit as good as foreign quality for Chevrolet and Ford, and not the myth that they continue to build crap.  Honda at 110 problems per 100 vehicles, Chevrolet at 113 per 100 vehicles and Ford with 112 per 100.  Statistically, that is splitting hairs between the three name plates.

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#17) On January 05, 2009 at 9:11 PM, BlueLakeVentures (< 20) wrote:

I agree, it is one of my predictions for 2009:

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#18) On January 06, 2009 at 1:06 AM, JakilaTheHun (99.92) wrote:


As far as your #11 observation goes, I'm still not sure that's totally accurate.  After all, this is an "initial quality study" and the reason people buy Toyotas, Hondas, and Acuras is because of their longevity and particularly, the quality of the engines. 

I actually think Ford has a reasonable chance of surviving, but my biggest fear for them is that due to the way automobile brand loyalty develops, it may take a decade or two before they really start to reap the rewards of an improved quality in their vehicles.  And can any of us say for sure that their 2008 cars are on par with Hondas and Toyotas before, say ... 2023?

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#19) On January 06, 2009 at 2:34 AM, awallejr (37.00) wrote:

If you need to invest in an auto stock then go F-S.  Of the US 3 Ford is in the best shape.  This stock is preferred and it pays a dividend yield over 35%.  If you feel Ford will not go bankrupt then you can't beat this stock.  If you think Ford will go bankrupt, then of course, don't touch it.  For those who can afford to devote some "risk" funds I urge this pick.  Pity I can't pick it in CAPS but I do own some in real life as a spec play (bought at $8)

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#20) On January 06, 2009 at 9:23 AM, degaston (< 20) wrote:

This thread reminds me why I think the people who pushed the auto bailout ought to have their political careers doomed. Instead of giving handouts for these companies' shareholders to fleece we should've been setting up a trust fund under TARP called "Troubled Warranty Guarantee Fund" that would approrpiate money to help car owners have their basic 3 year warranties guaranteed in case the American-based manufacturer defaults on this obligation. Such a program would not even be implemented by the government bureaucracy unless its determined in bankruptcy court to be needed. That way consumers will still consider buying their cars with that worry gone. Instead what the consumers see is a handout to the shareholders and this gives them no more confidence to buy Chrysler cars and as a result the sales numbers are going to continue tanking. For the record both of my cars were manufactured in America - a Camry by Toyota Motor Manufacturing of Georgetown, Kentucky and a CRV from Honda of America Manufacturing in East Liberty, Ohio.

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#21) On January 06, 2009 at 9:24 AM, GNUBEE (< 20) wrote:

- First very few cars are built to be driven into the ground any more. With all our new "wealth" most people didn't keep vehicles that long.

Millgram and Deej, I think you guys are debating two different periods.

I would say any benz from 1995-2006 is suspect. Highly needy at best. Today, Benz build quality is up, but with so much new technology new problems arise (airmatic/command etc). So the more stuff you pack in, higher chance you'll have a problem. So I'd agree with you both regarding benz.

And Chrysler - who's reason to exist is, "to build it cheaper" is just that- cheaper. If Cerebus was not involved.. maybe a lifeline, but with them no way. They thought they could pull it off, now they can't- let them drown.

Huney, look up Toyota - engines- sludge. Suprising huh?

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#22) On January 06, 2009 at 10:54 AM, TheScouter (43.28) wrote:

Part of your story thats missing is that about 200K units were taken out of the fleet sales in 2008. This is the direction that they wanted to take since that segment is unprofitable and impacts residual value.  

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#23) On January 07, 2009 at 11:25 AM, JakilaTheHun (99.92) wrote:


Not surprising at all.  Of course, it all seems like a crapshoot with new cars doesn't it?  It can take several years before poor engineering quality can become apparent.  This is pretty interesting:

Ford dominates that list of problem used cars, but Toyota's sludge problems and the Prius made it as well. 

The only thing I know for certain is that current car ('99 Acura Integra) and my previous car ('90 Acura Legend) held up remarkably well.  That '90 Legend ran for 18 years and hit 200,000 miles.  I bought the '99 Integra last year and just now had to do my first repairs after 14 months of ownership --- it's rarer than rare to own a used car that doesn't need some big repair at least twice a year if you're running it over 10K per year. 

Still, even if I'm a millionaire some day, I'm buying used.

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#24) On September 23, 2009 at 9:25 PM, BrandonPaulChevy (< 20) wrote:

Well, indeed chrysler is not making a move in order for them to rise up in the automotive industry. If they can't make new car models, I think what they should do is to modify and innovate some of their car parts such as car wheels. most of the consumers are attracted on the external parts so therefore they should focus on it more.

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