Chrysler declares bankruptcy. Now what?

The good news is that the adorable Fiat 500 will be appearing at all the affiliated “Crysleratti” dealerships soon. Its reviews have been absolutely terrific. Hopefully, one day they’ll be built at plants that built total loser vehicles like the worthless Compass.

Am I hearing this right. Chrysler declares Chapt11. Fiat wants to partner up. Then,we(you and I) loan them another couple Billion dollars because of this news? Socialism will not work here or anywhere because eventually the government is going to run out of OUR money.

I heard the press conference, and I’m not sure the Fiat 500 thing wasn’t just a misunderstanding. The way I heard it was that Fiat may manufacture the 500 in North America — not that it would necessarily be sold in the United States.

US emissions and safety standards are more stringent than other countries, and the only cost-effective way to sell cars here is to plan for US certification as soon as the design is started — modifying an existing car gets very expensive. So unless the 500 was originally designed for US crash and emissions standards, I’d be surprised to see it. That said… Fiat has been wanting back into this market for some time, and according to Chrysler, they’ve been thinking US-spec for the last 18 months. And Jim Press did show up to the NY Auto Show in a Fiat 500. So… anything’s possible! Time to call my contact at Chrysler… — Aaron

Jim, if the Fascisti Right seem to have mega billions to secure oil reserves for Big Oil, surely a few billion to save thousands of peoples’ futures isn’t too much. Best of all this plan doesn’t kill 3,000+ brave people and devastate their families.

I hope this turns out to be a good thing and Chrysler is able to start producing better quality cars in the future. However, if things don’t work out then their market share will just end up in Ford’s pocket. And I say that because I know personally that if I were shopping for a car and a Chrysler product was on my list then it is probable that a Ford product is there as well. And given the way Ford is going these days it would be the better choice. As for Fiat, I have no experience with any of their products so their level of influence is a huge variable in this situation. Let’s hope it works out. My only question is why didn’t this happen 5 months ago before Bush gave them part of the $25 billion after congress said no?

Bottom line, if bankruptcy keeps people employed and any tax dollars provided to keep them going during the restructure is eventually repaid with interest, then that’s not socialism that’s good business. The government is not taking over, they are just becoming another creditor that has the borrowers best interest in mind instead of pure profit for themselves the only goal.

So when I see GM making the same announcement on Monday, I will back that one too.

DFI: For what it’s worth, I had to replace a car last month after it was wrecked in an accident. I wanted a hatchback of some sort, as I occasionally have need to haul largish things. The wrecked car was a Pontiac Vibe, but I didn’t like the new ones enough to buy one (and now with Pontiac’s demise, I’m glad I didn’t).

I grew up in a Ford family, and would have like to have bought one now that they have their act together, but Ford doesn’t currently sell a hatchback in the US (they discontinued the Focus hatchback/wagon in ‘07 or so). Chrysler does make one (the Caliber). I really liked the styling and practicality, but I couldn’t bring myself to buy one due to Chrysler’s shaky footing, the mediocre reviews it received, and the rather poor fuel economy it gets.

Now with Chrysler’s future somewhat clear, I really hope they get their act together (and fix the Caliber’s shortcomings). If they and Fiat are willing to put the effort into producing some good cars, I’d certainly be willing to give them a try. The ball is in their court, so to speak.

A lot of people seem to be panicing about buying a car because of these announcements. In fact, this could be a great oppotunity. Obama has already declared that anyone buying a new GM or Chrysler *during the restructuring period*, i.e. now, will have their warranty backed by the goverment.

As for Fiat, my family in the UK love Fiat cars. Like Don, I’d be really interested in seeing the 500 show up over here, as Chrysler needs a good entry in the subcompact segment. Hopefully they keep the diesel option available.

Best of all this plan doesn’t kill 3,000+ brave people and devastate their families.
I am not sure what that quote means but I assume you are a conspiracy theorist.

We have a market economy. Well, at least we are suppose to. If you produce inferior goods that people don’t want, you fail. If you fail you can go in to chapter 7, or, 11, and, try to recover. That is what bankruptcy court is for. NOT the government. Let the market decide. You mark my words. If the goverenment starts to dictate what is manufactured, and they will, every manufacturer should be very scared. Chysler will not be able to market affordable, quality cars with the government involved. They couldn’t do it on their own. What makes you think they will be able to do it now. I am glad you enjoy paying more taxes, because that train is coming fast. I can’t afford a new vehicle, and I make good money. Who can afford a $30k plus car?(Never borrow money for a depreciating asset!)

Im not sure how this became about politics, but..

I happen to be a proud LEFTY and I actually agree with some of Jim’s agrument. If the right would have actually practiced what they preached, we wouldnt be here today. I think his assesment of a failing company, welll.. failing is spot on. It has to happen sometime, why not now? I liken Chrysler to an old house.. If you pour a lot of money into it, it still will cost more than a new one and likely be considered a worse investment. If thye fail, a new company will enter in. Same with GM, same with ford,although Ford seems to have it’s act together. A Fiat deal IS good for this country. We need better cars and they can only help Chrysler achieve that.

I’m still pissed about the fact that Chrysler is a very rich company (parent company Cerberus is worth around $100 billion) and is getting all this handout money from us. And they have been purposely holding out for even more than what they are going to get. Can’t get over it. Won’t get over it. Screw Chrysler!

When this mess first surfaced,I said chapter 11 was the only way for them to go.I was laughed at.This was the only way they could get out of the UAW albatross they had around their neck.Now,after throwing a ton of money in the toilet,guess what?I have said in the past,the last good car they made,was the Dodge Magnum.I know this is a matter of taste,but you’ll have to pry mine out of my cold dead fingers.I believe Lee Iacocca could have saved them,as he did in the past,but he wouldn’t touch that mess(in my opinion).

@ChrisF A bit off topic I know but what car did you finally decide on? Just curious.
On topic, I will say that if I was truly interesting in a car from either GM or Chrysler, I would still be interested. I just don’t see this situation as stopping too many people from buying something they really want. Unless they intend on trade in value of course. It’s not like parts or servicing is going to become more difficult or extinct, is it? At least not for quite some time. Am I wrong?

Don, the fascist right? Do you really hate capitalism that much? Investments in oil reserves? Seems to have kept gas prices pretty low? Don’t know how you can compare the Iraq war to Chrysler? Better lay off the juice old man.

My problem with this BK is it seems that it’s being orchestrated by the administration and I haven’t heard a lot of concessions coming from the UAW. In fact, I’ve heard just the opposite from Obama’s people? With the UAW as part owner I don’t see where they will give an inch and in fact I belivethe greedy bastards will try to take more inches. They just can’t help themselves. Unions have that socialist mentality that their members are entitled to a better living than others and as long as they can force someone else to pay for it what’s to stop them? Obama? HAHAHAHAHA!

No way this is going to work. We’re just kissing good money goodbye.

C

Chuck, as defined in the first 2 lines in Wikipedia: “Fascism is a radical and authoritarian nationalist political ideology. Fascism is also a corporatist economic ideology.”
Right out of the Bush(Big Oil), Chaney(Halibuton/KBR, CEO), Condi Rice(Chevron, BOD) playbook. Capitalism is just fine with me, just not when it’s manipulated for the benefit of a few, at the expense of millions.

If government intervention is such a bad thing, then why don’t we privatize the armed forces, police forces, and the fire departments? And while we’re at it, charge tolls for every highway on the Eisenhower Interstate system. Imagine what will happen when you get a $1,250 bill for calling the cops out when you hear a person in your back yard, or when the fire department decides not to respond to the inferno in your garage because the structure and the car and the 30 years of family photos are, according to some accountant in Manhattan, worth less than the $85,000 they would charge to put the fire out. (Although maybe privatizing the army wouldn’t be such a bad thing, as the Iraq war wasn’t exactly a great investment.)

Any time the government gets involved in anything, you can always count on a bunch of people to cry “Socialism!” And yet we insist that the government have control of the services we rely on most, because we all know that turning them into for-profit businesses would be an absolute disaster. Loaning money to Chrysler — who, I might add, has an excellent track record of repaying government loans — will help keep food on the table of thousands of families. It helps fellow citizens in need. It provides for the good of the people. All reasons that we have a government in the first place, no? — Aaron

BTW, UAW has already, I understand, agreed to major concessions. I haven’t read the details yet, but it’s enough that Chrysler is saying they won’t need to break their union contract, as Chapter 11 allows them to to. — Aaron

Sorry Aaron,but I trust the UAW as far as I can throw one of those inferior cars that Chrysler makes.If Chrysler doesn’t take this opportunity to break that contract,it’s because someone made a boatload of cash.If they come out of this,the contract will be the anchor that pulls them down in the future.If they go broke,let em.Another company will rise up and take over.Cream always rises to the top.

The long term survivability of Crysler, as I see it is not their union contracts(which do need trimming), it’s their lack of creating cars that people desire and that are perceived as quality built cars. The rank & file, as well as management can take a 50% pay cut, but it won’t do any good if they’re building cars people aren’t buying. Vipers, Wranglers and Challengers aren’t going to cut it for Chryco’s survival.
As for those who want to obliterate the unions,well guess what will happen to wages across the country…they’ll collapse. Of course corporate profits will skyrocket, while we work and build the stuff we can’t afford. Now that’s the Rupert Murdoch/Fox News view of capitalism…BUT IT AIN’T MINE!!!

Wow. How did Hawaiian Don get from the Chrysler BK to 3000 dead soldiers. That is truly warped. I wonder how much “big oil” he burns in his tank. Aaron, you should stick to cars too. Law enforcement and fire protection are – according to our courts – constitutionally mandated functions of the government, making Chryslers is not.

Hugh, where in the Constitution does it say that the government cannot privatize (or at least outsource) the armed forces, police or fire departments? The government is required to “raise and support armies” and “provide and maintain a Navy”, but I don’t see anything that would prevent outsourcing of the armed forces. As for police and fire, where is that mandated in the Constitution? (Full text here). There are regulations on police power, but nothing I can find that regulates how local fire and police departments are organized. I’m certainly no constitutional scholar, and there may be court cases I don’t know about, but I don’t see anything that says a municipality can’t privatize its fire or police forces. Perhaps someone who knows better can set me straight. — Aaron

No, Aaron, the function of the United States government is not to “help fellow citizens in need”. Rather it is to collect taxes for PUBLIC functions such as road building and maintenance, armed forces, police, courts, fire departments and so on. The countries around the world that have the highest levels of government interference also have far higher rates of unemployment than the U.S. The government putting food on tables in the short term is going to lead to higher unemployment rates and less food on the tables in the long run.
Further, Chrysler vehicles are the worst of all. Bankruptcy is a fine solution, but government help is silly.

Aaron, you’re right about privatization of the armed forces. In fact, it is already done – think of the billions of dollars already spent on military contracts to private businesses (Lockheed, etc.) And, it just goes to show that even the government realizes it is inefficient and in need of help from the private sector!

It’s real simple Hugh. I’m talking about how the government prioritizes its spending.It is totally clear at this point that the Bush Administration was intent on securing the vast oil fields of Iraq before the 9-11 assault on America. True there were Al Qaeda operatives there, as in Syria, Tunisia, Egypt, Sudan, etc. However, a very vocal Saddam made for a very easy sell, in order to attack and “get even” for 9-11, when in reality we could drive a nuclear wedge (that would be our military) into the heart of the Middle East, secure the second biggest oil fields in the world for “Big Oil”, quell Israel’s nerves and create a looming menace to Iran. That was the Neo-Con plan. As it turned out, Israel is no more secure, Iran is still inching closer to nuclear weaponry, BUT those oil fields are secure for the oil companies. The world is now awash with the biggest oil inventory in 19 years, yet somehow I just paid $2.25, when it should be about half of that. This whole scenario has cost us $750,000,000,000, 3000+ honorable lives and countless thousands of permanent injuries.
Yet, we sit here and talk about a handful of billions that can not only salvage American icons such as GM and Chrysler, but also the tens of thousands of lives dependent on them. Remember, the conservative Brits salvaged Roll Royce, when its stock dropped to $.12 a share back in the early 70’s, because it was representative of “everything British”? So saving our auto companies would hardly be unprecedented.
Yet we

Don, you remind of the manic lady in Airplane with the line of passengers ready to shut her up.

I’m in that line

C

Well with 2 kids on Active Duty overseas, maybe I have a right to be that manic lady!

Aaron, you’re embarrassing yourself little buddy. Stick with cars.

BTW-your comment that the UAW gave up major concessions followed up by the comment that you have no idea what the details are sort of sums up your expertise in this area. So far the only thing they’ve divulged is that UAW members are giving up Viagra. Whoa, fire up the steel mills and start pumping out those chargers. The UAW is rollin in dough now.

Aaron, do your really think the Obama administration or any administration can run a car company profitably? Look at how much they waste with the military. Sure it’s the best in the world but it’s still wasteful. Look at how well they protect our borders? Medicare and social security are headed for the same iceberg that sunk the titanic. More government is not the answer.

We can’t afford it. It’s just that simple.

And finally, yes we are moving more towards a European socialist type economy. And I think that’s bad.

C

>your comment that the UAW gave up major concessions followed up by the comment that you have no idea what the details are sort of sums up your expertise in this area.

And your statement that the UAW merely gave up Viagra sums up yours.

If you’d really like to know, the UAW upped the number of workers who make $14 to $16 an hour from 20 to 25%; reduced the number of jobs classified as skilled trades; gave up cost of living allowance (COLA) increases; expanded the provisions for part-time and temporary labor; and traded about half of Chrysler’s obligation to the retirement fund in trade for ownership in the new company (which, if they don’t come out of bankruptcy, could prove to be worthless). Retirees did give up Viagra, along with other prescription benefits (including ulcer meds, which I’m sure would be a great help at this point) as well as some dental and eye care benefits. You can find all of this info with a two-minute Google search, btw.

Of course, simply reporting that UAW workers will no longer be able to get Viagra makes for much more entertaining commentary. Never let facts get in the way of a good story!

>Aaron, do your really think the Obama administration or any administration can run a car company profitably?

I’m not sure how Federal loans equate to the Obama administration running a car company profitably, but if your question is whether I think a publicly-run company can make a profit, the answer is yes, I know that it can. (Here in L.A., our publicly-owned power/water utility consumes no tax dollars and contributes $190 million to the city annually. When the private companies resorted to rolling blackouts, the lights stayed on in the city.)

As for an automaker — when Renault was on the rocks in 1981, the French government took it over and the company was stable by 1987 and wildly successful by the early 90s. Soon it became clear that government ownership had become a hindrance to further growth rather than a help, so Renault was re-privatized in 1996. Of course, what do the French know, those baguette-eating socialists!

Contrast that with the UK, which turned its publicly-owned railroads over to private companies under John Major’s conservative government. Turns out that the railroad was running pretty efficiently under government ownership. Today the government subsidy is bigger than it was pre-privatization; the railways serve fewer destinations, fares are higher, and the service isn’t a whole lot better. Turns out it might have been cheaper for the gov’t to keep British Rail and simply cut a check to a few of the private companies’ executives.

So yes — I think a government-run automaker could do pretty darn well. Even though that’s miles away from what’s happening with Chrysler.

>yes we are moving more towards a European socialist type economy. And I think that’s bad.

Imagine living in a society where you don’t have to worry about being turned down for health care merely because you’re already sick and where you won’t end up living out your retirement under a bridge abutment and eating cat food because the stock market tanked and your 401k disappeared. You’re right, that’d be just horrible. — Aaron

I’m still trying to figure out where all these capitalist freaks are thinking that the very act of bankruptcy is an indication of some liberal agenda to socialize everything.

First and for most, turn off Fox News and use your freakin’ brain for once! Providing a car company with a LOAN from the government is no different than a bank providing the funds. The problem is there are no banks left with any money to loan because capitalism unchecked destroyed them all. And like any creditor, the loaner has the authority to lay down ground rules as a condition of acquiring a loan.

Second, the act of declaring bankruptcy is in fact a request and invitation (dare I say begging) from the company to the government to take over because they can no longer take care of themselves.

So before you finish your republican capitalist cool-aid, take a moment to discover the facts and next time keep your uninformed overly opinionated trap shut.

I support the bankrupcy and I wish it would have happened sooner. I believe something will work out with Fiat and they will help put Crysler back in proper order. I believe GM will not be far behind in declaring chapter 11 and they too will emerge stronger in the long run. And I firmly believe that the government will have nothing to do with any of it short of providing the investment funds now and gaining a legitimate and practical return on their investment.

So 8 years from now when the car companies are running fine and our economy is booming again and we are no longer in 3 wars simulateously. Then we can have a discussion about free range capitalism and Bush doctrine versus Obama’s preference for rational thought.

I haven’t heard yet what the outcome will be in the GM debt/buyout deal (have any of you?), but if the government and UAW end up running the company as GM has implied (asked?), the real question for both Ford AND Chrysler is: how do you compete against a company run by your own union which now has a profit interest in a competitor and funded by the comparatively bottomless resources of the feds. Things could get funky fast.

As for the political arguments here….they make sense in today’s automotive economy. BUT just speaking for myself, if this turns into an automotive version of “Think Progress” or “Michelle Malkin”(sp?), I’m no longer interested….and I really like cars.

The debates over the limits of collectivism are well suited to the halls of congress, the backrooms of Washington thinktanks, and (oddly) the individual mind. They are not simple enough to be hashed out in a blog format. Just visit some of these sites that attempt it. You’ll find that they are filled with name calling and half-thought-out arguments (depending on whether or not you agree, of course ), not the kind of nuanced, weighted thinking required for truly rational conclusions.

While its true that politics (individual vs. collective rights) plays a strong role in automaking today, so does health care; so does the law; so does employee relations; so does accounting; etc.; etc.

Maybe I’m alone? Will you flame me for thinking that this thread is approaching digression status?

Can we talk cars?

THAT’S why I’m here.

P.S. I really hope that the future looks brighter for Chrysler and its thousands of workers.

To DFI & Aaron:
Supremely logical and accutely stated positions to say the very least…beyond my capabilities to be sure. Unfortunately, for some from the family of Rupert Murdoch and his Faux News, it is far more enjoyable to reach for the low hanging friut of baseless name calling, jingoistic phrases and sarcasm.

To Mike:
Sorry about our socio-political diatribe on these particular pages. Allow us this liberty on this blog. We promise not to spill over to the others, like the new one, just posted on buying Fiats.

Wow, some of you guys are actually, genuinely socialistic. Socialism is a terrible idea in theory as well as in practice. I am something of a libertarian – socially and fiscally – libertarianism is the foundation of American society. Less government is better! We are different from the nations of the EU, which is what has made us great. I am sad that bright people like Aaron and Don have forgotten that. But this difference will not prevent me from reading this blog, which is awesome!

Tim, you can disagree with me all you like as long as you keep on reading. Thank you for the kind words about the blog, they are most appreciated, comrade my friend. — Aaron

I’m afraid the history of socialism trying to produce cars is an ugly one. The Cubans are still tooling around in ancient American cars from before the revolution. The Soviets had the Trabant, an ugly, plastic eyesore about which nothing good was ever said. The British government took over British Leyland back in the 1970’s and made some truly lousy vehicles before going bankrupt. I doubt Chrysler will be a going concern for too much longer unless Obama wants to throw billions more at it.

Consumer Reports rates Chrysler dead last of 15 car companies in its composite of reliability and test scores. No Chrysler cars are recommended: http://www.consumerreports.org/cro/cars/new-cars/buying-advice/who-makes-the-best-cars/automaker-report-cards/index.htm

Actually Mike, the Trabant was an East German car. Satellite countries were not the Soviet Union, like Puerto Rico is not the USA. However, E. Germany was socialist, as were the the cars that came from other satellites: Tatra, pretty good… Skoda, also good. From the USSR came the came the Zahporozhetz, a pitiful car… the Moscovitch, a very poor car…the Tavria, a very poor car…the Lada, not a bad car at all…the Volga, a very GOOD car and the Zil limousine, a great car by many accounts. As bad as so many of these were, it is amazing how many 20+ year old ones are everywhere. More surprising is the fondness people have for them. Personally, I became very fond of the Volga I drove for the 4 years I was there in the post Soviet years. It never once let me down in -20 degree weather.

There was a term used to describe Fiats back in the 60’s, It was S–t box. And I think It will be used again, soon!

Aside from all the political ramblings, the last resource I’d take any faith in is Consumer Reports. That they have no Chrysler vehicles in their “Recommended” list means nothing to me, particularly when the Charger/300, and PT Cruiser were listed as “Recommended” just a few years ago.

If I want to know about a particular vehicle, I go look at them myself, and talk to people who own them. I’ve found more often than not that these sources directly conflict with what CR reports.

I’ve owned Chrysler vehicles since the early 90’s. Although there are better cars out there, there are also a whole lot worse. The ones I’ve owned have been very good, and I’d certainly buy another. I’d love a Challenger RT or a Charger/300. The rest they can keep, but hopefully all that they’re going through will change that.

Interesting article. Thanks for posting your ideas. On a grammatical point – it’s = it is and is not a possessive form of it. The possessive form of it is its

Right – and the bottom line is that it’s not the end of the line

Wrong – Chrysler could go from being the US auto industry’s left fielder to it’s most valuable player.

Rebuttal to Comrade Aaron

First draft was destroyed by a Internet Explorer crash(probably a good think since it was rather ugly)

First, the concessions may be big considering it’s the UAW who have never conceded before and is largely responsible for all the U.S. Auto industry woes. But in the grand scheme of things, it’s not that big, it was just an obvious necessity. Didn’t need google for that and yes the facts hurt, don’t they?

Utilities can raise rates as needed and don’t need to compete. Lousy example but not surprising.

I don’t live in France or England and doubt you do either. Here’s my examples: FAA, FEMA, Wasteful Military spending, Post Office, IRS, Amtrak, Public Schools, ATF(Waco), Federal Reserve, SEC(my gawd, this one should just scare the bejeesis out of you), Congress, Calilfornia, FHA, Fannie Mae, Freddie Mac, Dept Treasury, Nancy Pelosi.

Renault is still in business? Hm? Who cares huh?

Your final statement is pure hyperbole. This is what you big lefties like to use as examples but there are far more nightmarish examples from socialized medicine countries and would take up much more room than we have here.

C

Lets bring this back to the original question, please! I’m old enough to remember the “five great cars of the Forward Look”; Plymouth, Dodge, DeSoto, Chrysler, and Imperial. Cars were esthetically pleasing and the proportions were right; Todays monochromatic jellybeans really don’t inspire, sorry.I wish Chrysler the best of luck, but all things considered, people generally prioritize their finances (food, clothing, shelter). Where does signing yourself up for payments come up on the list?

I think Chrysler and maybe GM will be toast. In an informal survey at work, I haven’t found anyone who will buy from the government, or even the UAW. One of our electricians, a Chevy guy normally, just bought a Camry. The administration is nuts to even try this.

I am nearing the end of the first year of a 3 year lease on a Town & Country. I’ve heard that they’ve stopped the lease program, now this. Where do I stand as to future payments, etc.? To top it all off, I’ve just been diagnosed with a terminal disease, and probably won’t live to see the end of the lease period. I think personally that Chrysler should just give me the vehicle and title and call it a done deal. What say you?

Aaron,

That was funny.

Gina, sorry to hear about your health issues. The lease agreement is between you and the bank, which may be Chrysler Financial (a separate company from Chrysler). Automakers generally do not finance their own leases; they sell the car to a bank which then rents the car back to you, and then sells it at the end of the lease term. If your lease bills say Chrysler Financial, keep in mind that that is a different company that is not part of the bankruptcy proceedings. So even if Chrysler were to go completely under — which, so far, they are not; they are in Chapter 11 (restructuring), not Chapter 7 (liquidation) — your lease would continue as if nothing had happened. — Aaron

Gina, sorry about the diagnosis…forget about stuff like this…go out and have fun with that car and beat it into the ground…you’re more important than some stupid lease!

ummm all u guys are lame ok!