When contemplating the full horror of February's sales stats, the key metric to keep in mind is -6.3 percent. That number represent the overall decline in new car sales for the month, relative to '07. Automotive News [AN, sub] reports that Chrysler was the biggest loser in this declining market, registering a 14 percent February sales drop. Truck sales, upon which ChryCo's fortunes (or lack thereof) depend, sank 22 percent. The situation over at GM, is equally dire. Sales for the month dropped by 12.9 percent. Both automakers responded to the news with characteristic bravado/denial. GM Marketing Maven Mark LaNeve told analysts it's everybody's problem ("Toyota, Ford, all had a difficult month") and blamed the media ("I personally believe that this discussion of a recession hurts consumer confidence"). Chrysler's executive vice president of North American sales said the sun will come out tomorrow. While predicting double digit declines for every month for the rest of the year (!), Steven Landry said "We know there will be an upside. If it is March we want to be ready." Yes, well, if sales at GM and Chrysler continue to crater at this pace, both carmakers' cash conflagration will force them to file. It's simply a question of who'll file first.
Find Reviews by Make:
Read all comments
My money is on Chrysler (being the first to file) that is. Can another gov. bail-out loan be in the companies future??? Back to the days of Lee Iacoccoa and his gov. loan to save Chrysler. History does have a way of repeating itself !!!!!
red dawg : My money is on Chrysler (being the first to file) that is. The smart (dumb?) money is with you. And you're right: federal assistance is a dead cert.
I love how they don’t want to discuss the problems – just encourage everyone to not talk about it and it will magically go away. *le sigh*
I have a hard time seeing the feds bail out a private equity firm. 1980 was a long time ago, Chrysler was a much bigger company, and a bankruptcy then would have had a much bigger proportional impact on the economy.
If Cerberus gets desperate, they’ll just have to start selling what ever is left sooner rather than later.
I read that something like the new Chrysler minivan sales are down 30%. It was supposed to redefine the minivan and set the standard – but cheap interior and paltry performance makes it perfect for it’s reality…rental fleets. But now it looks like the Odyssey on an aging platform will finally take the total (fleet + retail) minivan crown even though it long stole the retail side 5-6 years ago.
I put my money on Chrysler b/c Cerebus can use it to break the 40 year old mismanagement mold and uaw deathgrip. First to file should win b/c that’ll give them a leg up on the competition when they file.
What would be the benefit of bailing them out? Would they magically realize how to produce vehicles that sell and allow them to make profit?
Bancho :
What would be the benefit of bailing them out? Would they magically realize how to produce vehicles that sell and allow them to make profit?
The main (if not only) benefit will be political.
I was afraid that would be the answer.
The main (if not only) benefit will be political.
Times are changing. I’m with Niedermeyer. I doubt that the political benefits will float.
Of course, last year was uncharacteristically high as a benchmark, but that didn’t stop the automakers from thinking that the borrowing spree would never end. Guess I should actually call it a lending spree, as it was the banks and financial institutions that were driving the “anything with a pulse” can buy a house/car/vacation home madness.
And now the tiger has swung back to bite. I think it’s going to be a race for the finish with Chrysler and GM.
6.3% drop, with an extra day of sales. Ouch.
So really that should be (93.7/29)/(100/28), right?
That makes it a 10% (ok, 9.96%) drop in daily sales.
GM Marketing Maven Chip Diller Mark LaNeve told analysts Remain calm. All is well! it’s everybody’s problem “(Toyota, Ford, all had a difficult month”) and blamed the media (“I personally believe that this discussion of a recession hurts consumer confidence”).
“It’s everybody’s problem”. Not quite. Today I stopped by the local Honda dealer to look at a Civic Si sedan. Sorry, said the friendly salesman, we sold the last two over the weekend. We then checked his list and found three more arriving in about twelve days. “Do you want me to call you when they come in”?
Will the feds bail out a private company? I doubt it. And…Daimler AG still holds 19%, will our gov’t bail out their interest too?
Nope.
Bankruptcy = first Chrysler, next FoMoCo…despite all the hoopla, how they’ll soon be profitable (yeah, right), how will they repay that 44 billion dollar loan?
GM, Ford and ChryCo execs have one thing in common, they’re clueless.
marshall :
6.3% drop, with an extra day of sales. Ouch.
So really that should be (93.7/29)/(100/28), right?
That makes it a 10% (ok, 9.96%) drop in daily sales.
Automotive News has already adjusted the figures for sales days.
I too, doubt a bailout, at least for Chrysler.
I do find it interesting that they didn’t hesitate to bail out the airlines after 9-11, and now bazillion dollar banks, despite them killing themselves.
But what should we expect? Why should 3 giant companies look to have any influence in Washington?? It sickens me actually. Not saying a bailout is warranted, but I’m repeatedly amazed at how quickly this country is willing to throw these three companies under the bus, while gushing about foreign cars. You don’t see it in Japan or Germany or Korea or China. Why here?
Ford is more likely to tank than GM.
To be honest, this will be hard on SE Michigan, but these companies have gotta shed all but their cores. If Chapter 11 is the way to do it, so be it. Its better than them disappearing completely.
I just can’t believe that these companies, the ones that were once the biggest, most profitable, most respected American giants in the world have gotten to this point. Its quite sad actually.
i’ve read (emercedesbenz.com) that mercedes sales were up about 22% in jan 08 compared to the prior year. apparently it’s not due to the rich folks getting richer (although shoemaker may account for a percent or two ;o) because BMW was just about the same percentage DOWN. i’m not sure what my point is except that if merc can increase its sales that much, in spite of its reliability woes, then GM and Chrysler really have no excuse other than poor product. ya think?
If the dodge Durango I recently suffered is any indication, Chryberus is already screwed. After spending a week out west with a Toyota Sequoia, I rented a car to drive from Billings to Bozeman, MT. The Durango was hard plastic city. My wife kept thinking a door was open or window open due to the wind noise. The Truck had NO shocks at 14k. (Suppliers must be shipping quality.) The vibration between the door and roof showed a distinct lack of torsional rigidity, unlike the Toyota. I really can’t compare the Durango and the Toy, really. One was quick, quiet and comfortable. The other was not. No sane person could drive both, geek or no, and come away wanting the Durango. I was quite happy at mile 150 or so to give the durango back. The 4.7 liter v-8 had no relation to the nice DOHC motor in the Toyota, and drank gas to no real effect. Reminded me of a late 70’s pollution control motor- a real wheezer and unacceptable in today’s day and age.
Picking up my MDX at the Airport was like getting into an M class BMW in comparison.
# Robert Farago :
March 3rd, 2008 at 8:46 pm
The main (if not only) benefit will be political.
This isn’t going to happen. The bailout of banks and homeowners on the subprime debacle is already consuming Fed funds at a horrendous rate. Add to this the silly and budget breaking rebates to taxpayers leaves them with little way to drop billions more on Detroit with no realistic chance of salvation.
Then again I could be wrong. The stupidity of our political leaders never ceases to amaze me.
Even the Wall Street Journal has picked up on the fact that GM has far more brands than it can support. Today’s article is titled “Eight-Brand Pileup Dents GM’s Turnaround Efforts”. I think you have to be a subscriber to read the story:
http://online.wsj.com/article/SB120456874600508063.html
My mantra for GM remains: Chevrolet and Cadillac, Everything Else is Just Noise
I highly doubt that we will see another 1980s style Chrysler bailout. After years of being a German company and now a short time as the latest hedge fund cluster-**** I don’t see the gov’t getting involved.
The Detroit Free Press reports that Chrysler’s big drop in sales is due to significant reductions in fleet sales (sounds like we’ve heard that from the other big 2 before) but then drops this tasty nugget:
“Some bright spots in the month were Chrysler Sebring sales that were up 92.4% for the month and the Dodge Avenger sales that were up 59.6%.”
Umm, what? Sebring sales almost doubled while reducing fleet sales? Somebody please enlighten me on this one!
Insert ‘Dodge Journey’ joke here.
Steven Landry said “We know there will be an upside. If it is March we want to be ready.”
What exactly does that even mean?
It means that bankruptcy will hit Chrysler within 18 months. Guaranteed.
Anyone who visited the dealer auctions on a daily basis by 2006 knew that Chrysler was already in a terribly bad position even then. Hundreds of thousands of Sebrings, Stratuses, Neons, Crossfires, Caravans, and Rams were just sitting at the sales. Not only were Chrysler’s products far outdated, but Daimler saw fit to include some of the weirdest option combinations you can ever imagine on these vehicles. Minivans with captain’s chairs and tons of options, but no rear air. Loaded up SUV’s with no sunroof or 4WD, a multitude of Crossfires with less than 5,000 miles on them and dog 3.2 engines.
Daimler was busy stuffing their cars any place that they would go. Factory parking lots, abandoned commercial enterprises with large parking lots, and even the auctions. I remember buying 1 year old Chrysler minivans with about 60k on them for anywhere between 7k to 8k… and this was by far one of Chrysler’s most competitive products at that time. It still took two to three months to retail the ones I bought.
Back then Chrysler actually did have a few things going for it. A Hemi was still considered a good thing, the 300 was generating some good buzz, and the promise of better products seemed very genuine given Chrysler’s penchant for building exceptional products during challenging times.
Obviously none of it happened. What may be less obvious to most of the public at this point are two things.
1) No one knows, yet, how deeply imapcted Cerebreus’s auto finance operations are at the moment. These operations may actually end up with a worse bottom line than their core automotive operations.
2) No one knows whether Chrysler is even going to be able to work it’s way through the upcoming supplier issues. What’s going on now is possibly just the very tip of the iceberg.
What we do know is that Chrysler has absolutely no vehicles within the larger market segments that could be considered best in class. Every car segment that they compete in, and nearly every large SUV, CUV, truck, and minivan segment offers at least three products that pretty much blow the Chrysler product away. You take away the Wrangler at this point, and Chrysler doesn’t have a single market leader.
Ford and GM do. They also still have substantial savings and many of their products have rightly earned the ‘best in class’ moniker from the mainstream media. Ford and GM at least have the potential to compete across the board. For Chrysler, it will take bankruptcy (which will help them a great deal over the long term) and probably an international partner with better product to get them back into the thick of the marketplace.
But the entire Dodge and Chrysler line-ups were
while the Jury is still out on Ford and GM – I think the general consensus is that Chrysler is dogfood.
Jerome10:
I just can’t believe that these companies, the ones that were once the biggest, most profitable, most respected American giants in the world have gotten to this point. Its quite sad actually.
Yes. But they made SO many mistakes… It’s frustrating and sad.
Back in the early 90’s, I visited Mexico for the 1st time and noted the Japanese were making some inroads in the light truck market. Once back home, I asked a local mid-level domestic 2.8 guy if they were concerned. He dismissed the Mexican market as ‘beneath’ the dignity of his company’s effort.
Dismissing a market of ~100 million people is just dumb.
Ok, someone mentioned how eager some of us are to roll the little 3 under the bus and I have a question in return.
What compelling reason other than flag waving is there to even consider products from the big 3 over foreign competition unless you’re buying a truck? Is it the horrible resale? The poor interiors? The fact that they really don’t excel at anything? Sure, we have a halo car here and there but what about the plain-jane sedans and hatchbacks? Which ones are really better choices than their obvious competition?
The domestics have come a long way, but they still don’t seem to understand how to compete at all. They put effort into trucks almost to the exclusion of all else.
What year did the Chrysler bailout happen?
I’ll bet we have a bailout. And we’ll be soothsayed by the press into believing it’s a good thing; a necessary thing.
But really, it’s because the politicians think it’s their money, not yours and mine. And there’s very little education, in schools or elsewhare, these days to refute that, so a lot of people will just go along with it.
Smile, and pay your taxes, we’ll be told. You’re lucky you even have a job, so you should be happy to pay more.
The ultimate of ironies would be if the feds raised gasoline taxes to pay for the bailout of the 2.8…
The airline bailout made sense. Airlines are crucial to the national infrastructure and economy, and they got a serious knock after 9/11, for reasons they had no control over.
Lutz has been aiming GM at the ground for years, but when he zipz about in his trainer jets he knows when to pull back on the stick — with GM it’s as if he’s been expecting a hole to open in the ground saving them all.
At least Ford had the good sense to dump the top management and get new people on board. Whether Mulally can pull it out of the fire remains to be seen – he’s not aiming for the ground, though.
I wonder, how far into the corner they have to be pushed to start making quality interiors? do they really have to be pressed under a bailer. no bailout. Put under bailer.
Stein X Leikanger :
Lutz has been aiming GM at the ground for years, but when he zipz about in his trainer jets he knows when to pull back on the stick — with GM it’s as if he’s been expecting a hole to open in the ground saving them all.
Maybe he’s trying to pilot GM’s way to China, right through the center of the Earth.
Let ’em flop – and I do think having decent paying manufacturing jobs within the USA is important – but the establishment needs to go away. I mean that from the top level management whose perspective on the American consumer is completely detached from reality right down to the assembly line worker who thinks their high school diploma is worth more than $50 an hour – they all need to go away and be replaced with people who want to achieve, who aren’t going to strangle the company with problems and fights over territory and who is allowed to do what.
The imports seem to have their priorities generally in the right order. They have quality. They don’t drive big vehicles and spit on the little ones. They will sell you a quality vehicle whatever the size. They don’t refer to compact vehicles as “starter vehicles” or kids’ vehicles. They seem to take the small vehicles as seriously as the large vehicles.
What a difference a year makes.