Shame on us that we’ve overlooked a startling statement made by Crisis LLC’s Prez. In a speech last Thursday at the Economic Club of Chicago, Jim Press basically said that anyone who expects more than 10m SAAR (annual selling rate) anytime soon is on drugs. Instead of getting better, it might get worse,
“It would be a mistake to assume that this ‘10 million market’ is an aberration. Instead, we need to accept and come to grips with it,” Jim Press said. Coming to grips with it means that it will be a 10m market for – gasp – at least for four years. In January, the annual sales rate (SAAR) was just under 10m units. Press is preparing the world for worse: “I’ve told our dealers that one day we may even look back on January of 2009 as the “good old days!”
Then, a second moment of startling truth…
“Now, Chrysler Financial did receive a $1.5 billion loan from the TARP fund in January. There’s no mystery about where that money went and will go. It was immediately put to work in connection with our ’employee pricing’ and ‘0% financing’ to help get the market moving again. And that is helping to improve our sales situation.
But, again, the lending restrictions are extraordinarily tight. Ironically, those customers who are eligible for credit tend to be among the rare group who don’t need it.”
As if that’s not truth enough, #3 followed:
“Frankly, the domestic auto industry had lost its way. We didn’t always deliver the quality in our products that our customers deserved. We didn’t take the lead on developing new fuel-efficient technologies as we should have. We lost sight of the customer. And we seemed to spend more energy fighting with government than we did finding ways to work together.”
The speech was meant as an inspirational address and a sketch of the “viability” plan to be delivered this week. It sounded more like a eulogy to the industry. Jim Press doesn’t sound like someone working for a secretive organization as Cerberus. He sounds like someone who already has a new job. [ED: tanning in Aruba?]
Yesterday, we cited Erich Merkle who said: “If we don’t beat the second half of 2008 this year, then it could be all over. We’re all going to be peeling bark off trees and go back to being an agrarian society.”
Now Jim Press says it will be worse than January. What are we going to eat now?
UPDATE [via The Wall Street Journal]:
Mr. Press said the auto maker now has a special bond with the American taxpayer since it took low-interest loans and they will work hard to respond by building quality cars.
“We will return Chrysler to an American icon,” he says.
Quick, invest it all in termites and rust while you still can. That’s the winning combo for the future!
When we look back at January, 2009 we’ll remember the bronze statue of Mr. Press commissioned for the Asshole Hall Of Fame so very fondly.
Yet he forces dealers to take more cars into inventory……
The stages of grief….
– Denial
– Anger
– Bargaining
– Depression
– Acceptance
Given the UAW negotiation breakdown and now this speech, I would say that we are moving past bargaining and into depression / acceptance.
The folks on the “Corvette must die” thread with all the reasons that we must have a mass produced 500HP 2 seater sports car are still in the bargaining phase.
Everyone goes at their own pace, but we all eventually reach acceptance and/or the world moves on without us.
New car deals are great, but used prices are even better. We just bought an off lease 2005 Dodge Grand Caravan with under 50,000-miles for less than 25-percent of new value, our first domestic and only used car purchase in decades. It’s a serviceable design, with not so good quality of execution. We see it as the Bic lighter of cars; good enough to do the job, cheap enough to be disposable!
Someone needs to explain to me something. It’s been bugging me since I started visiting TTAC.
Chrysler is in as much trouble as a company could be in.
Why are top executives like Lutz and Press leaving successful companies and joining Chrysler?
“Why are top executives like Lutz and Press leaving successful companies and joining Chrysler?”
Bob Lutz left Chrysler decades ago. Jim Press joined Chrysler just after the Cerberus take-over at a time when he was riding high as President of Toyota USA and the first US citizen on Toyota’s board. Press’ decision probably had something to do with US tradition of paying top executives 10x more than the Japanese do.
This is just posturing:
1) Sales are going to be low for a while, maybe 10 million for the next four years – this is just cutting off the argument that sales are going to be low. Press has to admit to this to have any credibility.
2) Is bullshit. Credit is available, just not with no underwritting standards, like a couple years ago. I would bet money that the vast majority of people buying $30K cars do not have $30K in cash. This is just more Chrysler whining to get increased money to make increasingly bad loans.
3) Is just telling the greens, hey, if you give us money we’re going to work with you now.
Well, I was going to argue that the people buying $30K-sticker Chryslers had no taste, but you can say that they have no money as well.
All your Chicago base are belong to BMW y Honda y Nissan y Toyota y VW. Ford might have a gazillon dealers in the metro area, but Chicago also has a gazillon museums. (Some of the Ford dealers might even resemble museums.)
dzwax: Lutz is retiring because he’s old now, but is certainly not joining Chrysler. Press had been with Toyota for quite a long time, and with the esteemed career position came the ability to move around. Chrysler is no doubt paying him more. Just because the company is in trouble most certainly does not mean there’s a deficit of salary funds.
Something one has to consider is the numerous double whammy’s in the marketplace. I used to work in pharma and know people close to the Pfizer, Wyeth merger. They anticipate that the equivalent of 90% of the Wyeth salesforce will be let go (though not all from the Wyeth side). So, all those people won’t have company cars anymore. All those vehicles have to be returned to the leasing companies. The only upside is that if the newly unemployed no longer have a company car, they may have to buy one. But in their position, who is going to buy new? There are countless sales/marketing types in this position.
The whole world is in economic meltdown.
The US is actually in better financial shape than Europe.
I like this guy more so then Lutz – despite the fact the Maximum Bob was at least always entertaining.
The folks on the “Corvette must die” thread with all the reasons that we must have a mass produced 500HP 2 seater sports car are still in the bargaining phase.
Well, we can drag that argument into here, too, but I won’t. Keep in mind that’ll probably do more harm than good, since GM doesn’t have the stellar quality track that Toyota has to fall back on when they drop kicked the Supra, et al. They’ll be in an even deeper hole.
@ bluecon
The US is actually in better financial shape than Europe.
How did you arrive at that???
I don’t think it’s a competition, but I also don’t see economists suggesting anything like the problems in Europe that the USofA has inflicted on itself.
I don’t think it’s a competition, but I also don’t see economists suggesting anything like the problems in Europe that the USofA has inflicted on itself.
It depends on how you define “Europe”. If you define it as “Iceland, Spain, Greece and perhaps Ireland and Italy” than he’s right. If you define it along the traditional France/Germany/UK axis, it’s not doing quite so badly. Suffice to say that most of the stronger economic countries are still reasonably sound, while the financial basketcases that floated on a hyperinflated market have been weeded out.
Much like the NAFTA zone, actually.
The US is actually in better financial shape than Europe.
Car-wise, Europe is in better shape. (Excluding Spain for a while.) Ownerships still in the 500’s per thousand and not at an obscene 790. The eastern countries still are unsaturated. The overall losses in 08 were MUCH less than in the US, even bloody January was less bloodier. Real estate cooling, but nowhere near the U-SOFA melt-down. The longer term problems in Europe (and Japan) are demographics: People getting old, no children.
In my view, the healthiest economy is China, believe it or not.
‘We will return Chrysler to an American Icon’
Yes indeed, one that is 35% owned by an Italian company that invested $0, 20% owned by a German company that has written the value down to $0, with the remainder split between various hedge and pension funds around the world. Sounds like the ideal base for a proud American corporation to plant its feet, invest massively and spring forward from, SI? Nein denke?
The reason that the domestic auto industry will be dead for the next 4 years (at least) is that the only people that ‘may’ be interested in buying the current domestic junk, currently OWN domestic junk. THOSE people are so upside down in their loans, that there is NO WAY they can get out of their cars … probably forever. 4 years from now, when their 6 and 7 year ‘stupid’ loans are almost paid off, their cars will have ZERO equity anyway. The people who own current GM cars will be buying $1000 junkers, because they won’t have the 20% to put down on a new car loan. As I’ve said before … the days of Americans buying $30K+ cars are OVER. Auto manufacturers better start producing $15K cars or they’ll slump even more.
I must’ve missed the whole ‘American’s must buy $30,000 cars” meme.
I’ve been buying $15-22,000 cars and I really don’t see any reason to move my upper-end price-point any higher.