The Auto Writer

Inasmuch as General Motors employees are worried about losing their jobs, you have to believe that Chrysler LLC employees are also concerned about their positions regardless of whether Fiat takes a stake in the company or not.

Thirty Days Has Chrysler, Sixty For GM

When President Obama announced on Monday that GM had 60 days to restructure, he gave Chrysler half that time to seek an alliance with Fiat or else. Clearly, the administration believes GM can be saved while Chrysler’s fortunes will be tied to another manufacturer.

But what if Fiat decides it doesn’t want Chrysler?

Soon after the president finished speaking, Chrysler LLC announced that it had struck a deal with Fiat sPa, a stunning announcement given how close it was to the Obama news conference. Twitter was lit up with comments with Ask Patty (among others) tweeting (sharing) the good news.

Within a few hours, Chrysler amended its announcement by saying that the company had reached a “framework” for an accord, an odd but necessary way to retract what was originally distributed.

Liquidating Chrysler LLC

If Fiat decides for whatever reason (and I can think of some good ones) to break off its talks with Chrysler, then expect the automaker to enter into bankruptcy ASAP. Unfortunately, this won’t be Chapter 11 bankruptcy which is for restructuring the company, rather it’ll be Chapter 7 which will liquidate Chrysler.

In effect, Chrysler would be out of business.

I would like to believe that while Chrysler is the process of being liquidated that they’ll still be able to emerge in some fashion on the other side. But, a lot of people have a stake in the automaker including retirees and workers whose healthcare benefits  and other legacy costs need to be met unless a judge rules otherwise. Several communities across the midwest will be devastated if Chrysler dies, with Ontario getting whacked as well.

President Obama indicated that proceeding through bankruptcy would be swift work, but as a Wall Street Journal article asserts, the process isn’t an easy one with Rep. John D. Dingell (D-MI), a former bankruptcy lawyer stating,  ”I have some concern that if these companies get into bankruptcy, how do they get out? I’m an old bankruptcy lawyer, and bankruptcies have a life of their own.”

The federal government has already told Fiat that their initial share in Chrysler will be closer to 20% which is much lower than the 35% originally agreed upon. Cerberus Capital Management, LP will forfeit its ownership of Chrysler in exchange for continued federal funding while Daimler AG is still trying to shop its 19.9% stake in Chrysler LLC.

Back To Breaking Up Chrysler

If a rosier liquidation scenario unfolds, Chrysler could fetch some big bucks for a its many different parts, perhaps much more than what it would get if sold as one unit.

In healthier days I would have said that Jeep would have gone to either General Motors or Ford, but the former is absolutely broke while the latter doesn’t want to ruin its own recovery efforts.

I like to think that in a certain Dearborn boardroom the Jeep idea was considered and quickly dismissed, seeing that Ford could emerge from the current economic slump in good shape with no need to acquire Jeep. Besides, Ford is in the selling mood themselves, actively shopping Volvo as of this writing.

The Dodge Viper will be picked up by someone, somewhere as it is a good niche vehicle for any fleet. Perhaps the Dodge Challenger could be added to that deal, giving Mopar’s pony car a fresh lease on life.

The Dodge Ram is a capable and very good selling pickup truck with a diesel engine option, excellent storage space and a top notch reputation.  Nissan’s Titan hasn’t performed all that well and the Japanese automaker has an agreement in place with Chrysler LLC whereby the Dodge platform will underpin the next generation Titan model. Sounds like the Dodge Ram could be rechristened the Nissan Titan in the near future.

For the past twenty-five years, Chrysler’s fortunes have ebbed and flowed, but its line of minivans has stood tall. Even as GM and Ford exited the segment, Chrysler LLC has stayed put, fending off Toyota and Honda whose minivans surpass the Chrysler twins (Chrysler Town & Country and Dodge Grand Caravan) in quality but not in sales.  Personally, I would love to see GM or Ford snap up the minivans, but I doubt that  it’ll happen for the same reasons why Jeep won’t be absorbed.

Fiat, Give Us Some Italian Romancing

Beyond that, there isn’t much that anyone will want of Chrysler besides a few decent factories. I would hate to see all of this stuff sold to China, but given that liquidation can take any form that it wants, anything is possible.

Let’s hope that Fiat goes through with its Chrysler alliance, a last gasp effort for a historic automaker.

Further Reading: Chrysler Takes Tough Stance With CAW