The Auto Writer

All three U.S. automakers are in a heap of trouble, but Chrysler is the most distressed automaker of them all.

While General Motors and the Ford Motor Company have huge, but surmountable obstacles to overcome, Chrysler may have dug a hole too deep for the company to get out of. GM and Ford sell many more cars overseas than they do in the US, but Chrysler derives about 90% of its sales from the weak US market.

Dodge, Jeep, and Chrysler Sales Are Down Sharply

U.S. sales for Chrysler through August were down by 24.2% (according to Autodata Corp.), a larger drop off than Ford or GM.

Unlike its domestic competitors, Chrysler doesn’t have a Ford Focus or Chevrolet Cobalt to turn to, a car that gets industry leading fuel economy. Its smallest car, the Dodge Caliber, gets 24 mpg/city and 30 mpg/highway for 2009, well below the 25/37 for the Cobalt XFE and the 24/35 for the Focus. With too few high mileage vehicles available (the Dodge Avenger is one other car that gets 30 mpg), customers are fleeing to Honda, Subaru, and other manufacturers to find relief or waiting for the present economic conditions to improve.

Thus, the company finds itself with a line up of vehicles that not enough buyers want and limited resources to make the switch over to a fuel efficient fleet. But, by the looks of an announcement made by Jim Press this past Wednesday — Chrysler’s President and Vice Chairman — the company has grand plans to overhaul its fleet, introducing as many as nine new models by the end of 2010.

I just wish I could believe that Chrysler LLC will make it happen.

New Cars In The Product Planning Pipeline

As reported by the Detroit Free Press, Press contends that Chrysler will field an all-new Chrysler 300 and Dodge Charger, roll out an updated Jeep Cherokee (built on a car platform), and release an all-new Dodge Durango SUV. A small car being built for Chrysler is expected to arrive from Nissan, possibly the Dodge Hornet (pictured). Beyond that, analysts aren’t certain what else Chrysler has in mind as, unlike General Motors, the company is holding its new product offerings close to the vest.

Press Discusses The Federal Auto Industry Loan Guarantee Package

Besides outlining what Chrysler LLC has coming down the pipeline, Press went on to discuss the federal loan guarantee appropriation (earmark) that is part of the U.S. Department of Energy’s effort to help the U.S. become much less dependent on foreign oil. In that discussion, which has been posted to The Firehouse — Chrysler’s media blog — Press made the following points:

• The loan guarantee isn’t a bailout as Chrysler will have to repay what they owe plus interest.

• Besides GM, Ford, and Chrysler, the loan guarantee would be made available to any auto maker who has been building cars in the US for the past twenty years in addition to suppliers. Suppliers would include battery manufacturers, electric motor builders, and other companies who can help the auto industry through advanced technology.

• Loan monies would enable the automakers to “accelerate technology and put it into the hands of their customers faster.” Chrysler says that they have fuel efficient vehicles in the planning stages, cars that will meet future CAFE (corporate average fuel economy) requirements. The loans would enable the automaker to move development of these vehicles up by years, not months.

• Press also said that while we’re making the move away from foreign oil, we also need to make a move toward utilizing American technology, perhaps taking an indirect swipe at GM whose lithium-ion batteries for the Chevrolet Volt will come from one of two manufacturers, one based in South Korea and the other in Germany. Press mentioned that we must be careful not to switch our reliance on foreign oil to a reliance on foreign technology.

I Hope That They Succeed

Although I’m most pessimistic about the fortunes of Chrysler, LLC, I do hope that the company succeeds. Without some sort of federal intervention, Chrysler won’t last and the going for General Motors and Ford will be especially tough.

I’m not big on government intervention, but since the federal government is behind the new CAFE numbers, some sort of provision to see the auto industry through this time seems necessary. Both of the major political party’s presidential candidates — John McCain and Barach Obama — have endorsed the $25 billion package, with Obama saying that he is in favor of an expanded $50 billion energy package.