Chrysler: Better dead or alive?

Bankrupt or not, the automaker's future looks increasingly precarious.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
Alex Taylor III, Senior editor

Cars that wrecked Chrysler
Chrysler was king of the hill with its 300 series just a few years ago. Oh how the mighty have fallen.
What do you think of the government's efforts to keep Chrysler going?
  • It's doing what's appropriate
  • It should be working harder
  • It should do less and let Chrysler fold

Find your next Car

NEW YORK (Fortune) -- Chrysler is undergoing the last bits of metamorphosis as it is hopefully transforms from a caterpillar into a butterfly.

Don't hold your breath. I like Chrysler better as a ground crawler than I do airborne. The new Chrysler will have so many moving pieces, it will defy the laws of aerodynamics. None of them are flight-tested and it is hard to imagine them all working together.

Consider: Fiat is moving in to gift Chrysler with its technology, its new model designs, and possibly its CEO. While Chrysler can certainly use some modern powertrains, fresh product entries, and automotive experience at the top of the company, there are so many risks associated with this deal as to make it almost not worth doing.

For one thing, the opportunities for culture-clash are huge, as veterans of the disastrous Daimler-Chrysler hookup can testify. The record of two complex organizations like auto companies successfully linking up - even those within the same national borders - is poor.

And the Germans at least had a lot to bring to the table: They had a plan, they had money, and they had time. (Actually given all that, it is amazing they messed it up as badly as they did).

Despite its improved financial performance in recent years, Fiat has never been considered one of Europe's stronger players. The quality of its cars remains dodgy and, outside of their home country, they aren't particularly popular.

Now if Volkswagen had come after Chrysler, that would be a different story. The Germany automaker has a record of assimilating car companies from different countries, like Skoda (Czechoslovakia) and SEAT (Spain).

Finally on the Fiat front, it will be two years minimum before anything developed in the engineering halls in Turin makes it way to Auburn Hills. What is Chrysler supposed to do in the meantime? With new federal fuel economy standards fast approaching, there is no time to waste.

At least Fiat is experienced in dealing with labor unions. That's a good thing, since the United Auto Workers will be Chrysler's majority owner under the new setup.

The history of employee-owned companies is dismal in this country. It is hard for workers who felt exploited by their previous owners to avoid cutting themselves all sorts of deals that are not in the company's best interest. It will be especially hard for members of the UAW, with their embedded feelings of grievance and entitlement.

And finally, Chrysler and its brands - Chrysler, Dodge, and Jeep - have been so soiled by this entire experience that it is hard to imagine them ever recovering. When you combine their lack of brand strength with the paucity of product in the pipeline, you have to be skeptical about their offerings.

In a new report from Goldman Sachs, analyst Patrick Archambault writes : "We continue to have questions over Chrysler's long-term viability. Even with Fiat, we forecast a reduction in market share from 11% in 2006 to 5.1% by 2012."

If you are keeping score at home, that would sink Chrysler below Hyundai/Kia. Now, if the Koreans had only shown some interest... To top of page

Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.