Chrysler, Jeep and Dodge are in the beginning of a pre-packaged bankruptcy. The judge has already approved $4.5 billion dollars in loans yet the car company has already told dealers there will be NO PRODUCTION during the two month BK process. Dealers have inventory, but not enough of the models that sell well. Hence, the opportunity to put additional sales on the books during the 60 day hiatus is lost to factory freeze. Dealers placing orders today are being assured their cars will be built this summer as 2010′s, but probably won’t reach the showrooms ’til fall. Given the standing supply and consumer uncertainty, will Chrysler amp up rebates to help dealers clear their lots, or leave them to choke on slow-movers ?
The biggest question daunting the public and the government appointed car czars (who masterfully designed the BK) is “will American car buyers trust a car company salvaged by the government, to make a reliable, safe, quality vehicle at a reasonable price? IS FIAT’s reputation for building cars that don’t break? What Chrysler has never understood is repeated visits to the dealership for repairs, even under warranty, is not a plus in the mind of the consumer. For our loan money, are we getting a truly competitive car or just one that returns a profit to the shareholders, now US.
The car buyers I work with are buying new and used Toyota, Honda and Nissan products, or their high-line luxury brand sisters. The car shoppers I know rarely ask me to get them a price on a Dodge, Chrysler or Jeep, after owning one with one too many problems. The Cummins Diesel problems of 2007, and 2008 involving the EPA required ultra-low sulfur fuel and DPF regen systems have destroyed the holy grail of Dodge profit; the RAM 2500/3500 Cummins Diesel. Will the government back the failed turbos, DPF’s and emission systems of the Dodge Cummins? President Obama has repeatedly said the factory warranty will be backed by the government and parts will be available. Great. Will there be any Chrysler, Jeep or Dodge dealers left to do the work? This week in Las Vegas, the second, and remaining Alpha (Chrysler, Jeep, Dodge) dealership closed. I expect it will take more than President Obama seen riding in a Chrysler 300 Presidential stretch limo to convince consumers Chrysler is the real deal.
Adding another question mark to the equation of life after BK for Chrysler; Will the new 2010 NHTSA five star safety crash test ratings spell trouble for the release of the newly redesigned Jeep Wrangler, or launch of the 200 and EV-SUV Nitro? Chrysler’s history of 5 star results have been mixed at best.
If consumers don’t belly up to the bar when Chrysler emerges from bankruptcy, will the factory continue the heritage of rebates, 0% financing incentives and lifetime warranty giveaways that fostered two decades of buying the business? WIll Chrysler Financial, have the restored luster and deep pockets to buy the auto loans consumers need? If CFC isn’t part of the reorganization, with specific benchmarks to meet, give the $4.5B back now.
These are but a few of the many issues facing the Pentastar behemouth, many wonder if it’s worth saving? What do you think?
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Sarah Lee is an automotive executive with 20+ years of experience. She writes about Cars, and is a staunch consumer advocate on car related subjects. Her company: MY CARLADY is a car buyer’s service committed to getting you the best deal on your next new or pre-owned vehicle. You can reach her at www.mycarlady.com
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