Chrysler’s time is up:
An administration official said the government had the “full support of Chrysler’s key stakeholders” in its efforts to restructure the company and expressed confidence about Chrysler’s prospects for emerging stronger. But the official, who declined to speak for attribution ahead of President Obama’s announcement, made it clear that the administration was frustrated with the holdout creditors.
A key part of the restructuring plan involves the Italian automaker Fiat. According to people briefed on the talks, who requested anonymity because they were not authorized to speak for the government, Chrysler would file for bankruptcy first, then would present an agreement with Fiat to the court for approval, possibly on Monday.
On the one hand, people are a bit too simplistic when they claim that the company hasn’t been making cars people want; the Challenger, Chrysler 300, Magnum, Ram pickup, the Viper, and the hideously ugly PT Cruiser are all successful cars in their categories, and the Neon has sold very well. On the other, the company doesn’t have a single car that gets mileage better than 30MPG (I’m searching for the source on this–I read it in one of the Chrysler-Fiat news stories). It operates in a highly complex organizational environment with the UAW, suppliers, and its recent split from Daimler. It’s kind of a clunky company.
It’s not clear to me that bankruptcy or a Fiat merger would improve Chrysler’s situation. While Fiat would bring high-efficiency cars such as the 500, Bravo, and Panda to a cash-strapped US market, Chrysler doesn’t have a good record with mergers, and Fiat has its own family culture that at first blush seems incompatible with Chrysler’s bureaucracy. Money for new product development will be tight. Also, the UAW will likely see increased ownership in the company, and that organization’s goals are often at odds with those of the company and the market.
There also is the matter of the new boss. No matter what the org chart says, Obama’s in charge. He sets the company’s performance standards and holds them accountable through the provision and withholding of support. That presents its own set of challenges.
