AUTOMOBILE WEEK : Chrysler (PART 1)

Jay Leno's 1956 Chrysler 300
(one of 116 cars Jay has collected)

"I believe that, all things being equal, Americans will buy American. It just has to be as good as the competition; it doesn’t have to be better. The classic example is Harley-Davidson. Throughout the ’70s, the motorcycle maker had huge quality-control problems. Then Harley-Davidson said, “Look, let’s take our time. Let’s build fewer bikes. Let’s build them properly, so they don’t leak oil and they’ll run forever.” Harley-Davidson won back the market share it had lost, and it continues to dominate today. Even though the bikes might not be technically superior, they’re bulletproof and they’re American. People will buy American if given the chance".

--Jay Leno

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From the age of 6, I fell in love with cars. As a little kid, I could spot a car half a mile away and call out the make. That was fun! I hand-assembled over 120 model car kits. The cars I really love are the ones built before 1973--the ones that you see guys like Bruce Springsteen and Jon Bon Jovi leaning against in CD liner photos. But the world has changed. The "Big Three"--General Motors, Ford and Chrysler axed 269,440 jobs. The weakest company of the "Big Three" is Chrysler Corporation, LLC. In the 1970's, CEO Lee Iacocca and a brilliant Chief Financial Officer named Gerald Greenwald pulled off a stunning victory from bankruptcy. They were hero's. But Lee and Jerry are mega millionaires now, and enjoy living the good life without all the heartburn (and Pepto-Bismol) associated with running a car company. Unfortunately, Germany's Daimler-Benz Corporation bought Chrysler for $36 billion in 1998, joked about having lied about their intentions and spent the last 10 years letting the company slide into trouble before they sold it for just $7.4 billion to private investors. The investors bought out the shareholders and now have 80.1 percent control with Daimler holding 19.9 percent. They call themselves by a weird name, too: "Cerberus". Daimler-Chrysler had just laid off 13,000 employees before the sale to Cerberus closed, and recently 10,000 more jobs were eliminated. Cars such as the Dodge Magnum, the Chrysler Crossfire, Pacifica, and the PT Cruiser convertible were halted due to poor sales. Experts say this was necessary. But how will Chrysler rebuild? Do they have time? Not much. Chrysler's problems are similar to their competitors. They have too many dealers, an outdated product that nobody was buying (with the possible exception of Jeeps), and just 10 percent of the overseas market with $9 billion in the bank. When I was a kid, Plymouth was the "muscle car" to "Wow" over! Today, that moniker is long gone. And Charger is the only "muscle car" left over (to compete with Ford's Mustang GT). I used to own a Mustang GT (see my Photo Pages). Gas was well under $2.00 a gallon (U.S.) when I sold it, and as much fun as that car was, I don't miss it. In fact, the gas bills from my 88-mile daily commutes in broadcasting back then was a huge burden. So, today only Bill Gates and Warren Buffett get to drive my old car...Seriously! Enough already. Let's look at Chrysler's survival plan.

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The Plan: Chrysler has loaded up the company with experienced executives to help out CEO Bob Nardelli, ex of Home Depot (yeah, that guy). They come to Chrysler from backgrounds at Ford, G.M, Lexus and Nissan. They will move quickly to shrink the company, buff up the product line and place Chrysler, Dodge and Jeep under one roof--so to speak. Since they have neither time or deep pockets (rivals G.M. and Ford have 4 times more capital on hand) Nissan will build a subcompact for Chrysler to market in South America, while China's Chery Automobile will make a small car this year for international markets that looks a lot like the Chevy Cobalt.

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My View: They have a shot, but it's a very "long shot". And I say this because privately owned Chrysler is still building fuel guzzlers such as the Dodge Journey at 19 miles per gallon (in city driving). Their "hybrids" are the Dodge Durango and Chrysler Aspen full-sized S.U.V.'s (which are almost identical, and just plain stupid because nobody can afford to drive them anymore!). The company is too weak to float a public offering. So, they need to be nimble and they will need a lot of luck to avoid joining the ranks of companies they bought out in the past who found themselves in the same situation. Those car companies were around long before you and I were even a thought in our parent's minds: Hudson, Nash and Overland-Willy's (the latter became Jeep). These three consolidated to become "American Motors". Chrysler bought AMC in 1987 when they were still a huge corporation. Now, Chrysler is a mere shadow of itself. For the sake of the remaining American employees, I wish them well!

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In the next 2 days we'll look at G.M. and Ford. Why?...
because this is AUTOMOBILE WEEK!

My Complete Website is: www.michaelmanning.tv