But what about the Sebring? Or Caliber? Or Nitro? - Dodge Nitro Forum
Chrysler/Dodge/Jeep News Find out the latest scoop here!

LinkBack Thread Tools Display Modes
post #1 of 1 (permalink) Old 10-27-2008, 10:41 AM Thread Starter
Super Moderator
rickaren's Avatar
Join Date: Nov 2006
Location: Indiana
Posts: 22,858
But what about the Sebring? Or Caliber? Or Nitro?

Why Detroit's Big 3 Car Companies Could Become Big 2
The economic crisis may be the last straw for a weakened Chrysler.

Posted October 27, 2008

To many Americans, Chrysler is a household name. But what about the Sebring? Or Caliber? Or Nitro?

If those don't sound like must-have vehicles, that helps explain why the Detroit 3 may soon become 2. As Chrysler explores a shotgun wedding with General Motors—or, failing that, Nissan-Renault—Detroit's defenders argue that soaring gas prices, the housing bust, and other unforeseen factors have blown domestic automakers off course and forced emergency measures. But the sudden pressure only hastens a Darwinian reckoning that's been looming over one of America's biggest manufacturing sectors for a decade. Detroit is finally facing a gruesome reality: America no longer needs three homegrown carmakers.
When the gravel stops flying, the Detroit 3 might still be intact, since Washington is obviously bailout happy. The Feds have already agreed to lend GM, Ford, Chrysler, and their suppliers $25 billion this year, and there's talk of another $25 billion in 2009. And since Washington has already taken over Fannie Mae and Freddie Mac and purchased stakes in several banks, some automaker shares might balance out the federal portfolio.

But even a bailout could be poisoned medicine, because there simply aren't enough buyers for all the cars Detroit pumps out. Just a few years ago, Detroit could peddle mediocre models like the Chrysler Sebring, Chevrolet Equinox, and Mercury Montego because the car business, fueled by soaring home equity, was booming. All three automakers had plans to downsize operations and restore profitability—gradually.

But they planned for a clear road, not a cliff dive. With the economy faltering, sales this year could be as low as 13.5 million vehicles—down from the 2006 peak of about 17 million. Next year, they could fall below 12 million. Automakers are hurting worldwide, but Detroit, with too many SUVs and a weak lineup of smaller vehicles, is suffering the most. If 2009 plays out as expected, GM and Ford could run out of cash. Privately owned Chrysler doesn't report its finances, but its sales have plunged more than those of any of its competitors. "I don't think Chrysler is going to be able to become competitive again," says David Silver of the research firm Wall Street Strategies.

Hummer. The government bailed out Chrysler once before, in 1980, and Detroit has seen much consolidation over the decades. Chrysler itself is an amalgam of Dodge, acquired in 1928, and American Motors, picked up in 1987. But a GM-Chrysler linkup would be a makeshift marriage at best. There are only a few positives. GM could use Chrysler's minivans, and the popular Jeep lineup could replace the ostentatious Hummer division, which GM hopes to sell. But GM might have to kill the remainder of Chrysler's lineup.

That could threaten at least 30,000 jobs, says trade publication Ward ' s Auto, and still leave an oversupply problem. Ward's estimates that if GM kept only Chrysler's Jeep and minivan operations, overall industry capacity would still be about 25 percent higher than actual sales this year. Much of the overhang would belong to GM, which could lose at least $10 billion in 2008, according to Zacks Equity Research.

But the deal isn't about "synergy" anyway. Last year, private equity firm Cerberus Capital Management bought most of the No. 3 U.S. automaker from DaimlerChrysler—pretty lousy timing. Cerberus also owns 51 percent of GM's financing arm, GMAC—and appears to be using GMAC as a cudgel to unload its hydroplaning car company. GMAC recently tightened lending standards, for example, which could crimp GM's sales even more. But if GM buys Chrysler, those loans might loosen up. Cerberus could also sell Chrysler in parts, which might be painful but possibly the best long-term solution. "The American industry would be much stronger today if Chrysler had been allowed to go out of business in 1980," says Jack Nerad, executive editorial director of kbb.com, a car research site. He points to other brands, like Oldsmobile and Plymouth, that vanished without wrecking the industry. So maybe it's a good time to buy a Sebring after all. It could end up a collector's item.

LINK:Why Detroit's Big 3 Car Companies Could Become Big 2 - US News and World Report


Nitro Year: 2007 (1 of 91,815 sold in 07)
Nitro Model: R/T 4X4 Stone White
CAT-BACK Exhaust, CAI, Projector Head Lamps
Fully-Equipped w/all factory options
rickaren is online now  
Sponsored Links

  Dodge Nitro Forum > Dodge Nitro News & Polls > Chrysler/Dodge/Jeep News

Quick Reply

Register Now

In order to be able to post messages on the Dodge Nitro Forum forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.

User Name:
Please enter a password for your user account. Note that passwords are case-sensitive.


Confirm Password:
Email Address
Please enter a valid email address for yourself.

Email Address:


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools
Show Printable Version Show Printable Version
Email this Page Email this Page
Display Modes
Linear Mode Linear Mode

Similar Threads
Thread Thread Starter Forum Replies Last Post
2009 Nitro Page 2 rickaren Dodge Nitro News 1 09-09-2008 07:53 PM
All-new Dodge Caliber SRT4® Launches in Markets Outside of North America rickaren Chrysler/Dodge/Jeep News 0 04-01-2008 11:48 AM
Nitro is a Dud? rickaren Chrysler/Dodge/Jeep News 1 06-08-2007 07:14 PM
New Nitro TV ad and marketing campaign ResumeSpeed Chrysler/Dodge/Jeep News 1 11-04-2006 12:17 PM
Dodge launches 2007 Dodge Nitro ekool Chrysler/Dodge/Jeep News 1 03-08-2006 03:47 PM

Posting Rules  
You may not post new threads
You may post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On

For the best viewing experience please update your browser to Google Chrome