So Far So Good - Dodge Nitro Forum
Chrysler/Dodge/Jeep News Find out the latest scoop here!

LinkBack Thread Tools Display Modes
post #1 of 1 (permalink) Old 05-17-2009, 10:40 PM Thread Starter
Super Moderator
rickaren's Avatar
Join Date: Nov 2006
Location: Indiana
Posts: 22,754
So Far So Good

May 18, 2009
So Far So Good

Less than three weeks after Chrysler filed for bankruptcy protection, it looks as if the Obama administration will pull off its goal of completing the carmaker’s restructuring by June, allowing it to emerge as a smaller, more viable contender in the global auto market.

Unfortunately, Detroit’s problems — and the White House’s — don’t end there. Still looming is the fate of General Motors, a much larger and more complex company than Chrysler. G.M.’s bankruptcy is becoming increasingly likely as its bondholders refuse to accept the government’s terms for a restructuring out of court.

Even if G.M. — with a lot of help — manages to survive bankruptcy, it has yet to show that it has a solution for one of its most fundamental problems: its inability to make cars that consumers want to drive. This is the government’s problem too. Under a plan being negotiated by General Motors and the Treasury, the government would swap some of its loans for a stake of at least 50 percent.

So far, it looks as if Chrysler will emerge from its restructuring a more sensible company, linked up to Italy’s Fiat, which knows how to manufacture and sell fuel-efficient cars. The deal, which could give Fiat up to 51 percent of Chrysler, was designed under the eye of the government to increase Chrysler’s sales overseas and get Fiat to develop fuel-efficient vehicles in the United States by 2013.

Chrysler’s bankruptcy has been so smooth and fast because the government held its hand all the way — including providing financing to keep it running through bankruptcy and cover its warranties so consumers would keep buying.

The process started with a precooked government plan to divvy up the company between Fiat, a trust fund run by the United Automobile Workers union and the American and Canadian governments. Even then it took a sympathetic bankruptcy judge to convince a group of recalcitrant lenders that it was in their best interest to drop their opposition. The company is still meeting fierce resistance from some of the 789 dealers it plans to shutter, as it shrinks to fit its smaller role in the global market.

G.M.’s restructuring is unlikely to go so smoothly. Many of G.M.’s creditors vehemently oppose the government’s plan to give them a 10 percent share of the company in exchange for debt worth some $27 billion while giving 39 percent to a fund run by the U.A.W. to cover obligations worth $10 billion.

The company must still slash labor costs further, and probably fire 20,000 additional workers. It wants to close hundreds of its dealerships. A bankruptcy process would be further complicated by G.M.’s sprawling global nature — and by the prospect that its subsidiaries might have to simultaneously file for bankruptcy in other countries.

Even assuming G.M.’s likely bankruptcy ends felicitously, the automaker will have to pull off the trick of becoming an entirely different company — one that can make fuel-efficient cars to serve a future of expensive energy and environmental strain and then persuade American consumers to buy them. It has little experience with either.

Culling the Hummer and launching the Chevy Volt won’t be enough. G.M. must swiftly pare its gas-guzzling truck and S.U.V. lines, which last year accounted for 11 of its 20 top-selling brands. It must accelerate development of gas-electric hybrids and other higher-technology cars. Pulling this off successfully could well require further help from Washington to coax drivers to pay the premium for fuel-efficient cars.

Fortunately, the government, the U.A.W. and G.M.’s new leadership all seem to get it. They share a broad vision of where the company needs to go. Pulling it off won’t be easy.



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
Chrysler good for Fiat rickaren Chrysler/Dodge/Jeep News 0 04-29-2009 10:11 AM
Busch proves best among Dodge drivers rickaren Chrysler/Dodge/Jeep News 0 04-06-2009 10:01 AM
Good Factory Parts Pricing rickaren Chrysler/Dodge/Jeep News 0 04-12-2008 02:25 PM
And that's a good thing rickaren Chrysler/Dodge/Jeep News 0 07-14-2007 10:22 AM
Seat and Head Restraint Testing, Tundra 'Good,' Nitro 'Poor' rickaren Chrysler/Dodge/Jeep News 0 07-11-2007 03:41 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