What's Next?

The decision by Justice Ginsburg to delay the sale of Chrysler to Fiat until further notice may mean a lot or may mean very little. The action taken today is merely a delay - possibly only for a day or so, in order to review the documentation, before deciding to hear or dismiss the appeal.

If that's what is intended, an effort to peer under the hood to see if anything is amiss before dismissing, then look for a decision before Saturday. For some reason 15 June 2009 is important (upon which Fiat's obligation to 'purchase' Chrysler expires. ; -)

If, in the next day or so, the Supreme Court declares that they will hear the appeal, the Fiat deal is gone. Arranging a marriage partner at that point will be difficult at best and the most that can be hoped for is the liquidation of Chrysler, the most valuable piece of which is the Jeep brand.

And if the court does decide to hear the appeal, what has to be done to ensure the GM bankruptcy doesn't suffer the same fate?

The Clock Is Ticking

There is a 4 pm deadline today for the Supreme Court to accept or decline intervening in a decision to let the Chrysler sale to Fiat go through. If the Supreme Court decides to take the case, look for lots of hand-wringing and gnashing of teeth on the part of administration spokespersons and talking heads on the boob tube.

Myself, I give it 1 in 3 odds of the court wanting to stick their noses in this one.

There's also been some discussion about how poorly vetted the deal with Fiat has been. To say the least it was a hastily arranged marriage, kinda like Bank of America and Merrill Lynch. ; -)

'Oh the Tangled Web We Weave . . .'

The NY Times is reporting that GM is seeking an equity stake in Fiat for the turnover of GM's Latin American and European operations.

So Fiat owns Chrysler and GM owns a big chunk of Fiat? Ho boy. ; -)

Fiat's UK Customer Satisfaction Numbers

MotorAuthority has this story regarding Fiat's UK J.D. Power satisfaction rankings.

I owned a Fiat, a 128, an important vehicle in the grand scheme of things (at least LJK Setright thought so). But it was not a very well built car. That was in 1976, however, and hopefully Fiat has learned a few things about screwing cars together in the intervening years. ; -)

Fiat's Ambition

Fiat, not long from financial ill health itself, seems to be intent on soaking up the marginal players in the current business cycle. They are intent on picking up GM's Europe holdings.

Frankly this is a bit troubling because neither Chrysler or GM Europe has made a profit recently. Will these two additions prove to be the 'gravitas' that propels Fiat to the forefront of automakers, or will they prove to be the Albatross around the neck that brings Fiat down?

I suspect the answer will depend on the type of recovery we see from the current recession. If it is a V-shaped or even U-shaped recovery, they may come out smelling like a rose. But if it is an L-shaped recovery, Fiat may wish it hadn't reached for an Opel or Dodge too far. ; -)

The Consumation of Chrysler

Well - what a turn of events. While GM is slowly being whittled away into what is hoped to be a sustainable company, Chrysler appears to be off the hook.

They're not really. Word is out that the UAW has approved contract concessions for Chrysler and Fiat has agreed to manage Chrysler (and Fiat still isn't taking on Chrysler debt, AFAIK). What exactly is going on?

Well, it may be best summarized as the invasion of the pod people, Italian style. Basically, Fiat is getting a husk of a company (or the infrastructure of an industrial company) with which it can mold its, Fiat's, reentry into the US market. Fiat will displace the current CEO, Bob Nardelli with a CEO of their own (and who knows what will happen to Jim Press).

What Fiat gets is the ability to build, service and sell Fiats, Alfa Romeos, (and please, please Fiat, bring in Lancias) in the US using the existing structure Chrysler has in place. Expect few if any Chrysler models to survive beyond 2011, possibly some Dodge product will survive, and Jeep should be left pretty much intact (with some of the weaker Jeep product, such as the Compass, going away).

This is a completely different outcome than expected for GM, it basically appears that the US government had enough sense to own only one auto maker. ; -)

Reports of UAW Accord with Chrysler

Now Automotive News is reporting that the UAW has reached an agreement with Chrysler, Fiat and the US government regarding contract concessions. We'll have to see if it's too little. too late.

Anyone Need Machine Tools?

This doesn't look good. According to this article, on Seeking Alpha, there are reports from the German press that Fiat will pick up Opel. The machinations around the bailout and potential Chrysler bankruptcy had to have been a factor.

Chrysler will probably end up in liquidation.

A Glimmer of Hope for Chrysler

The Detroit News has a story up saying that the Chrysler and the Canadian Auto Workers (CAW) have reached on an agreement on concessions. That provides a small glimmer of hope that Chrysler may be able to survive.

Meanwhile, back at Rancho Fiat, Fiat has been working on a 'Plan B' in case the Chrysler deal comes to naught. Word is they've been talking to GM regarding picking up Opel.

In the grand scheme of things we'll have the biggies, VW, Toyota, Fiat, Ford, and a whole bunch of also rans and boutique brands.

Chrysler

It's looking less and less like Chrysler will make it. Fiat is saying that if both the UAW and CAW (Canadian Auto Workers) don't accept significant pay cuts they will pull out of the proposed merger.

I don't believe this is going to happen.

Brief History of Chrysler Motors

Chrysler is the newest of the old line American 'Big 3' car companies. Chrysler cars hit the market in 1925 built in the Maxwell Motors facilities that Walter P. Chrysler had purchased four years earlier.

Walter P. Chrysler got his start in the railroad business as a machinist and mechanic in Kansas. He later ran Buick and when William C. Durant captured GM (for the second time), Chrysler tendered his resignation. Durant offered him an unprecedented salary and Chrysler was smart enough to accept it.

When he quit GM a few years later he was hired to fix Willys-Overland (for another unprecedented salary) which gave him the wherewithal to purchase Maxwell. Chrysler gave the company's product his name and later added Plymouth and De Soto to the product portfolio.

The Dodge Brothers concern floundered after the death of Horace and John; Chrylser purchased it in 1928. Shortly thereafter Dodge Brothers cars became simply Dodge cars.

Chrysler was known for engineering prowess (first mass produced four wheel hydraulic brakes) and in the mid-1930's was in second place in sales for US car manufacturers.

It moved through the late 1950s and into the early 1970s on the strength of the 'Hemi' engine and muscle cars. But by the end of the 1970s Chrysler needed government guarantees to obtain loans. Enter Lee Iacocca as CEO, and pitchman extraordinare, with the old salt, "If you can find a better car, buy it."

Chrysler survived on the strength of K cars and eventually one of the single most significant vehicles to ever exist, the minivan. (And the story of the minivan's origin is worthy of a novel. The short of it is that Ford originated the idea but didn't follow through.)

In the late 1980s Chrysler acquired the terminally ill American Motors, and quickly (and quietly) disposed of everything but the Jeep brand (and that was the reason American Motors was purchased). Along the way Chrysler picked up Bob Lutz and the Dodge Viper and Plymouth Prowler emerged.

Then Daimler-Benz pulled off a hostile takeover in the guise of a merger and that wasn't pretty for all concerned. (That chapter of Chrysler's history is well documented in the book, 'Taken for a Ride', by Vlasic & Stertz.)

But recently Chrysler has been lost in the wilderness, with wrong and uncompetitive product. In the end, Fiat is interested in the manufacturing capacity of Chrysler (and possibly the Jeep brand name). But if the government insists that Fiat absorb some or all of Chrysler's debt, look for the deal to fall through.

The last thing of any significant value in Chrysler is the Jeep name, and that brand's roots go back to Willys-Overland and without Walter P. Chrysler's ministrations in the early 1920s it wouldn't be there now to tempt a potential savior.