Wednesday, April 29, 2009

Can Chyrsler Be Saved?


The talks between the Chrysler and some of the lenders broke off yesterday! Chrysler will go into a government sponsored bankrupcy probably on Friday. Apparently, the government had worked out a deal with the largest banks, which they have given billions of loans in support. But, some of the hedge funds were balking at taking a hair cut! Obviously, no one wants to lose money on their investment, but the current situation is dire.

One of the difficulties for Chrysler in the negotiations is that are a number of different parties involved.....Fiat, four major banks, forty hedge funds, the United Auto Workers (UAW) and the Chrysler dealers. Apparently, for this restructuring to work all the parties involved would have to cooperate. Most if not all would have to take a substantial haircut...that is the million dollar question. Apparently, the hedge funds were the creditors that would not accept what they were offered in negotiations.

The Chrysler production plans are to produce Fiat designed vehicles in the U.S. for sale here and abroad. Car & Driver has an excellent flowchart that shows which vehicles will be produced going forward.

My take is that Chrysler will be put into a government sponsored bankruptcy! If Chrysler survives, the government will have saved Chrysler! So here are a couple of the autos that probably be produced!

Chrysler executives said the day is coming when the whole Chrysler fleet has electric powertrains. "The goal is to achieve fundamental technology, get economies of scale, improve our ability to make the future generations more robust, less cost, smaller, more powerful, better performance," according to Bill Press V.P & President. "Ultimately it will lead to a transformation of our entire fleet that will be in some manner electric drive."





The Dodge EV development vehicle, also called Dodge Circuit EV sports car, is a two-passenger, rear-wheel-drive, all electric sports car that combines a lithium-ion battery pack with a 200-kilowatt motor, capable of generating 268 horsepower. That's enough to propel the vehicle to 60 miles per hour (mph) in less than 5 seconds and to reach a top speed exceeding 120 mph (190 km/h). This car would be in build in cooperation with Lotus Motors and is almost identical to the Tesla Roadster.

The Dodge Zeo is a concept car, which is a four passenger sport wagon, powered by a single 268 hp. electric motor in coordination with a lithium-ion battery pack. It is a rear wheel drive 2+2 that can go 0-60 in 5.7 seconds. It has an effective range of 250 miles (400 km). between charges.

6 comments:

  1. Hello Pete,

    Thank you for your post, because I wanted to read your opinion on this Chrysler's Chapter 11. And I thought you will write about it. Dodge Zeo looks good and I hope they can survive.

    Best regards,
    Shaw Funami
    Fill the Missing Link

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  2. Hi Shaw,

    Since I have a financial background, I have known that technically Chrysler has been insolvent for a while. They have been able to operate only with government funds...so the day has come to reorganize and move forward.

    My opinion, without the government Chrysler would have gone into bankrupcy and probably been liquidated. With the governments help, they will probably survive...hopefully they will build better cars and be profitable.

    My concern is what will happen to the auto suppliers due to the bankrupcy....they are also in a weakened state.

    When car sales turn around demand should be robust since there will be a lot of pent up demand!

    Thanks for your great question!

    Best Regards

    Peter Baca
    The Car Enthusiast Online

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  3. Hi Pete . that was the colour of my Beetle ..it stands out in the crowd!!

    Surely even if bankruptcy occurs .. the knowledge will be there .. it may even be fine tuned (as Ford have done) .. new guys will pop up and I'm sure we'll have similar machines ... just somewhat different - thinking out of the box?

    I might add an orange Dodge Zeo to my list ..!

    Thanks love the pictures ..
    Hilary Melton-Butcher
    Positive Letters

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  4. Hello Pete,

    Thank you for your answering my question. I do hope Chrysler comes back as they did in mid '80s.

    Thanks again.
    Shaw Funami
    Fill the Missing Link

    ReplyDelete
  5. Hello Hilary,

    Bankrupcy in this example will get the creditors lined up. Basically, letting them know how much they are going to recieve!

    Since it is a government sponsored bankrupcy it should be done sooner than a regular chapter 11. Chrysler will come out a smaller organization with much less debt. They will probably build the cars that I outlined.

    My concern would be for all the employees that will be laid off even if they do survive. Also, a number of other organizations can be burned also.

    The Zeo look cool! There is something about the styling that I think would be attractive to people. Nothing like some sales getting the company going again!

    Thank you for your comments!

    Pete Baca
    The Car Enthusiast Online

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  6. Hi Shaw,

    Thank you for your questions! I think that Fiat will be the big winner out of this! They don't have to put up cash, Chrysler gets rid of major debts, they get a entry to the U.S. market.

    All they had to do was give some of their plans for their cars to Chrysler! Sounds like a winner to me!

    Thank you for your comments!

    Pete Baca
    The Car Enthusiast Online

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