GM & Chrysler

31 May

GM is expected imminently to go bankrupt, and Chrysler’s sale to Fiat, S.p.A. is expected to go be concluded by the end of next week.

While in a perfect world, these companies wouldn’t need government handouts to stay afloat, this isn’t a perfect world, and it’s more desirable to bail them out than it is to throw hundreds of thousands of workers out on the street and let the companies fail. Because it’s not just GM or Chrysler. It’s also parts manufacturers, dealerships, and myriad other allied industries. When the spiral is going downward, you don’t hasten it.

The business model for GM has been an anachronism for decades, and this was

The German plate is no accident

The German plate is no accident

inevitable. GM was too big, too heavily laden with legacy costs, building too many crap cars that could barely compete. This bankruptcy offers GM a chance to slough off unnecessary businesses and marques, and a chance to fundamentally restructure its operations to bring them up to 21st century standards.

GM’s automotive offerings have been improving quite starkly lately, and if they could make plants leaner, more flexible, and improve the speed with which new models come to market, they can actually begin to compete with the likes of foreign marques that seem somehow to be able to build good cars competitively in North America.

Chrysler is a different animal altogether. I just looked at Consumer Reports’ auto guide for 2009, and not one, single Chrysler vehicle is “recommended”. Not one. That’s just an epic failure from a car company that very recently was well-respected and innovative. The design of the Chrysler 300 became legendary, but the interiors remained cheap and the drivetrains remained unrefined. I don’t know why former master Daimler-Benz, which certainly knows better, let that happen, but Chrysler is literally to the point where it needs a complete overhaul of its entire line-up, and needs to return Jeep to its core competencies – Grand Cherokees and Wranglers. I’ve seen renderings and photos of Chrysler’s new auto interiors, and they’re a nice step up from what exists now, but probably a step behind where Honda or Toyota or Volkswagen.

Although Fiat has a bad reputation in the States because it generally sold crappy little cars that broke down a lot, in Europe that’s changed. While they still build the occasional quirky thing like the Multipla, their cars are innovative, well-designed, and well-built.

Could be worse. Could be selling rebadged North Korean cars.

2 Responses to “GM & Chrysler”

  1. Terry May 31, 2009 at 7:59 am #

    Somebody seems to get it right…..

  2. Ward June 1, 2009 at 2:58 pm #

    Government Motors will, in all likelihood, be directed to market cars which meet the owner’s (Fed Govt) dictates. These will probably not be cars which the car-buying public actually wants to purchase–after all, the F-150 is still vying for #1 in US sales. The result will be bad for the company. There will be a lot of cardboard, 3-cylinder Euro/China products sitting on car lots, just itching to push up GM’s CAFE numbers.

    Chrysler will be a slightly different story, as its fleet makeup will be dictated by Fiat (until 2005 a partner with GM). Pundit may get to see his beloved 500 on US car lots. The question is–will other Americans also feel the love in numbers sufficient to make Chrysler well? Or will Fiat have to venture into uncharted waters, and design and market cars that Americans actually want? There’s a big difference between selling the 500 to a niche market, and trying to replicate Chrysler’s old sales numbers by selling cars with broad appeal.

    It will be interesting on both fronts.

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