• Apr 16, 2010



When General Motors and Chrysler entered bankruptcy proceedings in 2009, it was very clear that one company had a future product portfolio and one didn't. So while The General received the lion's share of government funding, Chrysler was basically given to Fiat with the hope that Team Pentastar could benefit from platform and product sharing. The early results of the Chrysler/Fiat team have been somewhat encouraging. Fiat-Chrysler CEO Sergio Marchionne and his team have made significant progress cutting costs, and the management team created a five-year plan for Chrysler that includes new, Fiat-derived platforms and re-badged Lancias and Alfa Romeos.

Will these steps be enough for Chrysler to remain the full-line manufacturer it is today? A report in Automotive News shows that Bernstein Research analyst Max Warburton doesn't seem to think so. Warburton reportedly wrote in an assessment for Fiat investors that "we remain unconvinced Chrysler will survive in its current form despite Marchionne's blood, sweat and tears." Warburton cites four unnamed senior executives from Detroit.

The analyst's feelings come despite the fact that he feels Chrysler will come close to breaking even in the first quarter even with relatively poor sales. Warburton actually anticipates that Marchionne will announce Chrysler made a small profit in the month of March. So why the doom and gloom? Warburton cites Chrysler's still limited product development, light product portfolio and limited synergies between the two companies. The analyst also points to Marchionne's target for Chrysler to hit a 14 percent market share by 2014 as a reason for alarm. Chrysler hasn't been at 14 percent market share since 2000, and the Pentastar is currently just under 10 percent share.

In the report for Fiat investors, Warburton called a reasonable exit exit strategy from the situation "a slimming down of Chrysler to be just Ram, Jeep and a U.S. production base for Fiat." We're quite positive the folks in Auburn Hills, MI wouldn't like that plan. What do you think? Drop us a line or two in 'Comments.'

[Source: Automotive News - sub. req. | Image: Geoff Robins/AFP/Getty]



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  • 131 Comments
      • 4 Years Ago
      it takes years for a car company to turn around

      what did they expect? brand new models designed from scratch in 14 months selling like hot cakes already?

      nothing meaningful can happen in under 5 years
      • 4 Years Ago
      Fiat itself is on shaky ground and reluctant to pump substantial investment into Chrysler. The company is in just as deep doo-doo as Saab and makes things over at GM look rosy in comparison.

      The President's auto task force even knew this before they made the decision to pump taxpayer money into Chrysler then hand the keys over to the UAW and Fiat at no extra charge. The justification was "jobs". These jobs were lost already and the bailout is prolonging the inevitable. Same for GM to an extent. Same with Saab.

      GM and Ford would be better off with Chrysler liquidated, consumers have already spoken and unless something drastic or miraculous happens that isn't going to change.
      • 4 Years Ago
      They can't leave! Who's gonna make all the rental cars?
      • 4 Years Ago
      Chrysler is a dinosaur. Killing all but the trucks and Jeep is fine with me.
      • 4 Years Ago
      If we would have sat back, let the dust settle, and see what happened, Chrysler would already be gone. The government didn't sit back, they provided Chrysler with bail-out money. Even after pumping millions of dollars in loan money, analysts are still questioning whether they will be able to survive. The market is very competitive and Chrysler does not have the 5+ years it would take to develop a complete line of vehicles that can compete with what is coming out, let alone develop a product that consumers would prefer over another Ford/Toyota/Honda/GM/Hyundai/Kia offering. The only way I see the Chrysler brand surviving is by massive downsizing, to maybe one or two brands, then trying to rebuild and expand at a later time when the economy warrants it. Just my two cents I suppose.
        • 4 Years Ago
        Umm . . . this was never about saving Chrysler. Chrysler goes under, the worry was that the entire auto industry goes under. You might know that suppliers had been on the ropes for years. Suppliers who supply many more assemblers than Chrysler. Getting money--government backed loans, not bailouts--into the hands of Chrysler (and GM) really meant getting money into the hands of the suppliers.

        Sit back, and the government would have repeated the mistakes of 1929-1931. And we'd still be sitting in Great Depression II with 15 or 20% unemployment, rather than a recovery gathering steam. Believe me, Ben Bernanke and Henry Paulson are free-marketers who loathed what they had to do, but made the right call at the right time.

        And, don't count out Marchionne. Everyone said he couldn't save Fiat either. He's only running Fiat because GM bailed on Fiat. He enjoys proving people wrong.
        • 4 Years Ago
        If the only purpose was to protect the USDM, it would have been enough to simply save GM and let Chrysler fail.
      • 4 Years Ago
      I believe Chrysler has more than just Jeep and Ram to salvage. The large sedans (300, Charger, Challenger) need updating but are good basic platforms. They can do something with the minivans as well. Their big problem is that their quality hasn't been competitive, and they have a lot to prove with any small to medium size products based on Fiat platforms too. I would be skeptical of buying any of their products until they prove their quality and reliability.
      jmichaelh
      • 4 Years Ago
      sounds like b.s. planted by government run gm to slim down competition even more...even beyond the toyota assault...this is the second chrysler slur i have seen in the past few days!
      • 4 Years Ago
      "limited synergies"? smells a lot more like just another mouthpiece who's frustrated that Chrysler and Marchionne don't hand them ready-to-print sound bites.

      the all-new Grand Cherokee goes into production within weeks, the all-new Pentastar engine is already in production, Fiat 500s will be on sale this year, heavily revised Sebrings, 300s and Chargers are on the way.

      the writer needs to do some more homework before "knowing" that Chrysler should become a Fiat factory.
        • 4 Years Ago
        Isn't Warburton the same joker who, through 'trusted sources' speculated that GM was going to buy Chrysler to get at their 10 billion dollar warchest, using it to dismantle the company and take over key technologies/groups such as RAM and Jeep?
        • 4 Years Ago
        And isn't Max Warburton the same one who recommended buying Daimler after they sold Chrysler? Daimler at the time of Chyrsler sale was trading at almost a $100 and now it's $50!
      • 4 Years Ago
      To Sparrk : Get your facts before spouting off . When Benz took over Chrysler , Chrysler had $12 billion in cash reserves , employees had got over $10,000 in profit-sharing the previous 4 years in a row . The next year the profit sharing was $500 and none after that .Benz never did say what happen to the $12 billion in cash . They quit making the Neon , the best mileage car Chrysler had and replaced it with one that got 8 MPG less. How many Neons could they sell now , I am thinking all they could make . In other words Benz raped Chrysler and threw them out to rot . GET YOUR FACTS STRAIGHT
      • 4 Years Ago
      My family has owned Chrylers for many years. The ironic part of their current troubles is that some of their cars were the finest in their class. The Chrysler 300 is an excellent car, athough the combination of the economy freefall & the rape by Daimler has left them unable to come up with new versions. Essentially the 300 now is basically a 2008/9 model while Ford and lately GM are selling new 2010 versions in the same class. It's a joke to think that Fiat can rescue them. Fiats have always been unreliable pieces of junk. Had they been taken over by a good company (aka Daimler) that really intended to improve the company, they would be making a strong comeback. Daimler took the money, put it into improving their own styling using Chrysler designers, and left Chrysler for dead.
      bd
      • 4 Years Ago
      FYI, we have 5 Jeeps, all made by Chrysler, a 90 Cherokee (with 325,000 miles), a 98 Grand Cherokee (155,000 miles), a 99 Grand Cherokee(190,000 miles), my son's 97 Grand Cherokee (179,000 miles), and my daughter's 99 Grand Cherokee (159,000 miles). All have had minimal maintenance (oil changes, tuneups, etc) and minor repairs throughout their lifetime, except the 90 Cherokee, which has been kept all original except two engine replacements, due to the high mileage. I wouldn't buy any other 4 wheel drive SUV's, for any price (give me a transfer case with a lever instead of push button 4 wheel drive or all wheel drive), anytime. These things are tanks; they go anywhere, anytime. through any weather or any terrain, and only require the right tires, skills and knowledge to know how to drive them and where. Jeep...there's only one!
      • 4 Years Ago
      Just RAM and Jeep? I don't think this will happen.
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