“CAN THEY MAKE IT? CAN THEY MAKE IT?”

5/1/09

A more fun, and less scary, line of argument regarding the Chrysler bankruptcy is whether the company can make it in whatever guise in which it emerges from bankruptcy. Three, or maybe two and a half, items are most salient here.

First, the UAW will own, if not 55%, as currently envisioned, a substantial chunk of the company. Some fear that this union ownership will inhibit Sergio Marchionne (the latest in a long line of very coolly monikered car executives), or whatever puppet he installs, from making rational decisions regarding where to assemble and/or source product. It will be impossible, some argue, for Chrysler to manufacture overseas, even when doing so makes eminent sense, if the UAW is in charge. On the other hand, some argue that the UAW will need Chrysler to be profitable if it wants to get its members’ and retirees’ health care bills and pensions paid and thus will give the apparently very talented Mr. Marchionne more or less free reign to do what is necessary to make the company profitable, within reason. Given that the UAW has, in my opinion at least, behaved very responsibly, almost too responsibly, over this whole “car industry imploding” drama, I suspect the latter, and hence am betting that UAW ownership, while in a larger sense a very dyspeptic development for the separation of capital and labor that has served the western world so well, will, at least in the short run, be a good thing for Chrysler’s survival.

That having been said…

I think Troy Allen, a third generation owner of a Chrysler-Jeep-Dodge dealer in Derry New Hampshire, put it best when he said, as quoted in the Wall Street Journal, that what the government and Fiat do won’t matter for the next few years when “we have the same product that isn’t selling.”

Mr. Allen is right that the product line isn’t selling. He may not agree with me on the reason, though. Chrysler product isn’t selling, and Chrysler would have failed eventually anyway, because it produces lousy products. It’s as simple as that. One looks at the Chrysler product line and one sees…well, maybe not nothing, but very close to nothing.

Jeep? If I were given to trite expressions, I would say “Please.” Only Wall Street thinks Jeep is a good brand. Its moment in the sun came twenty years ago when no one produced that then latest yuppie fad called the SUV. Its twilight started when Ford began selling the Explorer. It is now hopelessly behind in the crossover race, producing the ridiculous Compass and slightly less laughable Patriot. It is on the verge of a slow death.

The minivans? I’ll grant Chrysler this one; the minivans are good products that sell in large numbers and dominate their market. However, the buff books and the consumer publications almost unanimously find the Honda Odyssey and the Toyota Sienna superior, usually far superior, products. I am inclined to agree, having driven them all, but find the Voyager/Caravan good and interesting products…for the money. My wife, the minivan driver in our household, wouldn’t come near a Chrysler, even with the bargain pricing on them of late and a pretty good relationship I have developed over the year with a local Chrysler dealer. That may be attributable, though, to her continuing “Japanese cars are always better than domestics” mentality. The same mentality might also be driving at least one of the consumer publication’s opinions regarding the relative virtue of the Caravan/Voyager, the Sienna, and the Odyssey.

The car lineup? Pretty good five years, pathetic today. Even the 300, a car with which I have been infatuated since its introduction (but which lacks a manual transmission (Strike one for yours truly), my wife says she would not be seen in under any imaginable circumstances (Strike two for yours truly)) and that was great about five years ago (about the time the President bought his (a 300C with a hemi, no less—the man has great taste in cars) that he later ditched for a Ford Escape hybrid when he decided to run for his current office), has gotten long in the tooth. The Challenger is cool (but huge! Have you noticed how BIG that car is?) and not versatile enough to be a big seller and compete with the Mustang. The PT Cruiser is gone and probably would have died a natural death anyway. The Sebring is not even worth discussing.

The great hope for the product line is the new alliance with Fiat, and the President spent part of his speech yesterday praising Fiat’s engineering and technology. While Fiat has come a long way under Mr. Marchionne, remains a major factor in Europe (the second largest European car company, I think), and is no longer the legitimate butt of the old “Fix it again, Tony” jokes, it’s no Toyota or VW. It makes some great little cars, some passable mid-sized cars, and some beautifully styled cars (as Italian cars tend to be), but it’s Fiat, after all. How many Americans do you know who are dying to buy a Fiat and have been marking their calendars in expectation of the day Fiat and Alfa return to this country? How many people are out there saying “I’d never buy a Chrysler, but I’d sure love one of those Fiats!”? Enough said.

Chrysler is a dead company under any circumstances simply because its products, for the most part, are not even close to being competitive. As the saying goes, if Fiat is the answer, it couldn’t have been a very good question.