Chrysler to File for Bankruptcy

[citizen k]

I don't think their distribution costs are that significant that it will make any difference.  I'll grant that I could be wrong about that.

Actually, it would allow a larger stock of each vehicle to be allocated to the "healthy" dealerships.

Too bad many of the closing dealerships were "healthy". 

[Savonarola]

Even the greatest actor in the world has turned on the Big 3:

The Rise and Fall of Detroit
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I was growing up, some kids dreamed of owning cars like a Trans Am, Camaro, Firebird, Corvette, Chevelle or GTO. Stock or tricked out, owning one of the fastest street cars that American automakers turned out was a dream come true. Mustangs were for the West Coast. Chevy ruled the road on Long Island in the1960's and 70's.

Back then, in the middle class neighborhood where I grew up, foreign cars were for foreigners. As fuel economy began to become an issue, NOBODY in my neighborhood gave a thought to buying a Japanese car. Nobody. OPEC appeared and gas shortages came and went. You went Ford, Chevy, Chrysler. That was it. I have a feeling that it was like that in most American middle class neighborhoods back then.

The fact that we have arrived where were are now is painful. Americans, who are being asked to invest billions upon billions of dollars in US automakers and their employees' futures, have already been investing in those companies, against their better interests, for decades. Now Chrysler is dead, GM is on critical life support and Ford has cancer but may beat it.

What do you care?

The heads of these corporations did not spend the last thirty years lying in bed each night, sleepless. They did not turn their spouses in the wee hours and say, "How do I serve the automotive needs of the American public and better protect their health and safety AND help them conserve energy?" They never said that.

Instead, they spent billions of dollars attempting to bribe the Congress to avoid putting in seat belts and air bags, installing catalytic converters and reaching more ambitious fuel efficiency standards. For the most part, they succeeded. Congress approached those issues with the same combination of sentiment, fealty and fear that Detroit's customers accepted. It was said to be "bad for Detroit." Little did we know that falling for that bull for so long was what was bad for Detroit. Now, the American automotive industry, once the industrial pride of this country and a source of so many great paying jobs that changed the economic fortunes of millions of Americans in assembly, parts, dealerships and service, is about to go away.

What do you care?

I feel horribly for every single man and woman who will suffer as the result of this heartbreaking turn of events. I was the voice of Chevy Tahoe TV spots for five years in the early 90's. I drove a Tahoe then and loved it. Now, I drive a Prius.

I've owned Mercs, Chevys, Fords and Jeeps. I'm in the market for a new car now. I'll probably get a hybrid from a Japanese company, manufactured at a transplant factory in the American South. (Read the excellent recent article in the New Yorker by Peter Boyer about the path the Big Three and the UAW took to get here.) I'd like to buy an American car, but I'd feel like a fool doing that now. The leadership of the biggest automakers made sure of that.

There can be only one legitimate response to this crisis. Let energy conservation and fuel efficiency rule the day. Let the carmakers go under. In the same way we have subsidized Big Oil by destabilizing the governments of petroleum rich countries, or outright invading them, we have subsidized Detroit long enough. Just as every barrel of oil is undervalued because we do not factor in that portion of the defense budget that helped bring that oil to market, so we have undervalued our government's, and therefore our, complicity in producing cars that not only were inferior, but drove Detroit itself right off a cliff.

From the ashes of such great innovation, hard work, beautiful design and extraordinary branding-as-myth-making, let's have better cars.

From the ashes of arrogance, greed and corporate cowardice, let's have better cars.

Until then, pull the plug.

It's amusing that Alec doesn't show the slightest bit of shame for shilling for a corporation that, according to him, spent billions bribing congress.

[Neil]

It's amusing that Alec doesn't show the slightest bit of shame for shilling for a corporation that, according to him, spent billions bribing congress.

Limousine liberals are without shame.

Also, destabilizing the governments of oil-rich countries?  Last time I checked, the governments of Saudi Arabia, the UAE and Qatar got a lot of help from the US, and Kuwait owes its existance to the US.

[Valmy]

Also, destabilizing the governments of oil-rich countries?  Last time I checked, the governments of Saudi Arabia, the UAE and Qatar got a lot of help from the US, and Kuwait owes its existance to the US.

He is obviously still pissed off about our invasion of Iraq.  Maybe he also believes we had something to do with the unsuccessful coup in Venezuela a couple years back.

[Savonarola]

Zetsche: 'Strong hope' for Chrysler-Fiat success
David Shepardson / Detroit News Washington Bureau
Washington -- Daimler AG board chairman Dieter Zetsche said Tuesday the deal to sell the German automaker's 19.9 percent stake in Chrysler LLC was "certainly not cheap for us."

On April 27, Daimler agreed to sell its remaining shares in Chrysler. As part of the deal, Daimler said it will forgive a $1.5 billion loan to Chrysler after ownership transferred to Cerberus Capital Management LP. Daimler also agreed to pay $600 million into Chrysler's pension plans in three installments, the last in 2011, to ensure pension payments for former DaimlerChrysler employees.

The deal came after complex talks with the U.S. Treasury, the UAW, the two automakers and Cerberus.

"It was certainly a fair package altogether for all parties involved," Zetsche told reporters at a briefing, saying he was "very satisfied" with the deal.

Daimler has been strapped for cash and agreed in March to sell a 9.1 percent stake in the company to Abu Dhabi's Aabar Investments PJSC to raise about $2.7 billion.

Zetsche, who ran Chrysler Group when it was part of DaimlerChrysler, said he hoped the Auburn Hills automaker's planned alliance with Italian automaker Fiat SpA would succeed.

"I certainly do hope that some of the strengths Fiat can bring to the party will help Chrysler and vice versa so that it can be stronger than a stand-alone form," said Zetsche, acknowledging that it is "very difficult to make that assessment from the outside."

Zetsche noted he still has many friends at Chrysler and has a "strong hope" that the automaker succeeds.

Some Daimler people were quoted anonymously in the Detroit News as saying "The Italians will steal milk out of coffee," so it's not really a surprise that they're eager to leave before a Fiat deal goes through.  Still that looks like a pretty awful deal for Daimler.

[Neil]

...to sell a 9.1 percent stake in the company to Abu Dhabi's Aabar Investments PJSC to raise about $2.7 billion.

Not a great investment on the part of the Arabs.

[DontSayBanana]

Question for AR, Syt, or other accountancy-type peeps: with all of these loans being forgiven, I realize that goes away from accounts payable, but is it just a straight strike? In other words, don't all of these forgiven loans actually take away from Chrysler's value?

[DGuller]

...to sell a 9.1 percent stake in the company to Abu Dhabi's Aabar Investments PJSC to raise about $2.7 billion.

Not a great investment on the part of the Arabs.

The one good thing about the crisis is that Arabs were the first fools rushing in to catch the falling knife.  Therefore they grossly overpaid for assets that turned out to be total junk.  I guess our financial "geniuses" are good for something after all.

[Admiral Yi]

Question for AR, Syt, or other accountancy-type peeps: with all of these loans being forgiven, I realize that goes away from accounts payable, but is it just a straight strike? In other words, don't all of these forgiven loans actually take away from Chrysler's value?

Decrease in liabilities always increases net worth.

[Zanza]

Some Daimler people were quoted anonymously in the Detroit News as saying "The Italians will steal milk out of coffee," so it's not really a surprise that they're eager to leave before a Fiat deal goes through.  Still that looks like a pretty awful deal for Daimler.

It's a terrible deal for them, but then they also had to give Cerberus money for the 80% stake in 2007. As Chrysler was worth $0 in their books, they had already written off most of the cost. Only the additional pension payments they agreed to now hurt them (another $700 million).

Not a great investment on the part of the Arabs.

Their stake at current market price is already worth about 25% more. They bought at exactly the right time.

[DGuller]

On the other hand, it makes sense for Arabs to buy Chrysler.  Demand for oil would plunge through the floor if Chrysler ever stopped making cars.

[Admiral Yi]

On the other hand, it makes sense for Arabs to buy Chrysler.  Demand for oil would plunge through the floor if Chrysler ever stopped making cars.

Please tell me you're not buying into the Democratic/Baldwin line that we would all be experiencing greater gas mileage if it weren't for the evol Detroit conspiracy.

[MadImmortalMan]

Too bad many of the closing dealerships were "healthy". 

I think most of them will be ok. A lot of dealerships are diversified. There are two in my area that Chrysler is dropping. One is currently a Jeep/Nissan dealer and the other sells Chryslers and Toyotas. So in either case, they'll both be selling their Japanese stuff still.

[Neil]

Their stake at current market price is already worth about 25% more. They bought at exactly the right time.

They need to sell quickly before anybody realizes that Chrysler is through.

[DGuller]

Please tell me you're not buying into the Democratic/Baldwin line that we would all be experiencing greater gas mileage if it weren't for the evol Detroit conspiracy.

I'm not.