Insights into the Bailout of Chrysler and Who Really Saved It

[commando1]

Carmine, do you read The Truth About Cars?

 

[Carmine]

Oh, and separately I will add that my parents bought a '95 Concorde brand new... Special ordered, metallic purple with leather seats, 3.5 DOHC and touring suspension. My mother primarily drove it to work. She retired and Chrysler was offering give-away deals on Dakotas circa 2009, so my parents bought a 3rd car (My dad has been minivan-only since 1985). Eventually, she asked me what the Concode was worth to sell. I had to give her a reality lesson... Sorry mom, that's a $2500 car now.

She almost slapped me... Horrified at the idea this car she loved so much was now beater-fodder for some kid to destroy. She insisted I take it. I resisted. She persisted. I found myself driving a purple Concorde.

Fast-forward a few years and I'm itching for a change. I really do like this Concorde, but I hate gray interiors, want a sunroof and just want something different. But I can't sell it to a kid and incur my mother's wrath/guilt (Italian thing I guess). So I write up a real good ad and make a youtube video:

https://www.youtube.com/watch?v=1b92fNq4yw8 (kind funny if you want to watch it)

Luckily a guy from Moparts and part-time preacher wants to buy it. He sends me photos of it at car show. Mom is happy, and I bought this as my daily-hooptie:


An LHS that I threw a 300 clip on for fun, + rims from an LX car. Drove it back from Tuscon in 2010 and have 140k on the 3.5. Has been/still is, a great car. Closest thing to a C-body I could find, and it was a great platform.

 

[Carmine]

Carmine, do you read The Truth About Cars?

I have, but only when I seek the heartburn of self-appointed auto-industry experts who work in cell phone retail outlets.

Seriously, I just can't get past the name and spin of the site. I'd be on there all day cut/pasting and screencapping. I have enough things to suck up my time.

 

[commando1]

LOL!
Thank you, Carmine.
I think only you and I understand about the cell phone outlet thing.

 

[saforwardlook]

Carmine, were you aware that there are separate fuel economy standards for cars and trucks in the rules? Also, did you know that the fuel economy rules have checkpoints along the way towards 2025 that will revisit them for any needed modifications as a result of market and other changes that might warrant a revisit of some aspects? And I really doubt that the D3 will be able to sell a lot of their large pick ups in other countries. The D3 must make world vehicles to remain in existence long term. Most other countries have relatively high fuel prices. So, do the new standards really hurt the D3, or rather encourage them to make competitive products with other world manufacturers? Overall, the D3 manufacturers are not complaining about the rules and have stated they intend to meet them. So who are you representing in your comments?

Chrysler in particular is vulnerable because it has little going on with electric cars or fuel cells, while GM has both and Toyota will be selling a production fuel cell car in the next year or so. Most other major manufacturers also have these programs going, but not much at Chrysler. The world is changing, and concerns about climate and fuel supply are not going away anytime soon in other parts of the world as well. GM & Toyota are the top sales volume manufacturers worldwide and VW is coming up fast. I am confident that their judgments are reasonable relative to the rules and about what technologies they have to research to stay on top. People in the U.S. will still be able to buy their have to have Escalades, but they will be more efficient.

 

[Carmine]

Pardon my asking, but are we talking about factors that impacted the industry before 2009 or new rules going forward?

However, it is funny that you mentioned selling pickups in other countries... In November 2008, I sold a '79 Chrysler 300 to a guy in Finland. He asked if I would mind sitting on the car until January, as long as he paid immediately. I said, "Sure, but aren't you anxious to get it?" He told me that if a vehicle is less than 30-years old, it is subject to some kind of huge tariff, thus it would save him a lot of cash to take delivery in 2009.

Ok, no problem. The guy paid top dollar, I'll do him a solid. So on New Year's day, I hopped in the car and made my way to western MI (it was being shipped from the port of Chicago by his friend who had a small warehouse in MI). So I arrive at the warehouse and meet his friend, also from Finland.

He takes me into the warehouse and immediately I notice 5-6 brand new Dodge trucks, all Cummins diesels. Casually I mention, "What's with all the trucks?" He says, "They are going with your car, to Finland."

"But I thought no one in Europe would buy a pickup?" He laughs and says, "First of all, we have farms too... And horse trailers, and contractors..." But what about the expense of fuel? "Diesel is a much better value in Europe."

But what about the taxes? Again, he chuckles... "There is an exception that says if you live in the US for a year, you can bring your vehicle back without paying duty... So this is my uncle's truck, my grandmother's truck..." Of course, with a wink a nod. I was witnessing the gray market in action, lol.

So why in the world go through all this hassle, undoubtedly he isn't doing this for free. Probably not financing anyone, and when the trucks arrive there will be no warranty work. But still; why bother?

He tells me that in order to get a vehicle as capable as these trucks, you must step up to a commercially-licensed vehicle and now you're talking 6-figures in US Dollars. Since telling this story, I have friends in Europe sending me photos of US trucks at work, or in one case, a whole carrier full of them.

Moral of the story? I suppose don't jump to conclusions about who-would-buy-what, if not for government interference (protectionism) in the market. Oh, side benefit? These diesels run to US standards for particulate emissions, so cleaner than required in Europe.

Now if you want to talk "future tech", I'd prefer to do that in another thread, but like you, I don't think Sergio is doing much to prepare the company going forward. If you recall, these new emissions standards were enacted at a time when the D3 were either near bankruptcy or in it. Not much leverage or point in complaining. I fully expect they will be challenged, but the extent will depend upon which current candidate is elected, and which unelected bureaucrat he/she selects to create the standards. *of course I'm only giving you my opinion.

And do I think these supply-side regulations better prepare the US industry for worldwide sales?

1) It's irrelevant. They're not going to open those markets before the US industry is gone, following the model the consumer electronics industry decades earlier... A long, slow death while our government sits on its *** and plays golf with foreign lobbyists.

2) No. I never think its better to intervene on the supply-side... At least not in a free-market economy. If you start dictating what consumers can buy, perhaps it will work, lol.

Let's close with a quote from Sergio if you don't believe me...

Marchionne said the capacity utilization rate of the European auto industry could fall to 65 percent in 2010 from 75 percent last year, with sales widely expected to decline.

"The reason, simply put, is that European manufacturers simply do not close plants. In fact, they're often paid not to," he said, referring to government subsidies he said had "distorted" the European car market.

 

[commando1]

Classic example of the government telling you what you are allowed versus what you need.

 

[saforwardlook]

Pardon my asking, but are we talking about factors that impacted the industry before 2009 or new rules going forward?

I was talking about rules impacting industry after 2009, and that is why I wrote about the 2025 endpoint. Honestly, in going back through your posts, I find them hard to follow - maybe it is me (you talk about 40 mpg Fiat 500s, and certainly those didn't exist in the U.S. before 2009).

I will just suggest we drop the thread at this point as I don't think we are getting anywhere.

Thanks

Steve

 

[Carmine]

I was talking about rules impacting industry after 2009, and that is why I wrote about the 2025 endpoint. Honestly, in going back through your posts, I find them hard to follow - maybe it is me (you talk about 40 mpg Fiat 500s, and certainly those didn't exist in the U.S. before 2009).

I will just suggest we drop the thread at this point as I don't think we are getting anywhere.

Thanks

Steve

Huh, I thought I'd made it fairly simple when I said:

In the end, all you're really supposed to come away with from my comments is a sense that it's very suspicious that the US government will involve itself to the micromanagement level of requiring Chrysler to sell a 40 MPG Fiat 500, yet there are systemic, decades old problems that not only go unresolved, but in the eyes of the general public are entirely unknown!!!

...And I believe that was my only reference to the Fiat 500.

Most everything else is what I'd call "supporting evidence" that the D3 have not sold, and will not soon sell worldwide... Something I assumed we both agree they must do?

They will not sell those products assembled in North America without knocking down protectionist barriers. What do you think Sergio refers to when he speaks of the distorted European market? Unless those issues are acknowledged, talking about exports out of the US is a pipe-dream.

I also made the point that our own market has been "distorted" by CAFE rules on the supply side. Even the global warming crowd generally acknowledges this, and wants something done to curb demand.

I believe these are fairly simple and easy to understand points. Interesting that they're lacking in the analysis that began this thread. s_dancing2:

 

[fc7_plumcrazy]

Ok, no problem. The guy paid top dollar, I'll do him a solid. So on New Year's day, I hopped in the car and made my way to western MI (it was being shipped from the port of Chicago by his friend who had a small warehouse in MI). So I arrive at the warehouse and meet his friend, also from Finland.

He takes me into the warehouse and immediately I notice 5-6 brand new Dodge trucks, all Cummins diesels. Casually I mention, "What's with all the trucks?" He says, "They are going with your car, to Finland."

"But I thought no one in Europe would buy a pickup?" He laughs and says, "First of all, we have farms too... And horse trailers, and contractors..." But what about the expense of fuel? "Diesel is a much better value in Europe."

But what about the taxes? Again, he chuckles... "There is an exception that says if you live in the US for a year, you can bring your vehicle back without paying duty... So this is my uncle's truck, my grandmother's truck..." Of course, with a wink a nod. I was witnessing the gray market in action, lol.

So why in the world go through all this hassle, undoubtedly he isn't doing this for free. Probably not financing anyone, and when the trucks arrive there will be no warranty work. But still; why bother?

He tells me that in order to get a vehicle as capable as these trucks, you must step up to a commercially-licensed vehicle and now you're talking 6-figures in US Dollars. Since telling this story, I have friends in Europe sending me photos of US trucks at work, or in one case, a whole carrier full of them.

Moral of the story? I suppose don't jump to conclusions about who-would-buy-what, if not for government interference (protectionism) in the market. Oh, side benefit? These diesels run to US standards for particulate emissions, so cleaner than required in Europe.


"The reason, simply put, is that European manufacturers simply do not close plants. In fact, they're often paid not to," he said, referring to government subsidies he said had "distorted" the European car market.

Hi,

the market for cars is different between the european countries.
Some smaller states like Denmark or Finland have high taxes when a modern car gets registered the first time. We are not talking import duties but registration fees.

In germany the situation is different. Of course there are import taxes and customs but the US built cars were still cheap for us considering their power/options. At least till the EURO got pretty weak in the last months.
Chrysler sold quiete a decent amount of 300Cs in germany between 2004 and 2011.
But still the total number wasn't impressive and wouldn't feed Chrysler.
Huge Pick ups? Not sold here officially. Just on the grey market, new and used. Some are Diesels, the gasoline cars often run on LPG.
Of course you do see one once in a while. But again the numbers are small and it isn't worth it talking about it being a market. It is a very tiny niche. Not more, not less. I would guess we have more modern Vettes driving around than Pick ups.

None of the american car sales in Europe in total are worth mentioning.

Japanese cars sell here in relativly high numbers. They do have the same amount of import duties&taxes as cars built in the US

Carsten

 

[Carmine]

Carsten, Be sure you're talking US built models... Chrysler built a lot (in relative terms) of cars in Graz, Austria under contract. Almost the full range, Voyager (minivan) 300 and 300 wagon, GC/Cherokee Jeeps, PT Cruiser. But as you say, very small numbers.Another side story... Have an aquaintance who should reallly not be allowed to purchase his own cars. He bought a used 300C and complained that it couldn't be aligned, he was wearing out tires, etc. So I look this car over and can see obvious (bad) collision repairs to the front end. Then I start to notice the little things that are different on a Euro-spec car. Sure enough, built in Graz. Question is, how did it end up over here? I'm pretty sure it was somehow gotten out of the EU (stolen in Russia?) and title-washed over here. I'd say that one went beyond gray market all the way to black!

 

[fc7_plumcrazy]

yes, Chrysler produced in Austria. The 300C wagon was just available in europe not in the US. You had the Dodge Magnum instead. Chrysler has cancelled all their official sales (I think despite England) now in europe. The plant in Graz does not produce any Chrysler vehicles anymore

Carsten

 

[Carmine]

Yes, a shame because prior to Daimler they seemed sincere about expanding outside the US again. Graz was part of that. Now we are re-badging Chryslers to a brand even Italians don't care about (Lancia). All that prior marketing effort wasted. A bad, perhaps emotion-driven decision by Sergio.