Tuesday, June 9, 2009

Post Bankruptcy Chrysler

Chrysler has been moving through bankruptcy court at a quick pace and it begs the question, "What will the Post Bankruptcy Chrysler look like?"

Well, all the talking heads have been using buzz words like "Leaner & Meaner" to describe how the company will be, and as usual, they speak without saying anything because no details have been released.

As it stands, there are 11 Dodge models (cars, trucks, SUV's) , 7 Jeep Models, and 6 Chrysler models that were being produced prior to filing for bankruptcy. Post bankruptcy may see a few of those models dropped or consolidated as they move away from larger vehicles toward the smaller more fuel efficient models.

Chrysler needs some small fuel efficient cars to stay in the game and compete with Toyota, Honda and Nissan as well as the other imports getting 30 MPG or better on most of their product line. A quick look at Hyundai models reveals better fuel economy than most of the Chrysler line up. This is where more work needs to be done, making more fuel efficient cars. Chrysler and Dodge combined has only 3 models getting 30 mpg or better with no hybrids and Jeep has 2 models getting 28 mpg with the rest getting 22 mpg or worse . They do have the ENVI cars, 5 models with 3 being readied for production, but none ready for the market as of this post.

Click the link below to learn more about Chrysler's electric vehicles.

Chrysler has produced some really nice looking vehicles and performance has made a come back in recent years, but its a trade off for fuel mileage. People are looking to tighten their budget by saving money with better fuel economy. My 2004 Saturn Ion with 135k miles gets 30 mpg and that's what I drive daily because gas is expensive. The price is already going up! It's not even summer yet and with so many people out of work there is no reason for it other than the oil companies are greedy.

But, I digress. Its for that reason that more fuel efficient vehicles are needed to make Chrysler a viable company in the future. That's where Fiat comes in. Their 500 model is their retro version of a previous model and offers a 1.2L 4 cyl with 46 mpg or a 1.4L 4 cyl with 37 mpg. Not too shabby from a car powered only by an internal combustion engine. By comparison, the 3rd generation Toyota Prius Hybrid is boasting 48 mpg. Right now, hybrid models are pricey. The new 2010 Prius starts at $22k up to $27k. The Fiat 500 is expected to start at around $16k.

Click the link below for more info on the Fiat 500.

With that info and the initial cost of the vehicle, a first time car owner or someone looking to get out of their older 18 to 20 mpg mini van may lean toward the Fiat model or at least give it a thought. Now we may not see the Fiat 500 in Chrysler or Dodge dealerships until the 2011 model year as they need time to get the parts and other infrastructure in place, but we will see them and other Fiat Specific models to follow.

During that time, new models will be designed buy American engineers and designers for our market based on other Fiat models. The Fiat Linea is a mid sized sedan that could have a Chrysler model based on that platform. It even has features like Ford's Sync bluetooth voice activated software. All of this will only work if they create new Chrysler/Dodge models from the Fiat technology, not just sell re-badged Fiat cars like they did with Mitsubishi in the 80's. Remember the Dodge Colt?

I doubt we will see the Dodge trucks or the Challenger go away soon or any real changes in the Mopar Performance area as this is a smaller segment of the car market. If Fiat sees the value in creating a retro version of their 500, then they appreciate the value of the Dodge Challenger and going back in a company's history to recreate the past. I get the sense that Fiat CEO Sergio Marchionne's interest is building up the company as he did with Fiat making that company viable again. Very unlike how Daimler treated and raided Chrysler to the shell it has become. At least Cerebus tried to build it back, but I don't think they counted on the economy tanking like it did.

For all those employed in this industry, I hope for their sake that this deal goes through so the company can stand tall again and keep from losing so many more jobs. To me, this deal feel like the right fit for the companies involved, un-like the earlier proposed GM-Chrysler merger. Had that deal been done, who knows how much worse it would have been.

I guess the upside of a Fiat-Chrysler merger is, since Fiat also owns Ferrari, that the Viper and the F430 will be cousins.