Chrysler to stop all production

Chrysler says its shutting down production at the end of the week for at least a month. I wonder if they will ever restart. Makes me think of the Lady Luck in downtown Vegas that shut down, what two and half years ago for "remodelling".

In the article, they point out 20-25% of their sales loss is due to customers being unable to get financing. I'm sure that's true compared to the easy money years. I wonder what that loss is compared to more normal times. Just seems like our entire economy was addicted to easy money and the recession we're now experiencing is just the withdrawal.

Edited: 06/26/2010 at 06:41AM

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Richard Warren

Real Estate Investor · Las Vegas, Nevada

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Icon_minipost Dec 17 '08, 04:41 AM

There has to be a fundamental change in the way the auto industry operates. In the past we needed the Big Three (or four) in order to have competition. Today the competition comes from overseas. Whichever companies survive should merge and get "lean and mean" but I'm sure the UAW would never allow that.

I wrote in my Article this week ( http://www.biggerpockets.com/renewsblog/2008/12/15/tales-from-the-pacific/ ) about a retired Ford dealer that I met on my vacation. We discussed the Auto bailout proposal and said that they shouldn't be given a dime. If we throw money at them they will never change. He felt this way even though his sons now own his dealership in Indiana and they would probably fail, but they will probably fail anyway.

:cool:

Edited: 06/26/2010 at 06:41AM by Richard Warren

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Icon_minipost Dec 17 '08, 05:00 AM

For your consideration:

Mitt Romney NYT Opinion

Thomas Friedman--What to Do About the Big 3

GM's Rebuttal to Thomas Friedman

Edited: 06/26/2010 at 06:41AM by Administrator

Will Barnard

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Icon_minipost Dec 17 '08, 05:09 AM

I like Mit and his article. He was my choice for leader of the free world!
Can't see how McCain was selected over him to represent the Rep. party.

Edited: 06/26/2010 at 06:41AM

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Rich Weese

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Icon_minipost Dec 17 '08, 07:18 PM

I like Mit also. Today, rumors are that chrysler and gm are merging. Who cares? As long as we don't bail out the overpaid employees getting $75 per hour compared to under $50 for Toyota..

Edited: 06/26/2010 at 06:41AM

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Icon_minipost Dec 17 '08, 07:20 PM

As long as we don't bail out the overpaid employees getting $75 per hour compared to under $50 for Toyota.

Do you have a credible citation for this statement?

Edited: 06/26/2010 at 06:41AM

Dave P.

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Icon_minipost Dec 17 '08, 07:25 PM

As Peter Schiff commented the other day, auto repair shops are about to flourish.

Edited: 06/26/2010 at 06:41AM

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Icon_minipost Dec 17 '08, 07:34 PM

Caitlin- It was pretty well reported on multiple news stations a week ago. U.S. companies are paying $74 per hour, includes wages, retirement benefits and insurance. For the same benefits, Toyota (for one) is $49 an hour. One of the spokesmen for the big 3 said theirs was comparable, BUT he was baseing it on a future concession due months from now. You should be able to find it online somewhere.

Edited: 06/26/2010 at 06:41AM

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Icon_minipost Dec 17 '08, 07:34 PM

The $73 figure is disingenuous at best. The cost of retiree pensions and benefits is included. Subtract that out, and the cost of the current labor force is much closer to the labor costs of foreign manufacturers operating in the United States.

GM's overseas divisions are actually profitable. It's the US side of the car manufacturing business that is grossly unprofitable. Add in the fact that a lot of GM's profits over the last few years came from financing cars and houses (think Ditech), and you can see what they need to do.

I don't have any sympathy for Chrysler or Cerberus. Cerberus took on the risk of taking the company private and packaging it for resale. The gamble did not pay off. Chrysler continues to manufacture some of the worst products in the industry. Structure a bankruptcy filing to protect the parts suppliers, and liquidate. I don't know why GM would even be interested in a merger.

With regard to all the infrastructure jobs that will supposedly be created by the new administration - do you really want Chrysler engineers designing and Chrysler assembly workers building your bridges? I didn't think so.

Edited: 06/26/2010 at 06:41AM

Nick G

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Icon_minipost Dec 17 '08, 09:16 PM

As Peter Schiff commented the other day, auto repair shops are about to flourish.

HA! Well Schiff has been right on pretty much everything thus far.

Edited: 06/26/2010 at 06:42AM

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Icon_minipost Dec 17 '08, 09:16 PM

Here's another perspective. The author makes some good points, I think.

There Are Too Many Car Brands, Anyway

Edited: 06/26/2010 at 06:42AM

Jeremy Sharff

Homeowner · MI

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Icon_minipost Dec 17 '08, 09:17 PM

Well, as an ex-Chrysler engineer, I think that last comment is off base. I am the person you want designing your bridges. The people that work(ed) at the Big 3 aren't dumb, retarded or imbeciles.

As much as I understand the sentiment (I mean, this real estate/mortgage crisis is all the fault of...and I'd never want them near my property/money again, right?) the auto industry is incredibly complex and far reaching.

This isn't the first time Chrysler (or any auto manufacturer for that matter) has shut down production for a while. And, I don't think Cerberus should get a dime - they made a bet and are losing (although, their lawsuit against Daimler argues they were given misinformation). I don't think any of the auto companies should get any money - they made short sighted decisions based on a North American market centric viewpoint that's biting them in the ass now.

On the flip side, the auto industry does support a lot of other businesses (not to mention a state) and right now, is that collapse something our economy can handle?

Edited: 06/26/2010 at 06:42AM

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Icon_minipost Dec 17 '08, 10:42 PM

Originally posted by Jeremy Sharff

On the flip side, the auto industry does support a lot of other businesses (not to mention a state) and right now, is that collapse something our economy can handle?

First, not all three would collapse. Second, a chapter 11 bankruptcy is EXACTLY what is needed. There is absolutely no viability in any of the Big 3 with the current union contracts in place. Chapter 11 will fix that problem.

Edited: 06/26/2010 at 06:42AM

Jon Holdman

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Icon_minipost Dec 17 '08, 10:44 PM

There is absolutely no viability in any of the Big 3 with the current union contracts in place.

Or with the number of brands and dealers.

Edited: 06/26/2010 at 06:42AM

Jon Holdman, Flying Phoenix LLC

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Icon_minipost Dec 17 '08, 10:49 PM

Very true and with a Chapter 11 filing ALL contracts are voided and renegotiated by the trustee and require approval of the bankruptcy judge.

Edited: 06/26/2010 at 06:42AM

Michael R.

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Icon_minipost Dec 19 '08, 03:28 AM

I guess the Union does not realize that if they dont make some concessions they are all going to be unemployed. Typical American greed in my opinion. Greed is what has brought down many empires and I think we are seeing the fall of this once great country.

Edited: 06/26/2010 at 06:42AM

Tim W.

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Icon_minipost Dec 19 '08, 06:19 AM

Michael,
The fall of an archaic industry is hardly the fall of a country. The internal combustion engine is old technology that needs to be replaced with high performance electric - not wimpy electric as they're trying to sell us now. There will be a new Detroit somewhere when they develop this well.

Edited: 06/26/2010 at 06:43AM by Tim W.