Found this article on Detroit Free Press.

http://www.freep.com/article/2009022...SS01/902240311


There are sections in their plan titled "U.S. Industrial Consolidation Example
Qualitative Benefits" and "Orderly Wind Down Scenario".

In another section, this is part of their presentation; "In a sustained U.S. industry below 9.1M SAAR, we believe Chrysler LLC will struggle to be viable and will require an additional restructuring and funding as noted on Page 47."

What are we at now?



And this:
"If Chrysler LLC is not able to successfully:
1.Restructure its balance sheet to substantially reduce its liabilities,

2.Negotiate targeted concessions from constituents,

3.Receive an additional $5 billion capital infusion from the U.S. Government, as
represented in the “Stand Alone” Alternative, then the only other alternative is for Chrysler to file for Chapter 11 as a first step in an orderly wind down.

• Chrysler LLC would seek debtor-in-possession
financing from both private sector lenders and the
U.S. Government. We believe the estimated size
of the financing need is $24 billion over a two
year period (Page 165).

• Without adequate DIP financing we estimate that
the 1st lien lenders will only realize a 25%
recovery, the US government 5%, while all other
creditors will receive nothing. (Page 171-173)

• An Orderly Wind Down will result in significant
social impact, with 300,000 jobs lost at Chrysler
and its suppliers and over 3,300 dealers failing.
2-3 million jobs could be lost due to a follow-on
collapse in the wider industry, resulting in a $150
billion reduction in U.S. Government revenue
over 3 years (Page 163).


It doesn't look good for Chrysler, either. The bad thing is, we do not have quick access to their news & numbers because they are privately owned.

 

So let me get this straight...

Chrysler shutting down will result in a collapse of the wider industry.
GM shutting down will result in an even bigger collapse of the wider industry.

That leaves Ford... and myself wondering how the heck will Ford survive if GM and Chrysler fail?

Ford will go down with GM and Chrysler. There is no other option.

 

thats what most are thinking too.

 

Well heck lets take this logic all the way out.

1. Chrysler's dead! They will fail and have no chance to re-start with or without a partner like Fiat.

2. Every supplier in the US will then fail.

3. GM and Ford will fail.

4. The loss of all the suppliers will disrupt production for the foreign implants. This along with the loss of domestic make competition will lead to a massive spike in inflation of prices for the import makes, as well as inflation of used car prices. No one will buy any new cars but no one will be working anyway.

5. Everyone will get frustrated about it and a big war will start. Everyone will die and the Earth will end up as a shriveled cinder inhabited by cockroaches.

eGads, this place sometimes sounds like our major news outlets with its doom and gloom

 

sweet!!!!!!!!!!!!!!!!!!!!!!!!!!!:met al:

 

The article as a whole is a bankrupcy study done by Chrysler, not an unraveling of the company.

To be perfectly honest, I can see the government steping in to save Chrysler over GM for quite a few reasons.

1. The total amount of cash needed to save Chrysler is a fraction of what's needed for GM. Chrysler needs 5 billion to survive... GM needs 30. In a public with bailout fatigue, 5 sounds better than 30, regardless as to what the repercussions are.

2. GM is (unfairly or fairly) a huge target in the public and press. Chrysler is the underdog in this. In front of congress last year, Nardelli (who I haven't been a great fan of) was the only one of the big 3 CEOs who upfront said he's agree to a $1 per year salary if it meant getting loans. He also stated a willingness to merge with GM in order for Chrysler to survive, even though he knew in such a merger his job would be the 1st to go. While Chrysler has avoided bad press publically, seems every other story in the press about GM varies between bad and catostrophic.

3. GM has far more assets to sell than Chrysler. Not just buildings and factories, but divisions, and shares in regional operations worldwide. GM is a absolutely massive company. Chrysler, on the other hand, is a US company that does alot of work for foreign brands on the side that puts money in North American coffers. Chrysler could bee seen as a bigger bang for the buck than GM.

4. Chrysler has it easy in meeting viability guidelines next to GM. Chrysler isn't carrying debt that they can not realistically climb out of within a few good years. All the bond holders of Chrysler (unlike a public company) are secured. Daimler funded Chrysler's retiree pensions as part of their deal with Cerberus. Chrysler (under it's Daimler days) already cut and bought out as many people as they could and still barely run the place. Chrysler is still lowest cost vehicle manufacturer in North America. From a proportional basis, they had more money than GM before they got Federal loans.


It's obvious that Chrysler needs small cars and a retail sellable midsize car. The crash in sales to fleets is what will permanently destroy Chrysler without changing the business plan towards more retail car sales.

Chrysler has a rock solid sales base with the Ram, the Minivan, and Jeep. Until they ran the 300 5 years without a redesign, it was a very strong retail seller. The Caliber, as many cool features as it has, is ugly outside, and chock full of cheap materials inside. Although the Sebring and Avenger are essentially nothing more than fleet cars, I can't imagine anyone puropsely buying them for a fleet unless the price is an absolute steal... which means Chrysler still doesn't make money on them, despite cheaping out.


A business plan from Chrysler that includes retail level small and midsized cars, even without Fiat (remember, Chrysler still has access to Mitsubishi platforms and still is part owner of a drivetrain developed with Kia & Mitsubishi) is likely enough to get Chrysler through the March 31st barrier. Meanwhile GM is going to have to go through this with over 60 billion in private debt, bondholders not willing to budge on more losses, and a judgement via "note of concern" from accountants that GM can no longer survive as a business.

To tell the truth, if I were in the hot seat and my very chance of continuing life depended on the outcome, I'd rather be in that chair arguing for Chrysler than arguing for GM. Both have serious problems and both have a shot at surviving... it's just Chrysler's is quite a bit easier to live through.

 

Guy,
I hear what you're saying.

But looking at the situation, one could say that, if one car company had to go, the ending or merging of Chrysler would have the least amount of impact on the overall economy, because they are so much smaller.

In other words, if the government decides there has to be a sacrificial lamb in all of this, it would probably be Chrysler.

 

I have no debate on which would have the smallest impact on the country if it went under.

But, to cut to right to the juglar, GM is more of a financial basket case than Chrysler is.

Let's be perfectly honest. Regardless as to what happens, General Motors is going to be shedding a massive amount of it's business, both in personel and in sales volume. The question now is no longer how can we help GM in a way it won't have a huge impact on the country. Regardless as to whose plan is followed (GM's or a judge or appointed official presiding over a controlled bankruptcy & liquidation), GM is going to lose anywhere from 1/3 to even 1/2 of it's output via lost divisions and employees.

In short, the question to ask is if it's worth giving GM money to wipe out so many jobs that would be wiped out in a bankruptcy anyway?

The other issue is if Chrysler can convince congress that it can regain viability by simply funding new small and mid size cars. If Chrysler gains money, there isn't an issue of taxpayer money being used to guarantee massive job losses as it would be at GM.

Make no mistake, I feel both have problems to overcome and decent shots at recovery. But looking at what it will take GM to get there and what it will take for GM to repay debt versus Chrysler, I'd say that GM is almost certain to go into controled bankruptcy and partial liquidation while Chrysler lucks out and winds up with a federal backed loan.


We'll know in less than a month, so we won't have to wait long to find out.

 

Well I respectfully disagree, from several angles.

- Chrysler's clearly at the bottom of the heap of the Big Three, from both a quality, innovation, and ability to field new designs standpoint. This cuts to the core of its future viability.

- Amount of debt is going to be a smaller factor than perceived future viability, due to the above.

- Include in the above, the perceived (by Congress and Obama) ability to respond to green mandates. There will most certainly be linkage to that in any forthcoming deals.

- Regardless of the above, don't underestimate desire of Congress (as a whole, not the minority Republicans) and Obama to support and protect the UAW. If any of the Big Three go into BK, the UAW is done and they know it. The UAW and our Dem leadership in DC fear this and are going to avoid that at just about any cost.

- Also... is it really certain our Government is going to take the 3/31/09 deadline seriously? I've a feeling they will end up punting and instead tossing some more newly printed $$ at the problem while allowing a "deadline extension for further negotiation". Works for everything else according to them

 

Hell, AIG just got another 30 bil....what's the big deal, right?